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HomeNewsArchivesDEADLINE PUSHED TO DEC. 7 FOR VICB TO BUY CHASE

DEADLINE PUSHED TO DEC. 7 FOR VICB TO BUY CHASE

Sept. 7, 2001 – The Federal Deposit Insurance Corp. on Friday granted the V.I. Community Bank another extension, to Dec. 7, to complete the purchase of the territory's Chase Bank assets.
It was the second such extension granted by the FDIC, which gave its conditional consent on Nov. 7, 2000, for VICB, owned by businessman Jeffrey Prosser, to acquire the seven V.I. branches of the New York-based Chase Bank.
The initial deadline was May 7 of this year. At VICB's request, that date was extended four months, to Sept. 7.
In a brief letter to V.I. Community Bank dated Sept. 7, Daryl P. Sturm, FDIC regional director, stated, "I have today approved the application filed on behalf of Virgin Islands Community Bank, Christiansted, St. Croix, to extend the expiration date" of the FDIC consent order. That order, Sturm noted, "grants approval to Virgin Islands Community Bank to purchase assets and assume liabilities from The Chase Manhattan Bank, New York, N.Y., and to acquire the capital stock of Chase Trade Inc. from JP Morgan Chase & Co., New York, N.Y."
Michael Dow, VICB president, said Friday that the reason the extension request was filed was "because, for one thing, the Sept. 7 date has now come and almost gone." He declined to be more specific, saying, "I don't have any further information."
According to a knowledgeable Chase source, the application for the extension was filed "very recently." Although the deal was not finalized as of the Sept. 7 deadline, with the new extension, "it still could be approved" by Chase, this individual said.
A telephone message left for Cassan Pancham, president of Chase V.I., was not returned Friday afternoon. A media relations official in the corporate communications offices of JP Morgan Chase & Co. in New York declined to comment.
Local Chase employees were told in July that the bank branches would close on Aug. 3 for a long weekend and then reopen Aug. 7 as VICB branches. That didn't happen, and Dow said a few days later, "We are a little behind there." As to when such a changeover would take place, he added, "I don't have any update. There is nothing new on it."
On Friday, referring back to his month-earlier comments, Dow said, "There wasn't anything to tell then, and there isn't anything further to tell now."
Dow, an executive with Chase Bank in the Virgin Islands before he was named president of VICB, added, "Now there is an extension in place — at least the door is still open for the transaction." Also, he said, "If and when it becomes appropriate, we will make a statement."
In May, Dow told the Virgin Islands Daily News — which also is owned by Jeffrey Prosser — that his bank could meet the Sept. 7 deadline.
The FDIC approval last November was for VICB to acquire, in addition to the assets of the V.I. bank branches, the capital stock of Chase Trade Inc., a Chase subsidiary headquartered on St. Thomas that provides tax advisory and other services to foreign sales corporations.
Since June, there has been speculation as to whether the proposed deal also involves Chase Agency Services, essentially a firm that insures home-loan mortgages issued by the bank. In June, it was reported locally that a $25 million class-action lawsuit had been filed against Chase Bank and Chase Agency Services.
Dow said Friday that Chase Agency Services was a part of earlier discussions and added, "I am not aware that there were any changes" in the latest negotiations.
Source efforts to get an explanation from FDIC officials in Washington, D.C., of the reason for the second extension were unsuccessful. One observer said the implication was that VICB "has not yet done what it needs to do to buy the branches from Chase, but does not want to abandon the notion."
Prosser also owns Innovative Communication Corp., parent company of Innovative Telephone (formerly Vitelco), Innovative St. Croix Cable TV, Innovative St. Thomas-St. John Cable TV, four other Caribbean cable companies, and Innovative Wireless. ICC is hundreds of millions of dollars in debt, and there has been speculation that while V.I. Community Bank is a separate company, it could be impacted by cash-flow problems Prosser might be experiencing.
If Chase Agency Services is included in the sale, Prosser and VICB might be liable for any judgment or settlement in the class-action lawsuit. Observers have said such a potential scenario might be a basis for Prosser to back out of the whole Chase deal without having to pay Chase a substantial penalty for negotiating in bad faith.
VICB announced its plans to acquire the Chase holdings in June 1999. The proposed purchase was approved, after review, by the FDIC and the V.I. Division of Banking and Insurance.
Prosser founded V.I. Community Bank on Dec. 30, 1994. The bank operates only on St. Croix, where it has three branches with some $78 million in assets. Chase in the Virgin Islands has four branches on St. Thomas, two on St. Croix and one on St. John. According to the FDIC, if the Chase acquisition goes through, VICB will have assets of about $500 million.

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