Trade Finance Drawing Latin Banks to Florida
A growing number of Latin American and Caribbean banks are moving to Florida to provide the trade finance U.S. banks have spurned.
Since the start of the year, the state banking division has approved licenses for one Mexican and two Jamaican bank and received applications from eight more Latin or Caribbean banks.
Last year, 13 foreign banks, the majority of them from Latin America or the Caribbean, applied for licenses in Florida and 10 were approved.
"Foreign banks, especially Latin American banks, see this as market opportunity," said Wilbert Bascom, chief of the Bureau of International Banking at the Florida Banking Department in Tallahassee. "U.S. banks are not really interested in trade finance."
The Latin and Caribbean banks that have arrived join a long roster of better-known European banks and hardly rank as giants on the international banking scene.
But state banking officials say they play a critical role in recycling flight capital from Latin America by taking nonresident deposits and using them to finance trade with their home countries.
More than half of some $9 billion in commodity exports from Florida to Latin America were financed by Latin American banks in Florida, officials estimate. In some instances, Latin American banks are the only ones willing to step forward and provide trade financing, they say.
Banco International de Costa Rica S.A., a consortium bank based in Panama, for example, finances about 90% of the trade with Costa Rica.
Banco del Pichincha C.A., based in Quito, Ecuador, finances much of the trade with that country, while Banco Mercantil finances a large portion of trade with Venezuela.
Banks from Brazil play an equally importantly role, officials say.
The three banks approved so far this year are Jamaica Citizens Bank Ltd., Eagle Merchant Bank of Jamaica Ltd., and Banco Nacional de Mexico.
The influx of small to medium-sized foreign banks, bankers say, it turning Miami into a financial center for Latin America and the Caribbean.
"Miami is the banking capital of the Caribbean, Central and South America," says Paul Chen-Young, chairman and chief executive of the $87 million asset-Eagle Merchant Bank of Jamaica, which opened its representative office in Miami in August.
"Opening an office in Miami positions us to establish bridgeheads in New York, Toronto, and London," he added.
"Miami is becoming to Latin America what Hong Kong is to Southeast Asia and what Beirut used to be for the Middle East," says Robert Paul, a partner in the Miami-based law firm Paul, Landy, Beiley, and Harper, which assists foreign banks to obtain Florida licenses.
Experts add that trade finance may only be a stepping stone for foreign banks toward a broader range of banking operations.