A new report by the International Monetary Fund (IMF) indicates that Belize’s Central Bank has lost another correspondent banking account, suggesting it may have been due to offering nesting services; however, the Central Bank has responded denying the claim, saying it will seek clarification from the IMF.
The IMF’s latest report on the issue of correspondent banking relations (CBRs) dated March, 2017 and titled “Recent trends in Correspondent Banking Relationships” details Belize’s troubles with the “de-risking” phenomenon between 2015 and 2016, noting that major global banks terminated around 22 CBR accounts (out of 31) in 9 of Belize’s 11 commercial and off-shore banks. “The Central Bank of Belize had also lost three of its five CBRs in the same period, including one that was used to process selected wires for banks that lost CBRs. As a result, transaction costs and processing times had increased substantially,” the IMF report said.
The Central Bank, however, in responding to questions from The Reporter on the matter late Thursday said: “The Central Bank has not lost any CBRs since the loss of the two CBRs mentioned in the July IMF report that you referenced. These were Commerzbank in August 2015 and Citibank in June 2016. The IMF may be referring to loss of an account with Morgan Stanley in March 2015, which was used solely for foreign reserve investments. Morgan Stanley does not provide correspondent banking services.”
The Central Bank also said it is seeking clarification from the IMF regarding its report.
In July 2015, after local banks first reported experiencing difficulties as a result of de-risking, the Central Bank began offering “nesting” services to banks which had already lost CBRs. Experts, however, had shared with the Reporter, fears that the Central Bank would also experience de-risking for offering the service. Nesting is described as one financial institution using its own CBR to provide wiring and other services to a bank that had already had its CBRs terminated. Last July it was reported that CitiGroup had terminated its CBR with the Central Bank. If the Central Bank were to lose all its remaining CBRs, Belize would be virtually cut off from the global financial market.
The Reporter tried reaching Central Bank Governor Joy Grant for comment but was told she is out of the country. The Reporter also tried to reach Financial Secretary Joseph Waight and Prime Minister Dean Barrow for comment; however, we didn’t receive a response to either request.