European bank to replace Bank of America as correspondent bank

Last Updated on Friday, 15 July 2016, 11:19 by Denis Chabrol

by Gary Eleazar

A European Bank has been identified to fill the void in the local financial system following the announcement of a pullout by Bank of America.

This was confirmed by Bank of Guyana Governor (BoG), Dr Gobind Ganga  who, during an exclusive interview with Demerara Waves Online News on Friday, said all of the necessary due diligence measures between the parties have been completed.

The Guyana Association of Bankers (GAB) did not immediately respond to questions posed several days ago.

The European Bank–which he declined to name at this point–will commence servicing indigenous banks from next month. Demerara Waves Online News has been reliably informed that the United Kingdom-based Crown Agents Bank which serves small and medium-sized companies.

Bank of America announced that it is severing ties with indigenous banks in Guyana, as part of its de-risking attempts, in the wake of Anti Money Laundering and Countering the Financing of Terrorism (AML/CFT) concerns globally.

Dr Ganga told Demerara Waves that the decision by Bank of America extended to all of three of the Indigenous Banks in Guyana but will no longer take effect in October since it has been extended to November.

He said that the entrance of a new banking relationship for Indigenous Banks, should not affect customers in relation to the fees paid for services provided.

“I don’t think its going to be more than what we are paying now…banks are different though, banks are different, we are hoping things won’t be more expensive in terms of transaction fees.”

The BoG Governor reminded that as a result of the upgraded financial regimes across the world taking into account AML/CFT concerns, banking customers generally were subjected to “more paperwork.”

Dr Ganga said the European Bank that will replace Bank of America will also have to adhere to various regulatory regimes and as such not much is expected to change.

Reiterating the soundness of the Guyanese banking system, Dr Ganga said that the announcement by Bank of America saw a number of North American and European Banks indicating their interest to fill the void.

“They see profit and they see that we are safe,” Dr Ganga said in reference to the overseas Banks that had approached Guyana.

The BoG Governor explained that the de-risking measure was only being implemented in the United States.

He said Canadian and European Banks are not taking such measures and are in fact keen on doing business in Guyana.

Caribbean Community (Caricom) leaders ended their annual summit in Guyana earlier this month vowing to mount a stiff lobby to the United States to urge them not to have American banks shut down their correspondent banking relations with their counterparts in the region.