Byline: Scott Malone

CORAL GABLES, Fla. — Factors are starting to test the waters of the Caribbean.
U.S. financial institutions have many reasons to be leery of getting involved in the region, from weak local laws on property and political instability, to simply not having good sources of financial information on local companies.
Two factoring organizations, CIT Commercial Services and SunTrust Bank, said at last week’s CBI Sourcing Summit that they are starting to finance the export of fabrics from U.S. mills to Caribbean apparel makers.
“This is not going to be easy, but it is starting to work,” said Lewis W. Tabb 3rd, senior vice president at CIT.
His firm is working with First Union, as well as local correspondent banks in the Dominican Republic, Honduras, Guatemala, El Salvador and Costa Rica. There is one major hurdle to developing the business, he said: “There is a dearth of financial information on companies in this part of the world.”
The reason for that, said Roberto Arguello, executive vice president with the Latin American Financial Services Corp., comes down to security concerns.
“I have friends from Guatemala who say, ‘I don’t want to give anyone my financial statements. I don’t want to be kidnapped,”‘ he contended.
Peter Mulroy, international department manager for SunTrust, said his bank is also stepping forward to factor imports from the CBI region and export sales to them.
He added that he believed that import factoring — in which his company guarantees the U.S. buyer, not the CBI seller — will allow his company to gather more data on the region’s apparel producers.
“As we get more involved in that loop, our comfort level will increase and you’ll see us doing more work in the region,” he said.