Colorado and Switzerland soon could have more than ski resorts in common. With the expected opening of an offshore depository in Denver this spring, Colorado too may become a safe haven for rich foreigners.
State regulators last month gave conditional approval for what would be the countrys second offshore depository: First Colorado Depository Corp.
This is a $5.6 trillion industry, but the U.S. has no presence, said Pierre Boisse, chief executive officer and co-founder of First Colorado, which will target nonresident aliens. If we hear Mr. Greenspan and President Bush correctly, it is important to bring foreign investment to the U.S.
First Colorado is the first institution of its kind to receive approval since Colorado passed a law two years ago creating a foreign depository charter. Montana is the only other state with a similar law, but in the four years since its passage regulators have not granted any charters.
The first foreign depository chartered in the United States was Glacier International Depository Ltd., which got approval in January 2000 to open on the Blackfeet reservation in Browning, Mont. The state has no jurisdiction over Glacier.
Colorado got into the act when State Sen. David T. Owen read about Montanas law in a magazine and decided to write Colorados own version of the statute. He said Colorados economy is more vibrant than Montanas and that offering a place for foreign capital is an excellent way to bring in revenues without worsening the states population explosion.
You get the money for investment without the people, except for ski season, when they come to visit their money, Sen. Owen said.
First Colorados founders are also betting that the state will attract more international money than Montana. Mr. Boisse pointed out that ski resorts such as Vail and Aspen, not to mention the Denver Broncos victories in the 1998 and 1999 Super Bowls, have brought the state worldwide recognition.
If were talking to international investors, everyone knows about Colorado, he said.
Under the law passed in 1999, the Colorado treasury would receive annual fees from the offshore institutions equal to 1.5% of assets. A bill intended to stimulate activity by lowering the fees to 0.5% was passed by the state Senate on Feb. 16 and is now under consideration in the House.
To be eligible for a charter, First Colorado had to agree to certain conditions, said Richard J. Fulkerson, commissioner of the Colorado division of banking. For instance, it must accept deposits from nonresident aliens only, set a $200,000 deposit minimum, and undergo periodic exams meant to prevent money laundering.
Also, First Colorado needs at least $4 million of capital to open and cannot fall below $2 million.
First Colorado has capital commitments from its board member that will exceed those requirements, Mr. Boisse said. He added that the deposit minimum will be $1 million and that the company will have its own investigating firm to ensure all deposits are reputable.
Organizers and regulators are quick to point out that First Colorado is not a bank.
The biggest single difference is we are prohibited from lending money, issuing credit cards, or anything in the lending arena, said Robert L. Inman, its chief operating officer and other co-founder. We really act much as a registered investment advisory firm.
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