Barbados Raises 'Bank De-Risking' Woes With IMF, WB
by Mike Godfrey, Lowtax.net, Washington
20 October, 2016
A Barbados delegation, which included its Minister of Finance and Central Bank Governor, highlighted the island's concerns over bank de-risking at meetings with the International Monetary Fund and World Bank.
"De-risking" refers to the recent practice of leading international commercial banks to withdraw relationships with financial institutions in certain countries to reduce regulatory risk. Caribbean territories have been impacted in particular. De-risking has involved the sale of subsidiaries, banks ceasing to provide some types of banking services, and the closure of client accounts.
The practice of de-risking is in response to fines some banks have been subject to; the risk of potential damage to a bank's reputation; the volume of information banks are obliged to collect from every customer; and the additional capital they are required to hold, to comply with international regulations.
Barbados noted that the "de-risking" problem is still growing, and said the measures that have been suggested so far have done little to mitigate the potential damage Caribbean banks might suffer. Studies are underway to explore the full impact of the issue, and the implications for international finance and access to financial services.
Follow-up discussions will be held with international financial institutions, including the International Monetary Fund, the World Bank, and the Financial Stability Board.
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