Antigua and Barbuda Prime Minister Gaston Browne Wednesday called for the establishment of a Caribbean bank that would allow the region to counteract the position of international banks regarding corresponding banking.
Caribbean countries have been arguing that the threat by banks in developed countries to withdraw correspondent banking services would exclude the region from the global finance and trading system with grave consequences for maintenance of financial stability, economic growth, remittance flows and poverty alleviation.
Browne, who is leading the region’s response to the issue, told the Caribbean Media Corporation (CMC) that the region has been making “slow progress” on dealing with the matter.
“But at the same time there’s still a problem. The corresponding banks continue to take this policy of risk and return, so as far as they are concerned the banks in the OECS (Organistion of Eastern Caribbean States) in particular are too small and they are in essence looking to bank larger banks within the region which then forces us to consolidate to have bigger banks.
There may even be the need for us to have a Caribbean bank, that is a bank that is owned by various indigenous banks in the Caribbean and one that could have branches in the US diaspora, UK diaspora (and) Canadian diaspora in order to provide services to the Caribbean in the diaspora.”
He said such an initiative would allow for the provision of corresponding banking in the region, especially the smaller ones.
“My understanding is that there is an informal threshold about a billions US dollars, so that generally speaking, banks that have less than a billion US dollars would almost be not bankable for corresponding banking”.
The Antigua and Barbuda Prime Minister, who is here to attend the 40th meeting of Caribbean Community (CARICOM) leaders, said the irony of the entire situation is that “most of our banks, have less than one billion US in assets.
“It has been a very difficult proposition for us. However we have decided to raise the ante and to increase our advocacy because corresponding banking in essence is a public global good so I cannot be looked upon exclusively from the standpoint of risk and return because in essence if we were to do that then you would be literally de-bank certain regions and certain countries”.
Browne said the region would continue to bring greater awareness to the various stakeholders including regulators in the United States, Europe and Canada to some extent “so that they could understand it is not just about risk and return but it is really about a fundamental right.
“Every single human being should have the right to move money and to receive money. If you can’t move money and you can’t receive that money then it means that you can’t purchase goods and you can’t get paid for the services that you provide”.
In-coming CARICOM chairman and host Prime Minister Allen Chastanet, said he welcomed the idea of establishing a single Caribbean bank, adding “we have also come to the conclusion we now need to reduce that risk”.
He said a former governor of the Eastern Caribbean Central Bank (ECCB) had indicated a solution would be to have all of the indigenous banks in the region to form one bank.
He said whilst this may be a difficult proposition “what we have been talking about is to form one compliance authority,” adding “that’s the change.
“The world did not understand what compliance was before, it’s the fastest growing industry in the whole world in terms of compliance because as you ask one question it compels you to ask many more questions.
“In my humble opinion, what has happened is that we have become so intimidated by the loss of corresponding banking that our own compliance agencies have become excessive and in some times it is now reducing the size of the amount of money coming down in and out of our region.
“So by creating one compliance department that is properly manned and the indigenous banks would pay for those services on a use basis that may be a way to solve the problem …and I think Prime Minister Browne is 100 per cent right if in fact that is not moving fast enough”.
He said another way of looking at the problem of corresponding banking is to follow the Mexico model and work with the country “and use their banks to assist us”,
Prime Minister Browne said he believes the region should also consider getting together and purchase Scotiabank operations in the region.
“I thought that was an excellent opportunity for the OECS counties in particular to come together and purchase the branches,” he said noting that it would have required at least 98 million US dollars for the nine branches “with perhaps about three billion UIS dollars in assets
“I thought that was an excellent opportunity for the region which would have helped us to have one major bank that would have branches in the diaspora to provide banking services to Caribbean people in the diaspora,” Browne said.
Last November, the Trinidad-based Republic Financial Holdings Limited (RFHL) announced that it was seeking to acquire Scotiabank operations in several Caribbean countries.
Antigua and Barbuda and Guyana had initially expressed reservations about the proposed acquisition, with St. John’s indicating that it would not be issuing a vesting order to facilitate the move.
The RFHL statement said that the banks being acquired are located in Guyana, St. Maarten, Anguilla, Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.
It said that the purchase price is US$123 million, which represents US$25 million consideration for total shareholding of Scotiabank Anguilla Limited; and a premium of US$98 million over net asset value for operations in the remaining eight countries.
Antigua and Barbuda has said that it wants assurances that local banks will be given priority to purchase Scotiabank’s operations on the island and that local persons’ investments and savings will be protected.
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Even if they managed to create a central bank (highly unlikely) foreign banks are not forced to do business with them, so what happens then?.
“There may even be the need for us to have a Caribbean bank, that is a bank that is owned by various indigenous banks in the Caribbean and one that could have branches in the US diaspora, UK diaspora (and) Canadian diaspora in order to provide services to the Caribbean in the diaspora.””
What about the above statement you do not understand. Our PM who as usual is always thinking outside the box has suggested that this bank should have branches in the various diasporas thereby eliminating the use of the other international banks for corresponding services. But I guess your are more focused to oppose anything he says, whether good or bad. Just oppose for apposing sake. Good luck with that but it makes you look real dunce.
ECCB governor Timothy Antoine came up with this outside the box idea 3 years ago FTSL. See Observer article dated May 2016.
But no, once your piper days it it’s his idea and he’s thinking outside the box. The ALP is bereft of ideas and we all know it.
How about them thinking outside the box and get us running water, stable electricity and some roads.
And Lennox Weston came with that outside the box idea years before that when he was in opposition. What is your point? He use to tell Dwight Veneer that he is too lazy.
Where is your receipt. Stop making up lies and show me your proof.
First it was Gaston’s out of the box idea, now you’re presented with conflicting proof it is now Weston’s.
Stop with the lies.
After what has taken place regarding the Hurricane Irma Relief funds, why would the various diaspora trust the banks?.
The solution to this problem is to establish corresponding banking relationships with the largest banks in China and Russia. As long as the Caribbean relies on the US/EU banks, we will be at major risk. We could even establish corresponding banking with Hong Kong banks, as the Hong Kong Dollar is fixed to the USD rate, just like the ECD is.
Also, we need to focus more on cryptocurrency and the reality that it is growing very fast. Even Facebook is investing huge effort into cryptocurrency systems. What ever happened to Antigua’s new crypto law and using it for CIP?
It’s time to be creative and innovative! We need to move fast on this issue!
And you think Hong Kong or any other bank other than a USA bank can trade in US Dollars as they feel like?
I know push for reparation and use some of the money to capitalize The Bank of the Caribbean.
Brilliant idea king of Salem. Now that is what I call thinking outside the box. This should be shared on Facebook to give it traction. The Europeans can kill two birds with one reparation stone by funding a bank and University for the entire region.
Sounds like setting up a bank in America is like setting up a salt fish shop in town! Is it that simple and if so all the brilliant minds we have in the region never thought of this!
This is one of the most significant contribution of the PM to date.
Not so fast. The governor of ECCB touted this plan 3 years ago. See the link I posted in reply to the second tenor singer FTSL
In fact it was the IMF I understand that proposed the plan when they were here.
The same IMF that FTSL and the chief choir singer berate on the daily.
I humbly concede.
This is like Hiliray Clinton making the saying that we all grew up on “it takes a village to raise a child” popular.
Now most people attribute the saying to her….
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