Opportunity, Caution Seen For U.S. Banks As Cuba Rules Ease

Opportunity, Caution Seen For U.S. Banks As Cuba Rules Ease
DECEMBER 18, 2014 6:08 PM ET JIM ZARROLI

Among the changes to U.S. restrictions on Cuba President Obama announced
Wednesday was a relaxation of the rules barring U.S. banks from doing
business there.

Americans traveling in Cuba will now be able to use their credit cards
and ATM cards, but many U.S. banks see the new rules as something of a
legal minefield.

Even before Wednesday's announcement, the trade embargo with Cuba wasn't
absolute. The government allowed U.S. citizens to sell certain kinds of
agricultural and medical products to Cuba under special license, but
many companies were reluctant to do so.

The government has long barred U.S. banks from doing business in Cuba,
meaning anyone hoping to sell products there had to find an intermediary
bank in Cuba to process the trade. It's a complicated process, and Julia
Sweig of the Council on Foreign Relations says a lot of banks decided it
wasn't worth the trouble.

"Cuba has to tie itself in knots in order to find financial or business
institutions that are willing to pay the additional markup to do
business with it," she says.

The new rules will allow U.S. banks to form direct relationships with
banks in Cuba. They will also make the process of paying for goods
traded with the country a lot easier.

"So these changes are potentially seismic in that they would make a lot
simpler, a lot more direct and a lot cheaper, all of these financial
transactions," says Ted Henken, a professor at Baruch College and author
of Entrepreneurial Cuba: The Changing Policy Landscape.

And yet, many banks are looking at these changes with caution.

Right now many U.S. banks are waiting to see the text of the new
regulations, says David Schwartz, president and CEO of the Florida
International Bankers Association.

"Banks are going to analyze very closely the regulations that do come
out to determine how much leeway that does give them, how does that
reduce the risk of doing that business?" he says.

But Schwartz also acknowledges that the relaxation of the Cuban embargo
is an opportunity for banks, even if they're cautious about taking
advantage of it.

Source: Opportunity, Caution Seen For U.S. Banks As Cuba Rules Ease :
NPR -
http://www.npr.org/2014/12/18/371701243/opportunity-caution-seen-for-u-s-banks-as-cuba-rules-ease