Bahamas: Financial Services Critical to Nation’s Economic Future

Addressing Parliamentarians during the current Debate on the Government's 2004-5 Budget, Minister Maynard-Gibson took the opportunity to report on key accomplishments, maintaining that her Ministry has demonstrated its relevance as the focal point for the promotion of financial services as well as for foreign direct investment. On the latter, she asked members of the House to acknowledge the importance of investment to the overall health of the economy, highlighting specific achievements and ongoing plans -- which are keeping The Government "on target" with its investment model that calls for each Island to be anchored by a major project.

Below is a synopsis of the Minister's budget presentation relating to financial services.

The Ministry of Financial Services and Investments was established two years ago to ensure that the second most important component of the Bahamian economy, after Tourism, has a voice at the Cabinet table.

Minister Maynard-Gibson reported to Parliament that the initial focus on the financial services side of her portfolio has been on necessary legislation to stabilise and encourage the continued growth of the financial services sector. The industry is seen now to be primed for even stronger growth with the Investment Funds Act, the Purpose Trust Bill, Foundations Bill, Segregated Accounts Companies Bill, the three pieces of E-Commerce legislation, and amendments to the Perpetuities Act, the International Business Companies Act, the Trustee Act and the Financial Transactions Reporting Act and Regulations.

"The enactment of these pieces of legislation is the result of close public/private sector collaboration and cooperation," said the Minister. "In particular, the members of the Financial Services Consultative Forum, the Association of International Banks & Trust Companies and the Bahamas Financial Services Board are to be commended for the many untold hours they donated to assist us with legislative developments."

The Bahamas enjoys regional leadership in wealth management at a time when the need for effective wealth management has never been greater, in large part due to the focus on providing high quality services to high net worth individuals (HNWI).

The referenced legislation packaged was described as essential to ensure that The Bahamas remains at the cutting edge of the financial services sector. "The Bahamas has significant comparative advantage in the private wealth management sector, and the current transition reflects a fundamental shift in the private banking business as we distance ourselves from low-cost jurisdictions. We are not seeking to be a bottom feeder in the private banking business; our aim is to be perceived as absolutely mainstream."

According to the Minister, the desire to be part of this quality club is the reason the jurisdiction is streamlining its banking sector and eliminating those institutions that do not measure up to the necessary standards and who are not prepared to invest to meet them.

Calling for the active promotion of The Bahamas as a financial services centre in the same way as the tourism product is promoted and advertised, the Minister claimed "If we are to continue to be a leader in this segment of the financial services industry we must demonstrate continued commitment to the sector. We cannot rest on our laurels."

Maintaining that the financial sector is poised for growth, the Ministry has specific goals in the coming year. These include:

• Training initiatives to ensure the availability of talents and skills, the key incentives for industry growth.

• Enhancement of the Registrar General’s Department and services offered; including the customer service unit and management information systems.

• Expansion of the Office of the Registrar of Insurance Companies, including the redrafting of the new domestic insurance and new external insurance acts, the establishment of an insurance commission, and preparation of anti money laundering guidelines for the insurance sector.

• Streamlining of the supervisory structure of regulation; to include review of proposals for the development of a common database for use by industry regulators.

• Legislative developments relating to the establishment of an international arbitration centre, and to securitisations and private trust companies.

• Land policy review

• Continued promotion of the sector, including briefing visits to key markets for meetings with institutions and intermediaries.

On the last, Minister Maynard-Gibson spoke to the enthusiasm expressed by Swiss banking institutions during the recent European Briefing Visits organised in collaboration with the Bahamas Financial Services Board. "This enthusiasm," she said, "related to the quality of the jurisdiction - they acknowledged The Bahamas' lead in private banking and private wealth management and the fact that they have unprecedented access to decision makers -- and are actively encouraged to be partners in the decision making process." She maintained that this spirit of partnership engenders confidence, as demonstrated by indications of expanded business plans in The Bahamas, translating to increased employment.

The Minister also announced continued commitment for dialogue and consultation with the private sector. "During the coming year we will continue to review proposals presented to the Ministry by the Financial Services Consultative Forum as it continues to provide advice and guidance for the development of the financial services sector." Specifically, the Minister noted that one important issue to be reviewed is the recommendation contained in the Forum’s Report on Immigration Matters for the introduction of an "E-Pass" for persons who frequently travel to The Bahamas for business purposes.

As a service-based economy, The Bahamas will succeed in its two primary sectors of tourism and financial services by recognising, embracing and nurturing two simple operating principles in everything it does – providing value for money and providing top quality service. These, said the Minister, are inter-dependent, not mutually exclusive principles.

The participation by The Bahamas in financial services was viewed as critical to the nation's economic future. "We are building with this future in mind – we are building a sustainable, viable hub of finance,"concluded the Minister.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.