State to move deposits to small, local banks to encourage lending

PROVIDENCE – The state treasurer plans to move $30 million in deposits to local banks and credit unions in an effort to encourage more small-business lending.

General Treasurer Seth Magaziner on Thursday is expected to announce a new initiative called “Bank Local: Rhode Island’s Community Deposit Program,” which reallocates a portion of the state’s deposits to local financial institutions. Rhode Island banks and credit unions can apply to receive the deposits, and eligibility is based on local small business lending trends. The state typically has between $500 million and $1 billion in cash deposits, and $30 million will be made available to start the initiative, according to R.I. General Treasurer spokesman Evan England.

“We saw an opportunity to provide value for local banks and credit unions, which are also small businesses,” England said.

There’s no costs to the state to move the deposits, according to England.

- Advertisement -

A handful of local financial institutions have already expressed interest in the initiative, including Navigant Credit Union, People’s Credit Union, Home Loan Investment Bank and Bank Rhode Island, according to England. And while financial institutions don’t necessarily need more deposits to make more loans, the state’s money could nonetheless attract attention, as Rhode Island’s local deposit market is relatively stagnant and highly competitive. England said the state is likely to make more deposits available moving forward.

Rhode Island currently holds most of its cash with regional, national and global banks, including Citizens Bank (based in Providence), Bank of America and Santander Bank.

More details about the initiative will be made available following the announcement.

No posts to display