Caribbean trade bloc governments have agreed to establish a special committee of finance ministers to probe reasons why American and European commercial banks are reluctant to conduct business with regional counterparts, saying they fear many will soon face closure if the situation is not corrected.

The move followed extensive discussions on the issue at last week’s two-day summit, which ended in the Bahamas at the weekend.

Bahamian Prime Minister Perry Christie, who is also the current chair of the bloc, announced the setting up of the ministerial subcommittee to try to determine why “the region is being unjustly labeled as a high-risk area for financial services.”

The ministers are scheduled to hold talks with the umbrella Caribbean Association of Indigenous Banks on the issue in the coming weeks, as the situation is considered serious and urgent, Christie said.

Immediate past group chairman and Antiguan Prime Minister Gaston Browne raised the issue during the summit, saying that many banks in the Caribbean face imminent closure. He added that this has nothing to do with the banks’ financial health or operational wrongdoing, but it is simply because American correspondent banks are refusing to collaborate with the region since it was labeled a high-risk area. Where that label has come from is anybody’s guess, he said.

Indigenous member banks have at least $30 billion in assets, Browne said, so money certainly cannot be an issue in this regard, he argued. He pointed out that the region is at a loss to find out why it has been labeled as high risk.

“Unless this situation is addressed with urgency, the indigenous banks in each of our countries will be forced to close their doors, not because of any inherent difficulties in the banks themselves, but because they are constrained from transacting business abroad.”

Browne said that the region is wasting no time in trying to solve the misconception that the area is bad for business. He noted that if banks “are unable to settle their transactions in the United States, Canada and Britain, that clearly has serious implications.” He continued, “It means therefore that we wouldn’t be able to settle our trade transactions expeditiously. It also has implications for investments, and we thought that rather than having the banks deal with these issues on their own, that there was need to elevate it to the level of the regional governance and to have Caricom as a whole address the issue with various entities, to include the IMF, the World Bank, OAS and also to have dialogue with the correspondent banks in the various countries.”