We are pleased to introduce BFSB News Briefs, a publication of the Bahamas Financial Services Industry, produced by the Bahamas Financial Services Board.
Clearly, with so much happening in our industry, the timing is ideal for this kind of quarterly publication. Our objective is simply to ensure that, as clients, industry professionals, financial institutions and BFSB members, you are at all times informed of current events and developments within the financial services industry of The Bahamas. BFSB News Briefs will keep you up-to-date on matters of importance to you -- development of new products and services, changes to and new legislation, ongoing activities of BFSB and its members, guest editorials by significant industry practitioners, and much more.
Within The Bahamas, the growth of our industry during the past decade has been impressive. Much is being done to sustain what has been achieved. More must be done to success-fully meet the challenges of persistent competition. Maintaining our focus and executing a sound plan, we anticipate that current growth within the industry will be successfully sustained. BFSB News Briefs will keep you fully advised of our efforts and our progress.
We welcome your engagement in our efforts to produce a quality product. As you read our publication, please share your comments and give us your feedback. We would also welcome your ideas on future issues, features and articles to be covered in this, your regular Bahamas Financial Services Industry briefing.
BAHAMAS INTERNATIONAL SECURITIES EXCHANGE – BISX
The soon-to-be-launched Bahamas International Securities Exchange will add valuable dimension to the extensive range of products and services already offered by the country’s financial services industry. The exchange will provide local investors with more diversified and sophisticated avenues for investment and savings. The proposed dual-tier system will accommodate separate listing and trading of domestic and international securities.
"The Exchange will most certainly enhance The Bahamas’ position as a leading international financial centre" says Larry Gibson, Chairman of the BISX Steering Committee. "…its initiation is a timely and critical event in the development of The Bahamas as an international centre."
The long-awaited startup of BISX comes after an extensive period of preparation — dating back to establishment of the Securities Market Task Force in 1993. In 1995, passage of the Securities Board Act established the industry’s Regulatory Authority, the Securities Commission of The Bahamas. In January 1999, passage of the Securities Industry Act completed the legislative framework required for operation of the Bahamas International Securities Exchange. The Bahamas has been assisted in these efforts by the Multilateral Investment Fund/Inter-American Development Bank (IDB), which provided funding support as part of an initiative to harmonize exchanges throughout the Caribbean and Central America.
Market capitalisation of domestic equities is now in excess of $1.6 billion, and expected to reach $5 billion by 2003. Within the first 2 years of domestic exchange operation, the existing 14 domestic equities should top 25.
BISX Steering Committee
In response to a request from the Ministry of Finance, the Bahamas Financial Services Board established the BISX Steering Committee to plan and coordinate the official launch of the Exchange this year. The Steering Committee includes representatives from all major segments of the financial services industry. It has been meeting weekly since January, 1999 to complete a number of critical tasks:
- Incorporation of the Exchange
- Refinement of a two-year Business Plan
- Capitalisation by Founding Shareholders
- Recruitment of the Operations Manager
- Refinement of products to be traded
- Installation/customisation of software and hardware for trading and back office functions
The Committee, under the Chairmanship of BFSB Director Larry Gibson, will continue to guide developments of BISX until it is fully incorporated and capitalised, when its Founding Shareholders become owners of the process.
MONEY LAUNDERING - A GLOBAL INITIATIVE
March 5th articles in London’s Financial Times announced plans for an "Offshore Initiative" to be introduced by the United Nations Global Programme Against Money Laundering. The initiative proposes to create a league of authorised offshore financial centres, inclusion being conditioned on having established standards for the proper regulation of the offshore financial services industry. Specific focus will be on combatting money laundering, and centres must reach established league standards within 5 years. Failing that, Governments will run the risk of international pressure against the continued operation of their offshore centres.
It has been reported that the Organisation for Economic Co-operation and Development (OECD) has a similar initiative under consideration, but with the intent of creating a "black list" of suspect centres as opposed to the U.N.’s approach of listing approved centres.
BFSB’s Executive Director Barry J. Malcolm immediately responded to the article, notifying The Financial Times of The Bahamas’ vanguard efforts to combat money laundering. Specifically, 1996’s Money Laundering (Proceeds of Crime) Act and Regulations. BFSB is also working with The Bahamas Embassy in New York to ensure that The Bahamas is included in any proposed U.N. recognition of those countries which have taken significant action to discourage international money laundering. The financial services industry of The Bahamas will, of course, continue to work on an ongoing basis with local regulatory authorities to guarantee that standards are maintained. BFSB will be in direct contact with the United Nations Global Programme Against Money Laundering as well, to keep abreast of all developments on this initiative.
