PM Barrow Seeks Solution to Banking Sector Woes

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Updated: January 12, 2016

In May 2015 the Bank of America had severed ties with Belize Bank Limited thus creating a void and some serious inconveniences for importers, business persons and the public in general who conduct overseas transactions.  It is a serious issue and as was mentioned by CARICOM’s Secretary General, Irwin LaRocque, Belize is not the only country facing those issues but it is indeed the one being hardest hit.  Prime Minister Dean Barrow spoke on the issue today with the media and says that he is working on resolving the matter and meetings are being arranged in the US.

“Prime Minister Dean Barrow: “There is Scotia, Atlantic; there is clearly a problem still with Belize Bank and Heritage and I believe Choice Bank is looking at some difficulties. Choice as I understand it is international offshore and while that is worrying it is not quite as worrying as when the domestic banks are facing these problems. I’ve met with the US ambassador, with the US ambassador in Washington and he is trying to secure me appointments with the State Departments and the US Treasury, with the World Bank, with the Fund, with two regulators the FDIC and the Office of the Controller of Currency. One of our difficulties is that apart from the tier one banks smaller banks, community banks, state banks in the case of credit card settlements it’s a community bank that had agreed to do that for Belize Bank and for Heritage after the corresponding banking relationship was cut off by Bank of America. That bank has now indicated that by the middle of next month it is looking to discontinue even that sort of less comprehensive relationship. So even the question of the credit card settlements is now in some jeopardy. That is one of the reasons why I want to talk to both FDIC and the Office of the Controller of the Currency because those are the regulatory agencies for the state banks and for the small community banks.”

Prime Minister while this is cause for concern, we are not in crisis mode just yet.

Prime Minister Dean Barrow: “It is potentially a crisis, in fact I don’t want to overstate things but if we don’t find a solution one way or another it is going to be a huge crisis. We are not there yet, I hope that my visit to Washington will pay some dividends although when I had raised it with the President and he had expressed his willingness to try and have the US help us find a solution nothing has happened but look both the Belize Bank and Heritage are in continuing talks with various overseas banks, they are going further out field not just now looking at US banks. I think Heritage at one point was in a relationship with a bank out of Turkey they are now in a relationship with a bank out of New Zealand so there are those options not perhaps ideal but as long as they can take advantage of relationships with smaller banks internationally we are okay. What has happened though certainly in one case a small international bank, the bank from Turkey, engaged in a relationship with Heritage but then after a while said that they could not continue and it is our fear that because all those banks in turn have to deal with the US that the pressure ultimately continues to come from the US not necessarily from the US public sector, or from the treasury but from the big commercial banks who in turn say that “we do what we do because of the regulatory burden that the public sector places on us.” that’s what the tier one banks say. So there are all sorts of moving parts, it is still extremely fluid. As of now we are in a place that we don’t want to be but as I said it’s not game over quite yet and the individual banks are doing all they can to ensure that there are new relationships taking place of the old ones and government now is going to step up the official effort to try to get some kind of progress out of US regulators, out of the US public sector and out of the US tier one banks.”

As we mentioned, Secretary General LaRocque did speak on the matter and pledged that CARICOM will be lending support in trying to resolve the matter.  Prime Minister Barrow says he and the Sec Gen did have a discussion on the issue.

Prime Minister Dean Barrow: “I spoke to you after he and I had met and I had made plain that I expect that we will feature the question of corresponding banking relationships very prominently on the agenda for the summit that is going to be held in Placencia next month. I did get an update from him as to other jurisdictions that are also being affected and it is quite true that I think in the smaller jurisdictions in the Eastern Caribbean they are having their difficulties but it is my sense that the problem is nowhere near as pronounced in the Eastern Caribbean as it is in Belize. Perhaps even though they are small they have more domestic banks than we do and so if one is in trouble other are able to fill the gap, I don’t know the details I will find out when my colleagues come to Belize next month but no doubt at all that we are absolutely facing what is an existential threat and I am determined as are the individual banks in this country to ensure that we do everything that we possibly can and that we continue to go at this thing from every conceivable angle until we can find lasting solution.”

The severing of ties with Belize Bank and the other local banks means that the bank’s customers will not be able to conduct international banking through those institutions.