When Florida-based Stonegate Bank announced it would issue the first U.S. credit cards for use in Cuba, the news made worldwide financial headlines. Pundits lauded Stonegate as a pioneer in financial relationships between the U.S. and Cuba.
Stonegate’s outreach to Cuba, however, has not been as well received at home. Florida’s governor has spurned the idea that the U.S. and Cuba should be doing business with each other. Earlier this year, Gov. Rick Scott ominously threatened the state’s ports with cuts in infrastructure funding if they actively pursued business with ports in Cuba.
Scott has made other moves to quash U.S.-Cuba relationships, including threats to cut funding for educational institutions that offer programs for Cuban students. Finally came rumors that he was pushing legislation to outlaw Florida-based financial institutions from doing business in Cuba. Shortly thereafter, Stonegate announced that it was being acquired by Arkansas-based Home BancShares for $778.4 million—$50 million in cash and the rest in stock.
Stonegate President David Seleski says the proposed acquisition and merger was not prompted by any upcoming legislation in Florida. “The decision to sell the bank was strictly for our shareholders, and those of Home BancShares,” Seleski told Cuba Trade. “Both were very enthusiastic about this opportunity to create a stronger institution. ” The deal, expected to close in the next six months, will create a combined company worth about $13 billion.
Stonegate, founded in 2005, made headlines in 2015 when it entered into a correspondent relationship with Cuba’s Banco Internacional de Comercio. The one-way relationship gave the Pompano Beach-based bank the ability to issue debit and credit cards for ATMs in Cuba, and to move money to Cuba to cover the withdrawals. (U.S. law, however, still prohibits Cuban banks from opening accounts with U.S. banks.)
John Allison, chairman of Home BancShares, says he wanted the acquisition because of Stonegate’s performance and footprint. “It is simply the best franchise in Florida,” Allison told Cuba Trade.
Allison considers Stonegate’s Cuba connection an important asset for his Arkansas customers, especially those in rice and poultry production; Arkansas Gov. Asa Hutchinson is an outspoken proponent of trade with Cuba, and both the Senate and House versions of bills now before Congress to lift restrictions on agriculture sales to Cuba were sponsored by Arkansas Republicans (Sen. John Boozman and Rep. Rick Crawford).
“I thought the [Cuba connections] would be the icing on the cake,” said Allison, who flew to Cuba with Seleski. “It’s a communist country, but the entrepreneurship [there] seems to be alive and growing. It looks to me like the genie is out of the bottle.” Allison says the bank will issue credit and debit cards for Cuba in all its franchises.
“The embargo is still in place, but being first mover is a huge advantage,” says Seleski, who will remain in Florida to run the bank’s Florida and Cuba operations. “In Florida there are obviously some political sensitivities to this. But we are not going to be a [Florida] state chartered bank so it won’t matter.”