Improving ties between the U.S. and Cuba have led banks like The Bank of Nova Scotia BNS and Citigroup Inc. C to show interest in the country’s growth potential and their plans to expand operations in Cuba.
Scotiabank, which once was active in Cuba through eight branches, is looking for opportunities to resume its business in the country. The Canadian bank had winded up its operations in Cuba a long time back after the Cuban Government nationalized all banks.
With the U.S. Government working to ease travel and trade restrictions imposed in Cuba, Scotiabank wants to capitalize on Cuba’s willingness to bring about an economic change. The island’s abundant natural resources are bound to attract new investments from the U.S companies. The augmented commercial and trade activities could prove beneficial for Scotiabank.
To exploit these potential growth prospects, Scotiabank’s Chief Executive Officer Brian Porter is contemplating opening new branches with primary focus on providing finance for trading agricultural products and medical supplies. The bank will explore commercial banking opportunities in the near term with a long-term focus on the personal banking business.
Similarly, Wall Street giant Citigroup is assessing opportunities to re-enter the Cuban market. However, materializing the same may take some time owing to the new trading regulations and political issues.
With the toughening stance of the U.S regulators after the financial crisis of 2008, the complex rules and regulations required to be fulfilled to enter the Cuban market was expected to deter banks from conducting business there. However, the rising interest in Cuba despite such difficulties indicates that the Cuban economy is lucrative enough for the banks to forego the stringent regulations.
For banks that are facing pressure to improve growth in the domestic markets, opening up of the Cuban economy is expected to be a boon. Thus, major banks like JPMorgan Chase & Co. JPM and Bank of America Corp. BAC along with others will likely benefit by seizing the opportunities in Cuba.
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