NORTHERN MARIANAS FORECLOSURES EXPECTED TO RISE

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By Jojo Dass

SAIPAN, Northern Mariana Islands (October 26, 1998 -Marianas Variety)--- More banks hurting from the economic crisis will move toward seizing the assets of businessmen who have failed to service their debts, a leading local banker predicts.

Bank of Saipan Chief Executive Officer Thomas B. Aldan, in an interview Friday, said there is now a "very high probability" of foreclosures happening in the next few months, even as banks continue to be flooded with requests for refinancing of loans.

"Everybody is doing poorly," said Aldan.

He said banks are looking into these refinancing requests on a case-by-case basis, reviewing financial statements to see if the concerned debtor can still afford to pay.

"There are a lot of requests, not only from business but from individual (debtors) as well," said Aldan.

Aldan said banks have not started foreclosing assets yet.

"But," he stressed, "there is a probability, a very high probability of assets of businesses and individuals being foreclosed."

He declined to put an estimate on the number of affected debtors.

Aldan said the Commonwealth's banking and finance industry is already feeling the effects of the economic crisis, saying the sector foresees lower revenues for this year.

"It (crisis) is reducing the income of the banks for the year... that's the trend, so maybe we see it (revenues) a little bit lower than last year's, said Aldan.

Aldan admitted the current crisis is caused by troubles besetting the tourism industry.

"The way the economy of scale applies," he explained, "is (such that) when one sector is not doing very well, especially if you're depending on a major industry like tourism, then everybody is affected."

Unofficial estimates by the Department of Commerce placed the number of establishments that have closed down this year at more than 100.

The department agrees the picture could be larger.

The Commonwealth Utilities Corp. (CUC) said around 718 different establishments have closed their accounts from October 1997 to September this year. Aside from this, 364 businesses were disconnected over the same period for delinquent payments.

The islands' economy, over the past 10 years, has seen a growing dependence on the tourism industry.

This, however, was cut short late last year when Asian countries, including CNMI's two main markets, Korea and Japan, began suffering from currency devaluation and low productivity.

The crisis has caused tourist arrival numbers to plunge over the past several months.

For additional reports from the Marianas Variety, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/Marianas Variety.

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