Bahamas: New Funds Frontier

Reprinted from the Bahamas Financial Services Review 2003, published by Pageant Media. Info@pageantmedia.com

In the fast-moving world of offshore fund administration, The Bahamas faces daunting competition from regional centres such as Cayman, Curaçao, Bermuda and, further afield, Luxembourg and Dublin. A misleading perception that The Bahamas is not committed to developing its expertise and clout in this industry means that despite low set-up fees, an EST time zone and the presence of major administrators, its worth has until now been partially ignored.

One of the firms dedicated to changing this is Oceanic Bank and Trust, which was incorporated in Nassau in 1982. It entered the funds management business in 1998 when it purchased New World Trust Trustees and its mutual fund administration business. Since then, Oceanic has grown this business to over US$3 billion, with typical clients including private offshore mutual funds, hedge funds and other alternative funds. Oceanic offers full mutual fund administration services, including: NAV calculation; fund reconciliation; fund registration; and shareholder record keeping and related services.

Bill Thomson, vice president of Oceanic Investments Services Limited, reckons that his company is in tune with modern industry trends and focuses on the front-office client aspects of the business, while outsourcing the back-office operations to sophisticated online administration systems.

"With these developments, the time delays and infrequent NAV calculations, that have blighted mutual fund administration for many years will become obsolete." Thomson explains: "Clients are demanding greater transparency and higher levels of client service. There is a wide range of service providers out there and to compete you have to make sure your offering is top notch and adds value."

Today, Oceanic is able to offer complete back-office administration and daily NAVs for all types of funds through its new joint venture with the US system provider Derivative Portfolio Management (DPM). The new joint venture, Funds Clearing (Bahamas), offers all Bahamian administrators full online automated back-office administration and daily NAV capability.

According to Thomson the industry is plagued with legacy systems and out-of- date manual processes that are unable to compete in today’s new world. Thomson notes that today’s quickly changing environment and sophisticated clients are demanding faster and more accurate processes to provide daily and, in some cases, intra-daily NAVs, "which are still just pipe dreams to many old line administrators." In addition, increasing legislative demands and new sophisticated fund types demand greater transparency and faster and better systems to solve any delays in the process.

Though one of the fastest growing areas of financial services in The Bahamas has been mutual funds, the jurisdiction is also carving itself a niche as a natural home to alternative investments. Thomson believes it is "well on its way" to this stated goal, as the domicile adopts sophisticated state-of-the-art online systems that meet market requirements "that up until now were only available onshore."

Moreover, Oceanic is confident both itself and the domicile have the capacity and capability to propel The Bahamas to the forefront of this industry. Thomson believes that Oceanic’s approach to the business makes it etremely competitive. "There is an exceptionally strong client service/relationship management ethic in the organisation," he explains.

"On a daily basis we constantly seek to exceed our clients’ expectations by the quality of our service and relationship management, the innovativeness of our product offering, the professionalism and responsiveness of our employees and the user-friendliness of client-driven technology."

He concludes: "Our approach to fund administration has been that provided we have the right people, the right products and services, and the right service quality, clients will do business with us." In an industry plagued with legacy systems and out-of-date processes, Oceanic Bank aims to raise the standard and take Bahamian fund administration onwards and upwards

As of 6 April 1999, Thomson was appointed vice president of Oceanic Investment Services Limited which provides investment services to Oceanic Bank and Trust Limited and its clients. Before joining Oceanic, he was the chief investment officer for SG Hambros Private Bank and Trust (Bahamas) Ltd., formerly Coutts (Bahamas) Ltd.