Derisking is Minor Setback to Belize’s Banking Sector

Dean Barrow

The Prime Minister took on a number of issues this morning at a press conference that started at ten and continued until about twelve-twenty. P.M. Dean Barrow spoke on a myriad of national issues that have been on the headlines for days. There is the Petrocaribe Loan Act, which has become one of the most contentious pieces of legislation passed in the House of Representatives, against which opposition has ballooned and the Stake Bank Project, both were discussed in detail. But it is the issue of the so called “derisking” that was the first order of business at the press conference, which the PM said he had discussed with the Bank of America executives on his trip earlier this week to Miami.  Barrow set the stage of what is happening globally.

Prime Minister Dean Barrow

“There is no doubt that a global phenomenon has been developing whereby the large U.S. and European banks that provide correspondent banking services to our small jurisdictions have been engaging in a policy of so-called derisking.  Because there is so much international regulation and so much international scrutiny to which these banks have objected they are finding it difficult to continue to provide the correspondent banking services to our small jurisdiction because if anything goes wrong with respect to any of the correspondent banks, any transactions take place that is later seen to be a violation of U.S. or European regulations, the large correspondent banks in the States and in Europe pay some extremely large fines.  It is in that context that they say it hardly makes sense for the not very huge sums of moneys they make in consequence of their corresponding banking relationships with the banks in our jurisdiction.  They say, to some extent, it’s not worth it when they do their cost-benefit analysis. In the normal course, the regular, everyday customer of the bank is not too concerned about that but businesspeople who have to keep making remittances to their suppliers in the States or in Europe absolutely need and depend on their ability to send money through the local banks to those suppliers, and in order to do that their must be a correspondent bank at the other end.  So you will understand why this correspondent banking relationship is so absolutely important.”