INDUSTRY OUTLOOK
Minister of State for Public Enterprise, the Hon. Anthony Rolle, is the latest (February) public official to affirm the government’s intention to preserve The Bahamas’ position as a leader in offshore financial centres. Cooperative efforts by the public and private sectors have been credited with the success of the financial services industry to date, with maintenance of our competitive edge seen to hinge on ongoing collaborative efforts. Earlier in the month, Minister of State for Economic Development Carl Bethel asserted that the financial services sector is experiencing "unprecedented growth", citing total assets under management in the offshore sector as an indication of the overall importance of the industry to the economy. Given the dependent status of The Bahamas’ major competitors in international financial services (and a number of international developments), there is every indication that we should maintain a leading position in our industry. International centres (approximately 50 world-wide) account for more than half of the world’s legitimate financial activity, and this is expected to exceed 75% in the next decade.
Our principal aim is not to function or be perceived as an "offshore tax haven" as in the past, but to reposition ourselves as a well-regulated, low tax international financial centre, which jealously guards and protects its reputation with no wish to attract improper business.
The state of the industry mirrors that of the economy in general. At the end of 1998, Moody’s Investors Services granted The Bahamas an A-1 rating on its domestic currency debt, with an A-3 rating on its international/foreign currency debt for 1997 and 1998.The A-1 rating comes as a direct result of the government’s prudent economic policies and the positive foreign exchange flows greatly influenced by the thriving tourism and financial services industries. During 1998, The Bahamas’ external foreign reserves reached a record level of $330 million — in excess of $100 million over 1997’s figures and double that of reserves at the end of 1992.
INDUSTRY CAREERS
BFSB has initiated plans for a careers primer to be introduced in secondary schools around The Bahamas for the 1999-2000 academic year. The student publication will focus on selected careers within the financial services industry, and include pertinent data such as qualifications and base salaries. It will also list industry expert resources.
SECOND TO NONE
In The Bahamas, the first formal banking institution was established in the 19th century, with offshore trust business being introduced in the early 20th century.
Although The Bahamas has been well established as a financial services centre for almost half a century, the past decade has been a period of phenomenal growth and development. Over the past 10 years there has been extensive development of the body of law which supports operation of the financial services industry. This has included new and revised companies and trusts acts and, of course, securities industry related acts. Of particular note is 1996’s Money Laundering (Proceeds of Crime) Act and Money Laundering (Proceeds of Crime) Regulations, criminalising money laundering in The Bahamas. Our country was the first offshore jurisdiction to introduce this type of legislation, maintaining its leadership role by not only addressing immediate market needs but also being at the forefront in innovative and exciting financial services industry instruments. The Trustee Act of 1998, another such example, completely modernises trust legislation in The Bahamas.
The supervisory and regulatory structure of the industry is second to none, with the Central Bank of The Bahamas having primary responsibility for regulating the provisions of all related legislation.
A DECADE OF LEGISLATIVE ACHIEVEMENT…
- The Bahamas Maritime Authority Act, 1995
- The Companies Act, 1992
- The Companies (Amendment) Act, 1994
- The Exempted Limited Partnership Act, 1995
- The International Business Companies Act, 1989
- The Fraudulent Dispositions Act, 1991
- The International Business Companies (Amendment) Act, 1992, 1994
- The Money Laundering (Proceeds of Crime) Act, 1996
- The Money Laundering (Proceeds of Crime) Regulations, 1996
- The Mutual Funds Act, 1995
- The Mutual Funds Regulations, 1995
- The Perpetuities Act, 1995
- The Securities Industry Act, 1999
- The Trustee Act, 1998
- The Trusts (Choice of Governing Law) Act, 1989
- The Trusts (Choice of Governing Law) Amendment Act, 1996
BFSB WEB SITE
To advance greater international reach for the financial services industry, BFSB has taken early steps to establish a premier industry www site - BFSB-Bahamas.com.
Not only will the web site assist in fulfilling the Board’s promotional mission, it will also be an investment in a high-value member service. Proposals for development of the site have been received from a group of local and international www site service providers. Final selection of a site developer is targeted for the end of March, and the BFSB web site should be up and running by mid year.
Initial challenges include developing a format and content of ongoing interest to the market and members; capturing opportunities for membership input and engagement; in-house site maintenance; and customer service. As the site develops, remaining innovative in identifying areas for improvement and new service ideas will be critical.
While the site will be "open" in order to showcase the industry around the globe and leverage the web’s capability of putting the world in touch, there are also plans to establish a "secure" area for members information only as part of the web service.
PROMOTIONAL TOURS - 1999
Following the highly successful pro-motional tours coordinated in 1998, BFSB is planning a second series for 1999. In May, a team of BFSB leaders and members will travel to Switzerland for a 5-day tour, visiting Zurich (17-18), Lugano (19), and Geneva (20-21).
