7 News Belize

Belize Bank Loses Correspondent Bank Relationship With Bank of America
posted (April 22, 2015)

The Belize Bank is Belize's largest bank – controlling about half of the banking sector, and it's Belize's largest domestic lender – but tonight the bank is preparing for a significant change in operations. That's because as of April 30th., it will lose its correspondent banking relationship with the Bank of America. This means that the bank will no longer be able to do international banking transactions such as wire transfers to or from the US. Importantly, it will still be able to do credit card business as usual.

We spoke with Lyndon Guiseppi, the CEO for BCB Holdings and he told us that the vast majority of the Bank's clients - more than 90% - will not be affected by this. He called it "a manageable phenomenon" and says that the bank is "transitioning smoothly" by reaching out to all its clients who use these services to give them a list of alternatives. He said those customers who need to send a wire can do it through the Central Bank or other commercial banks. Guiseppi said the bank does not anticipate "a major fallout or major impact on day to day operations" and typical clients who go to the bank to deposit, withdraw, borrow or pay on credit cards will experience nothing different. He stressed that it is not a liquidity problem but a regulatory issue coming form the United States. When we asked if the bank will shrink as a consequence of this, Guiseppi said his bank is "still able to do the largest loans in Belize and can still generate foreign exchange through its credit card business."

In the Corozal Free Zone, however, it's not that simple; the bank has taken the decision to move out of the zone completely based on a risk audit.

So does it have implications for the wider banking system? Well, we spoke with the governor of the Central Bank of Belize, Glenford Ysaguirre who told us, quote, "there should be no alarm at the local level…and should it should have no damaging effect on the wider economy, and other domestic banks are not at risk". He added that those other banks are prepared to take up the slack.

He explained that the de-risking by the Bank of America is "not an issue with the jurisdiction of Belize," and that "the Bank of America makes its decisions and analysis based on individual institutions and their business model." He noted that "several banks across the Caribbean are suffering the same fate and it is mostly the indigenous banks."

Ysaguirre pointed to the Holy Redeemer Credit Union which is larger than a few banks – and pointed out that they have never had a correspondent banking relationship – and it doesn't affect their volume of business.

Of course, that would hardly be satisfactory to the very corporate Belize Bank – and Guiseppi told us that he is working very hard to establish another correspondent banking relationship – and he hopes to do so within three months.

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