KOROR (Palau Horizon) — Depositors of Pacific Savings Bank panicked on Wednesday and started withdrawing large amounts of money due to unconfirmed reports that the community bank is a branch of Bank of Saipan.
John DeVivo, Pacific Savings Bank general manager, said the disruption in the bank’s operation was due to the refusal of retail stores and another bank to accept their locally drawn checks.
He said Pacific Bank’s relationship with Bank of Saipan is “limited.” Pacific Bank is a pass-through bank or clearing house for Bank of Saipan’s off-island checks, he added.
On Wednesday, several depositors rushed to the bank’s Koror branch and began withdrawing their money after learning about the financial situation of Bank of Saipan.
“The confusion lies on reports that we are a branch of Bank of Saipan,” DeVivo said.
He said with the help of Vice President Sandra Pierantozzi, Administration Minister Elbuchel Sadang, Sen. Johnny Reklai and the Palau Banking Commission, the confusion was “immediately addressed.”
DeVivo said the government officials assisted the bank in explaining to retail store owners why they should honor locally drawn checks from the bank.
He said that due to the confusion, the bank ran out of currency on Wednesday, but this was immediately remedied and depositors were eventually allowed to withdraw.
DeVivo described the disruption as a “hiccup, a bump on the road.”
“Now, the bank is back on track.”
He said things started to normalize due to the support extended by other local businesses which did not stop accepting checks from the bank.
He said the large withdrawals were made by non-Palauan depositors.
He added that the local government provided the bank with short-term deposits which will be immediately returned with interest.
DeVivo said the bank’s staff should be lauded for the their professionalism. “The entire staff of the bank did not see it as a problem—we dealt with it and moved on,” he said.
He added that no large withdrawals were made in other bank branches in Airai and Peleliu.
The bank will change its pass-through bank from Bank of Saipan to Bank of Guam this week, he said.
