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Regional leaders say de-risking poses economic threat to the region

Belize is not unique to the de-risking movements taking place with correspondent banking. With representatives present in Placencia for the Inter-sessional meeting of the Heads of Government of CARICOM, we were able to hear from other member states on how they are being affected.

Renee Trujillo reporting…

“The last few weeks have seen the local banking sector headlining the new casts as the US banks undergo the de risking movements in the area of correspondent banking. While we have looked at the possible implications for Belize and while the country’s Prime Minister has made moves to try and mitigate the problem the 15 member states of the Caribbean Community are also discussing the issue as most of them are also being affected by the de risking phenomenon. As the 27th intercessional meeting of the heads of Government of CARICOM got underway with their meetings this morning, the secretary general Ambassador Irwin LaRocque spoke on the general situation in the CARICOM region.”

Ambassador Irwin LaRocque

“We’ve seen just about every single member state is impacted. I believe the one from what I heard yesterday that is the most severely impacted is Montserrat, our smallest member but none the less with having had two banks operating there, one has given notice and so if the other pulls out there will be no corresponding relationship with Montserrat which could really impact negatively on the economy. As we know Belize, Antigua and a whole host of other countries are similarly impacting. We know that Prime Minister Dean Barrow was in Washington two weeks ago and met with the authorities and I’m sure he will also be informing his colleagues here on what transpired there.”

Renee Trujillo

“The issues surrounding correspondent banking have not only been affecting countries individually but rather collectively. For example in Grenada while they have not been impacted directly the situation in Belize has created challenges for them as explained by Ambassador Dr.Patrick Antwan who is in Placencia as the CARICOM ambassador for Grenada.

Ambassador Dr. Patrick Antwan

“In Grenada we have not been as directly impacted through the banks as yet because we’ve already had some bank consolidation take place before that. What’s happening though is that increasingly a number of our clients are being essentially D listed. A number of them are having their transactions stopped and it’s affecting tremendously; cross border trade, real estate, investments and in other such services. Because I also carry responsibility at the OECS level for a number of the other countries the most severely impacted country most people will not know is Montserrat. Montserrat has two banks. One of them has received notification that they are going to be delisted which leaves only one and the fate of that one is tenuous. What we are looking at is a very real prospect that a country like Montserrat can be totally delinked, have no relationship in terms of getting financial transactions processed going out or coming in. That is a tremendously difficult place for a country to find itself. Grenada has been impacted directly from transactions coming through Belize and until this happens you don’t appreciate the fact that the financial mesh in global finance is so heavily integrated and that has also led to a number of transactions in Grenada that couldn’t go through not because clients didn’t have funds, not because there is no interest on a contract but just because you couldn’t get the funds out of your financial system into other banks. We are in a very dangerous place in CARICOM and I think this certainly calls for us to wrap our heads around this in terms of concerted action. The approach that Belize took tells us that going it alone is not necessarily the route but it also tells us something else. What we need to do is to put the question to the United States and the onus on the United States to tell us what regulations we’ve transgressed or what regulations we appear that we are going to transgress and they have an obligation to tell us. How are they purporting that these limitations are cured and I think that is one of the things that we need to do. Not just at the federal level but it’s also at the level of the regulators but the federal government has a responsibility also deal with its regulators so it can’t be just us talking at different levels of the US system, we have to be talking at the federal level, the operational level with regulators and banks and I’ve certainly learnt a lot from that. So going into the next phase which is really in Jamaica we really need to wrap our heads around a comprehensive strategy that really calls out the United States and the regulators on some of these matters.

Renee Trujillo

“Meanwhile in St. Lucia Ambassador June Sumor spoke of how they are affected particularly because of the common currency in the OECS. Sumor added that a harmonized approach on the matter has been decided on.”

Ambassador June Sumor

“Because we have a  common currency in the OECS it’s also affecting us because it it’s affecting Montserrat it’s affecting us in St.Lucia plus the fact that we have a number of indigenous banks in St.Lucia so the issue of correspondent banks is something that we are looking at very seriously. We have been trying to do it as individual territories and coming out of the task force that you spoke about the main recommendation was for us to take a harmonized approach and as we speak to the US and Canada and the UK we are going with one set of decisions and one view as a Caribbean people.”

Renee Trujillo

“Secretary General La Roque says that since last year the Caribbean Community has begun taking action and the works will continue. He added that following these meetings a more definitive approach and plan of action will be disclosed.”

Ambassador Irwin La Roque

“We started taking action since last year. When heads of government met in the Bahamas last February the matter was raised. We immediately made contact with the US government, when we met with President Obama in April that matter was discussed and it has been raised subsequently in different areas. More recently the Prime Minister has been up to Washington and we must continue that they march on Washington but it has to be both at the political and at the technical level. The meeting will be making some very specific recommendations to the heads of government on a course of action and I believe once the heads have considered them we can then determine how we can go forward. I don’t think I’m at liberty to disclose them now because it has to be presented to the heads first but very a very concrete plan of action of how we go forward.

Renee Trujillo

“As mentioned earlier Montserrat is the most affected member state in the Caribbean Community. Montserrat is the smallest member state with only one bank left on the island that still retains correspondent banking.”