It’s been a big week for U.S.-Cuba relations, and it’s only Wednesday.
On Monday, the Cuban Embassy opened in Washington, D.C., replacing the “Special Interest Section” that has represented the country for nearly six decades. It was the biggest step yet in the establishment of full diplomatic relations, with many observers suggesting that the significance of this development will only be eclipsed by the complete dismantling of the embargo.
But other developments have been unfolding behind the scenes. The latest just reported by Mexican newspaper La Jornada, which indicated that Florida-based bank Stonegate has entered into an agreement with Cuban bank, BICSA (Banco Internacional de Comercio S.A.).
Behind the scenes agreements
Stonegate, which isn’t exactly a household name in the U.S., gained a considerably higher profile in May, after announcing that it had been named the bank of record for Cuba’s government offices, including the Embassy, in the United States.
The story of how Stonegate gained such sudden prominence is an interesting one, reported by The Orlando Sun-Sentinel in this May article. The U.S. Department of State had been working diligently to find a bank for the Cuban Special Interest Section, lacking a bank since 2014.
It contacted large and small banks, none willing to jump through hoops or take on the risks they assumed would come along with providing banking services for a Cuban entity.
Initially, Stonegate’s CEO, Dave Seleski, wasn’t sure he wanted to take on that risk either, but after researching the issue and discussing it with the board of directors, Seleski decided the bank should go ahead, concluding that their decision was “on the right side of history.”
Stonegate, which is a community bank with just 21 branches in Florida and about $2.6 billion in assets, is now poised to dominate the nascent market.
“Crucial next step,”
The agreement between Stonegate and BICSA is being viewed by analysts as a crucial next step in jump-starting financial relations between the two countries.
Other players, large and small, are sure to follow, using the successful negotiation of the Stonegate-BICSA partnership as an example to accelerate their own agendas, which, in some ways, have been stuttering along over the past few months.
A representative for MasterCard, for instance, says, “We removed our network block on U.S.-issued cards being used in Cuba as of March 1,” but he acknowledges that the company leaves the “final decision to each card issuer whether its cardholders will be allowed to use their cards on the island.”
So far, there have been no reports of any card issuer permitting MasterCard use in Cuba.
Furthermore, MasterCard-carrying visitors would be hard-pressed to find a retailer or vendor with the software and point-of-sale hardware needed to process the cards.
But perhaps this historic banking agreement will be seen as a vote of confidence that will move financial relations forward.