BASSETERRE, St. Kitts - AS the Federation and other CARICOM member states brace for the possible fallout from the Correspondent Banking Relations, Prime Minister Dr. the Hon. Timothy Harris has indicated that more robust talks would continue to be had in 2017.
Talk of the de-risking began last year, and earlier in this year a number of countries, including Belize and its financial institutions, had their Correspondent Banking Relations cut with major overseas banks.
Over the past several months, Governor of the Eastern Caribbean Central Bank, Prime Minister Harris and other officials within the Ministry of Finance had engaged a number of international agencies (including one arm of the United States Government) on the potential pits for the Caribbean region if Correspondent Banking Relations were to be withdrawn.
“We are very concerned in the region about that. There are in fact some of our banks that have been issued with notices either to have their services terminated or to have their services curtailed [and] in some cases the fees have been doubled so that persons have to pay a lot more for the same service.,” Governor Timothy Antoine said earlier this year at a press conference.
Dr. Harris, who also holds the portfolio of Minister of Finance, told SKNVibes that the issue is a work in progress as they continue to engage the relevant authorities with the hope of mitigating the impact.
Further, he said this was a problem that was imposed upon countries in the region and not one that was invented. As such, “We will continue to have conversations with them and give them the understanding of what are the real concerns. We will also continue to improve on our due diligence in the banking system.
“We will improve on bank stability and capacity to have them know their clients better and therefore minimize the risk of illicit actor participating in the system.”
Additionally, Dr. Harris pointed out that as part of the strategy going forward for the stability and growth of the Currency Union, it was agreed upon that moves would be made to amalgamate banks.
This, he opined, is because many of the financial institutions with Corresponding Banking Relations are measuring the returns, adding that if “it is to the extent that the returns from Corresponding Banking Relationships may be perceived to be inadequate, that why we would lose some of these relationships.”
He pointed to partnerships with small banks which are perceived as being more risky and may not be able to provide the adequate returns for Correspondent Banks to pull their service.
Back in May, Dr. Harris and a number of other CARICOM representatives met with officials from the Treasury Department with the hope of swaying them.
During that meeting, SKNVibes understands that a number of issues were highlighted, including the impact the loss of Correspondent Banking Relations would have on the region.
It has been pointed out that money transfers and students studying abroad could be among the hardest hit with de-risking, while other transactions could take longer than expected with costs expected to rise for such services.
Drawing reference to challenges faced by banks in neighbouring Antigua, PM Harris noted that “maybe it is time that we speed up the discussions”, as he and other leaders step up their lobbying efforts in 2017.
“We will continue in the new year with our lobbying efforts at the regional level with the US Treasury Department, with the Correspondent Banks themselves and other key stakeholders. We would in the new year further the discussions on the amalgamation of Indigenous Banks to give us benefits of scale.”