The Latin American segment of the 1999 overseas promotional programme will include visits to Lima (November 1-2), Santiago (November 3-5), Buenos Aires (November 8-9) and Sao Paulo (November 10-12).
These activities provide the opportunity for BFSB to promote, first hand, the attractiveness of The Bahamas as an international financial services centre, and allow one-on-one business meetings with member counterparts and prospective investors.
MEMBERSHIP DEVELOPMENT
BFSB’s ability to attract and retain its founding members attests to the need for such a development and promotional agency for our industry at this time — and to the vision of the organisation. Sustained growth - with involvement of an active membership –is essential to continued development of the Board and its capacity to fulfill the BFSB mandate in an effective and timely manner.
A new membership campaign was launched at the beginning of the year, targeting prospects in every professional and business sector of the industry. This is in keeping with the stated goal of being a multidisciplinary body, working to advance all aspects of the financial services industry.
BFSB’s Executive Directors participated in a Retreat in January. The 2-day meeting, directed at strategic planning, helped BFSB to fine tune its 1999 Business Plan.
BFSB MEMBERSHIP ANALYSIS
- Law Firms 16%
- Accounting Firms 6%
- Banks & Trust Companies 59%
- Property Development/Sales 8%
- Support Services 2%
- Marketing/Public Relations 3%
- Insurance Companies 6%
NEWS CLIPS - MEMBERS IN THE NEWS......
Alliance Investment Management Ltd., recently received strong commendation from the Securities Commission. Chairman T. Baswell Donaldson stated that Alliance, the first Bahamian-owned investment advisory and brokerage company, "has gone beyond the requirements of the Securities Act.." – with specific reference to the insuring of client accounts.
Bahamas First Capital joins Colina Financial Group,as part of Colina’s "Credentials Plus Strategy" - to build the best overall financial team of Bahamian fund managers, administrators and investment analysts.
February 26-28: BNP Bahamas hosts seminar for its senior bankers throughout Latin America & The Caribbean. The 3-day meeting was the annual forum where BNP executives focused on issues relating to organisation, products, and state of the economy.
Fidelity Bank & Trust introduces the Fidelity Bahamas Growth & Income Fund, with targeted investments in equity and fixed income securities issued by companies and government agencies.
Geneva Private Portfolio Management Limited has acquired W & P Bank & Trust. (Name changed to Private Investment Bank & Trust (Bahamas) Limited.
Rentenanstalt/Swiss Life proposes to acquire 53.5% of Gotthard Bank from Sumitomo Bank Ltd. (Osaka). R/S is Switzerland’s largest and oldest life insurance and pension company.
A century of service 1899-1999: Imperial Life Financial launches its centennial celebrations.
Colina Financial Group moves to acquire MSI-Preferred Investment Fund, subject to Securities Commision approval.
March 11-12: Norshield International hosts the Mosaic Fund Alternative Investment Educational Symposium at Atlantis, Paradise Island. Programme co-ordinated by Norshield Asset Management Ltd., specialists in non-traditional or alternative investments.
NEW CORPORATE BUILDINGS - UNDER DEVELOPMENT BY MEMBER CONCERNS....
Goodman’s Bay Corporate Centre - Global Life Insurance
Bayside Development - Pictet Bank, Oceanic Bank & Trust, Teekay Shipping
Montagu Sterling Centre - KPMG,Thorand Trust & Management Limited, MeesPierson (Bahamas) Limited
STEP (TO THE BAHAMAS)
Approximately 150 trust and estate planners from the UK, North America and the Caribbean Region are expected in Nassau April 19-20 for the first STEP (Society of Trust and Estate Planners) Caribbean Conference.
BFSB is the presenting sponsor for the Conference titled "Offshore planning into the millennium....What does the future hold?" Leading specialists from around the world will be guest speakers and participate in panels designed to examine the many issues and developments facing trust practitioners.
PARADISE ISLAND BRIDGE BONDS
Effective March 8, 1999 The Bridge Authority invited investors for a B$28 million bond issue. Proceeds from the bond offering will cover construction costs of the new Paradise Island bridge as well as repairs to the existing eastern structure.
The MSI Preffered Investment Fund added the bridge bonds to its portfolio of government securities and local stocks. The Bank of The Bahamas introduced a programme to assist investors interested in purchasing the bonds, offering financing up to 90%.
INDUSTRY DATA
BFSB has taken the lead in coordinating ongoing meetings of a working group of relevant information sources in The Bahamas. The objective: to define and implement the best approach to ensuring that financial industry statistics are compiled and disseminated on a timely basis.
Participants include the Central Bank of The Bahamas, the Department of Statistics, Registrar General’s Office, Registrar of Insurance Companies, the Securities Commission, Bahamas Investment Authority, and the Bahamas Financial Services Board.
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.