Cuba Loses Two Important International Bank Branches

Wilfredo Cancio Isla (Café Fuerte)

HAVANA TIMES — The Banque Nacionale de Paris (BNP Paribas), France’s largest banking institution, has closed its branch in Havana following an investigation undertaken by US authorities prompted by alleged transactions in violation of the commercial bans on Cuba, Iran and Sudan.

A resolution published in Cuba’s Official Gazette, signed by the President of the Central Bank of Cuba (BCC) Ernesto Medina Villaveiran in November of last year, reported that the BNP had petitioned to cancel its operation license, in effect since 1999.

The BNP Paribas was one of the 11 foreign banks with branches on the island authorized to maintain transactions with Cuban State companies, joint-venture firms and the Central Bank of Cuba. Another important French institution, the Societe Generale, still operates under a license in Cuba.

The decision of the BNP Paribas (considered the fourth largest bank in the world) to close down its branch in Cuba has not been reported by the international press, nor have Cuba’s official media made any mention of it.

Approached by Diario las Americas, Paris spokesman Pascal Henisse refused to comment on the reasons behind the decision.

Ongoing Investigations

This past February 13, however, on announcing its annual profits, the BNP Paribas declared that it had set aside US $ 1.1 billion to pay potential fines arising from transactions with companies and citizens of countries which the United States has identified as States that sponsor terrorism. At the time, the institution revealed that its net profits for 2013 – which had been estimated at US $ 1.3 billion by experts – had fallen by 26 percent.

A communiqué issued by the French banking institution last week acknowledged the ongoing investigation undertaken by the US Department of Justice, the Office for Foreign Assets Control (OFAC) of the Treasury Department and Federal Reserve, as well as by the District Attorney’s Office in Manhattan, where the BNP Paribas US branch is based.

“We have conducted a retrospective internal review of certain payments in dollars that involve countries, people and entities that may have been the object of economic sanctions by virtue of US laws,” the communiqué issued by BNP Paribas pointed out. “We have identified a significant volume of transactions that could be considered inadmissible.”

The French bank representatives refused to identify the countries involved in the investigation, but closing down their branch in Havana is an indication that Cuba is among them.

A Door Closes

The BNP Paribas declared it was cooperating with the investigation being conducted by US authorities.

The shut-down of the Havana branch brings about yet another obstacle in the way of financial operations by the Cuban government at the international level.

“It is a financial channel that will no longer be available to Cuba and through which part of its foreign trade transactions were made,” economist Emilio Morales, president of Miami’s Havana Consulting Group commented.

Morales explained that French banks have been key in Cuba’s financial maneuvers aimed at evading embargo restrictions, particularly in connection with tobacco and rum sales in Europe.

The BNP Paribas is the second international bank based in Havana to request the closure of its branch. In October of 2013, a Central Bank resolution reported that the representative of Spain’s Banco Sabadell S.A. had requested the cancellation of its Mediterranean Savings Account license, which had been operative since 2003. The Banco Sabadell had come into possession of the Mediterranean Savings Account in 2011 as part of a restructuring process that forced the Bank of Spain to intervene.

The reasons for the closure of the Sabadell branch in Cuba were not explained.

A Financial Siege

The Cuban government has complained at different international forums about the financial siege brought about by the embargo and has even alleged that the Obama administration has stepped up the blockade.

The BNP Paribas incident is the most recent investigation into financial consortiums that have had links to Cuba and other countries blacklisted by the US State Department.

At the close of 2013, US Treasury Department officials fined the Royal Bank of Scotland (RBS) US $ 100 million for violating the sanctions imposed on Cuba, Iran, Sudan, Burma and Cuba.

In December 2012, the HSBC conglomerate had to pay some US $1.92 billion to avoid legal proceedings for alleged violations of the regulations set down by the US Banking Secrecy Act (BSA) and US sanctions currently in effect, which involved the New York branch of the banking institution for illegal transactions with clients such as Cuba.

That same year, the ING Bank agreed to pay a fine of US $619 million to skirt accusations of violating the US embargo against Cuba and the sanctions imposed on Iran, Sudan, Burma and Libya.

The JP Morgan Chase and Credit Suisse Banks have also been fined for similar reasons over the last five years.