The Bank of Albuquerque will be the custodian of more than $380 million in deposits from about 1,400 insurance companies doing business in New Mexico.
The bank has been awarded a one-year contract, beginning July 1, to oversee the deposits, the state Public Regulation Commission said.
The deposits help ensure insurance companies can pay creditors and policyholders.
The bank will be paid an annual custodial fee of 0.165 percent of all deposits, or about $650,000 a year, under the contract with the commission’s Insurance Division.
The current contract is held by Santa Fe-based Century Bank.
The Insurance Division had changed the Century Bank contract in 2005 to allow the bank to charge higher fees than allowed by state rules.
The division later changed the contract to comply with the rules.
At one point, Century Bank was receiving an annual fee of 0.25 percent, or more than $900,000 a year. The rate was reduced to 0.2 percent, and Century Bank later refunded some $180,000 in excess fees.
Under this commission, the ‘backdoor’ to the Insurance Division is now closed,” said Jason Marks, commission vice chairman.
The Century Bank contract also proved controversial because the bank gave nearly $130,000 over three years to Con Alma Health Foundation Inc.
Con Alma is a nonprofit organization that former state Superintendent of Insurance Eric Serna helped found. Serna resigned last year as Con Alma’s board president and retired from his state job.
The state attorney general’s office is still investigating Serna, a spokesman said.
The Bank of Albuquerque submitted the lowest bid for the contract, beating out Century Bank and Wells Fargo.
An evaluation committee consisting of representatives of the commission and the state treasurer’s office recommended that state Treasurer James Lewis award the new contract to Bank of Albuquerque.
“I am satisfied the selection process for the custodial bank was open, fully competitive and transparent to the citizens of New Mexico and the insurance industry,” Lewis said.
Ben R. Lujan, commission chairman, said the commission and the treasurer’s office are working to “strengthen the integrity of the Insurance Division and to restore public faith in the bidding process.”
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