US embassy cable - 05TEGUCIGALPA894

UNCLAS TEGUCIGALPA 000894 
 
SIPDIS 
 
STATE FOR WHA/CEN, WHA/EPSC, AND EB 
STATE PASS AID FOR LAC/CAM 
STATE PASS USTR 
TREASURY FOR DDOUGLASS 
STATE PASS OPIC FOR JEFFERY BARRY, DANA STRENGTH 
STATE PASS EXIM FOR WAYNE GARDELLA 
GUATEMALA FOR COMATT MLARSEN 
 
E.O. 12958: N/A 
TAGS: ECON, PGOV, SMIG, HO, EFIN 
SUBJECT: HONDURAS:  BANCO FICOHSA TO OPEN REP OFFICE IN 
U.S. 
 
REF: TEGUCIGALPA 800 
 
1. Banco Ficohsa President and CEO Camilo Atala confirmed 
to Post on April 21 that his bank has received permission 
from the U.S. Federal Reserve to open a representative 
office in Miami, Florida.  The bank intends to open the 
office this summer, with a view toward strengthening ties 
with investors and strategic partners.  As a representative 
office, the new office will not be permitted to take 
deposits but will serve as a link to Banco Ficohsa in 
Honduras.  Once it opens, this representative office will 
reportedly be the first such office of any Honduran bank in 
the United States.  As reported reftel, Ficohsa already has 
nine "Ficohsa Express" wire transfer offices in the U.S., 
providing remittance services to Hondurans resident in the 
U.S. The Fed approval will in no way change the Ficohsa 
Express operations, which will remain solely wire-transfer 
services. 
 
2. According to International Vice President Max Contag, 
the capitalization of the new office is yet to be 
determined but will likely be the minimum capitalization 
required by U.S. law.  According to Contag, quoted in the 
Honduran newspaper of record El Heraldo, Ficohsa is and 
will remain 100 percent Honduran capital.  Contag said the 
new office would seek new business opportunities for the 
bank, provide balance information and other information to 
clients, and inform both U.S. and Honduran businesses of 
trade and investment opportunities.  Under the agreement 
with the Fed, the Ficohsa representative office may not 
engage in banking activities. 
 
3. President of the Honduran Central Bank, Maria Elena 
Mondragon, issued a statement supporting the Fed decision, 
calling it beneficial for Honduras.  She went on to note 
that this decision not only highlights the solidity of 
Banco Ficohsa but also is an indication of Fed confidence 
in Honduran prudential oversight of the banking sector. 
 
4. While Honduran bank regulation has made significant 
strides in the last year, Mondragon's comments go beyond 
what the Fed actually said.  In its decision, the Fed 
wrote, "The Board will consider that the supervision 
standard has been met where it determines that the 
applicant bank is subject to a supervisory framework that 
is consistent with the activities of the proposed 
representative office, taking into account the nature of 
such activities.  This is a lesser standard than the 
comprehensive, consolidated supervision standard applicable 
to applications to establish branch or agency offices of a 
foreign bank.  The Board considers the lesser standard 
sufficient for approval of representative office 
applications because representative offices may not engage 
in banking activities."  Indeed, the Fed decision goes on 
to state, "The laws governing bank supervision in Honduras 
are in need of strengthening.  The NCBI [Honduran National 
Commission on Banking and Insurance] continues to work to 
obtain additional legislation that would allow it to 
supervise banks on a fully consolidated basis." (Full text 
of the Fed decision is available on the Internet at 
www.federalreserve.gov/boarddocs/press/orders /2005/20050420/ 
attachment.pdf) 
 
 
Pierce