A South Florida bank has become the first from the United States to sign a correspondent banking relationship in Cuba, a potential boost for U.S.-Cuban commerce following newly restored diplomatic relations between the longtime adversaries.
Stonegate Bank, which earlier this year became the Cuban government’s bank for its diplomatic mission in the United States, signed a deal with Cuba’s Banco Internacional de Comercio S.A. on Tuesday, a day after the United States and Cuba re-established diplomatic ties that had been severed for 54 years.
The Cuban bank, known as BICSA, has more than 600 correspondent relationships in the world and is audited annually by Ernst & Young, Stonegate said in a statement on Wednesday.
“This is another step in terms of normalizing commercial relations between the U.S. and Cuba. The ability to move money easily between the two countries will only increase trade and benefit American companies wishing to do business in Cuba,” Stonegate Chief Executive David Seleski said in the statement.
Although most U.S. trade with Cuba is banned under an economic embargo dating to the Cold War, there have been some exceptions such as food and medicine sales.
U.S. President Barack Obama further relaxed parts of the embargo in January as part of his policy of engagement with the Communist-governed island, allowing U.S. financial services and telecommunications limited operations in Cuba while authorizing greater purchases from self-employed Cuban exporters.
So far Cuban authorities have not announced granting permission to any U.S. companies to operate in Cuba, nor did they comment on the Stonegate-BICSA agreement.
Obama’s executive action allowed U.S. financial institutions like Stonegate to open correspondent accounts in Cuba. It also allowed U.S. credit card and debit transactions, but those have yet to receive Cuban authorization and U.S. cardholders still have no option but to use cash.
“This qualifies as a big deal because the agreement must be authorized by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury and the Federal Deposit Insurance Corporation (FDIC),” John Kavulich, president of the U.S.-Cuba Trade and Economic Council, said in a statement.
The deal affirms that Cuba’s financial governance “may be trusted, a substantial marketing benefit to the country,” Kavulich said.
Stonegate Bank reports $2.27 billion in assets and $1.93 billion in deposits.