By George Alleyne
CIBC FirstCaribbean is selling
its majority shares to a
Latin American and European
conglomerate, and this pending
multi-million-dollar transaction
has Barbadian banking
and finance university lecturer,
Jeremy Stephen, speculating
that it may be good news for
the region.
Stephen thinks that with the
transfer of 66.73 percent of the
Canadian-owned bank to GNB
Financial Group Ltd, a wholly
owned subsidiary of Europebased
Starmites Corporation
S.ar.L, of the Gilinski Group,
could end the chokehold American
banks have in their financial
correspondent relationship
with the region.
The Gilinski Group has banking
operations in Colombia,
Peru, Paraguay, Panama, and
Cayman Islands with approximately
$15 billion in combined
assets, and Stephen said that
should the Gilinski Group
choose to place the FirstCaribbean
assets under one of the
south or central American territories,
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or Europe then the
regulatory standards would
give it more room than the
strict compliance regime of
Canada, FirstCaribbean’s current
head office.
“Wherever the head office
is, in Colombia or Europe,
wouldn’t have the same burden
in terms of reporting standards
and risk measures that the
Canadian would have to take
on. So maybe the bank would
be willing to take on a bit more
risk.”
Operating in 16 regional
territories from Trinidad and
Tobago in the south to Turks
and Caicos Islands in the north,
FirstCaribbean is one of the
premier banks through which
Caribbean persons and businesses
conduct international
financial transactions.
But in what is commonly
referred to as ‘de-risking’, large
banks mainly in the US have
been closing their correspondent
relationship with regional
finance houses, making it difficult
for people in the region to
perform international money
transactions ranging from
sending cash to relatives or
friends, to purchasing goods
and services.
This de-risking was prompted
by the US’ introduction of
large fines on banks that conduct
money laundering, financing
of terrorism or other suspicious
financial activities.
As a Canadian concern,
FirstCaribbean is governed by
that country’s financial practices
which are consistent with
that of the US.
Most correspondent banks
have deemed financial transactions
with the Caribbean too
small to expend their resources
on verifying sources of money
sent out or into the region. So
they eliminated risks of large
fines from US authorities by
ending relationships with local
banks.
Bloomberg, the global business
and financial data producer,
quoted a banking expert
saying the FirstCaribbean sale
University lecturer, Jeremy Stephen. Photo by George Alleyne
as, ‘positive’ from a risk standpoint,
“the only time we hear
about the Caribbean is when
there’s a problem.”
Caribbean Community
(CARICOM) chairman and St.
Kitts and Nevis, Prime Minister
Dr. Timothy Harris, said
recently, “the practice de-risking
has a harmful effect on the
flow of remittances from those
living and working abroad to
their loved ones and business
associates at home who rely on
this source of funds to provide
for their sustenance,”
Bank sale may ease
Caribbean de-risking woes
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