BELIZE CITY, Thurs. July 30, 2015–Two banks in Belize—one domestic bank and another which holds a license under the International Banking Act—are scurrying to put alternative measures in place for correspondent banking relations, which enable them to conduct foreign money transfers and clear overseas payments, after receiving warning that their correspondent banking relationship with Bank of America, the second largest bank in the US, could soon be cut off.
We saw a notice from the international bank based in Belize City which says that the correspondent banking relationship with Bank of America will be severed as of this Friday, July 31, 2015. The notice said that, “…a few of our banking services such as wire transfers, USD bank drafts and foreign currency will be affected.”
While the bank said that it is working on several alternate arrangements for correspondent banking, it notifies customers that, “…we will not be able to facilitate any foreign currency wire transfers or USD bank drafts until further notice.”
In April, Bank of America severed its correspondent banking relations with Belize’s largest domestic bank – the Belize Bank, both its domestic and international institutions, on the claim that there was a business model mismatch.
Prime Minister and Minister of Finance Dean Barrow flew to the US in April, in an attempt to avert the situation with the Belize Bank and also to clarify the status of the other domestic banks—to no avail. He led a delegation which included the Government’s Economic Advisor, Mark Espat, and Central Bank Governor Glenford Ysaguirre to Miami, where they met with Bank of America reps.
Prime Minister Barrow had relayed in a subsequent press conference that Bank of America had given its assurance it was not taking measures against any other domestic bank in Belize.
According to Barrow, the Bank of America had also agreed that it would deepen its relations with the Central Bank of Belize so that, if at any time in the future, there were to be any looming sign of trouble with respect to its relations with any other bank in Belize, there would be better communication about the situation. He had also said that the Bank of America undertook to work towards ensuring that current relations with the banks in Belize will be preserved.
Ysaguirre has now informed us that two other local banks have since indicated that their existing Bank of America relationship is under review, and so they are looking at putting alternative arrangements in place to continue to operate for the time being.
“These same banks are well advanced in the process of establishing new relationships which they expect to be in place at or before the current relationships in question are terminated,” Ysaguirre informed, in response to our query.
“The situation remains very fluid as the large US banks continue to de-risk, and therefore, all banks in Belize have been very active seeking new relationships with more receptive but smaller mid-size institutions,” the Governor added.
Ysaguirre said that customers of the bank have been kept informed, where necessary, and the financial institutions would prefer not to make any formal public announcements that could negatively impact their current and future business prospects.
“These banks anticipate that the problem will be resolved with no loss or interruption of services to their customers,” Ysaguirre said.
He added that the Central Bank continues to work closely with the industry in their quest for new relationships.