Chairperson’ s Message
We take pride in welcoming you to another edition of Caribbean Account, and hope that this edition serves as a source of critical information to Members and helps to provide some strategic perspectives on the current financial environment.
The survival of our financial industry and, by extension, the economies of our region, is constantly being challenged by internal and external shocks, but I am confident that the resilience of our Caribbean Spirit will provide us with the necessary insights and strength to remain afloat. However, given our current realities, we must call upon CARICOM to provide technical assistance and institutional support for the adoption and implementation of a more harmonised legislative and regulatory framework to facilitate the effective functioning of the regional financial industry.
This is an opportune time to redefine our strategies so that we can better reposition our organisations and, become more viable in facilitating the region’ s development and growth potential. Consequently, the theme of this edition and conference-“ Caribbean Banking: Fresh Tools, New Thinking”- is therefore very appropriate and timely.
Economic Outlook: Global economic growth remains sluggish in 2016, with only a modest increase expected in 2017. The International Monetary Fund( IMF) in its October, 2016 review, revised global growth downwards to 3.1 % for 2016-2017. This downward revision was reflected in the projections for many advanced economies. The UK is projected to grow by 1.8 % from 1.9 %, the European Union by 1.7 % from 1.5 %, and the USA by 1.6 % from 2.4 %.
The Economic Commission for Latin America and the Caribbean( ECLAC) has revised its economic growth projections for the Region for 2016 and now expects an average contraction of-0.9% for Latin America and the Caribbean this year. However, economic activity is expected to pick up in 2017 with average growth of 1.5 %, driven by expectations of more favorable global conditions than in 2015 and 2016. Prices for commodities in 2017 will show gains over average 2016 levels, and growth is expected to be stronger in the economies of the region’ s trading partners.
The immediate effect of Britain’ s exit from the Union on the terms of trade and the financial industry of Caribbean region is not immediately apparent, however there are pressing concerns on whether Britain may want to renegotiate the terms of the European Partnership Agreement( EPA), and also the effect that the Pound’ s devaluation will have on regional exports and Tourism.
Additionally, a new Donald Trump presidency may have differing overwhelming effects on Regional economies, in so far as Republicans have articulated their concerns over the off-shoring of US company operations to foreign countries. We note further that many of our Caribbean countries, the Tourism Industry depends profoundly on visitors from the United States of America.
Correspondent Banking: This year we saw an escalation of the incidence of de-risking and, consequently, the CAB gave priority to advocacy efforts. A survey on correspondent banking conducted by the CAB in October 2016, indicated that 55 % of our members had lost at least one correspondent banking relationship. Determined that the CAB add its voice to the ongoing discussions and probable solutions to the issue, the Association ensured that we actively participated in key stakeholder meetings and conferences convened on the issue of de-risking.
To this end, we participated in related meetings and conferences hosted by the World Bank / ACAMS, CARICOM, International Monetary Fund( IMF), Financial Action Task Force( FATF), Caribbean-Central America Action( CCAA) etc. A number of recommendations proposed by the CAB were accepted as part of the conclusions of these meetings. Additionally, emerging from a CEO’ s forum held in April to discuss the issue, a six-member correspondent banking committee was formed to enable greater focus on the issue.
In order to strengthen our advocacy efforts and foster regional and national collaboration, the CAB has begun the process of formalising its relationship with regional bankers’ associations. While we are cognisant that international regulators cannot dictate correspondent banks business strategy, we believe that they can influence the decisions of correspondent banks in relation to de-risking.
In that regard, the CAB is indeed pleased that the Office of the Comptroller of the Currency( OCC) in their October 2016 Bulletin to US Correspondent banks, indicated the processes which should be adopted before closing a respondent bank’ s
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