|The Bahamas Investor Magazine
June 27, 2007
June 27, 2007
In addition to its prime location, favourable tax environment, progressive legislation and political, economic and social stability, The Bahamas can point to one more asset that has made it a premier international financial centre—a highly skilled, well-educated and experienced financial workforce. “There’s an extremely high-calibre group of individuals working in the industry here. They are very professional and very committed to their profession and to the institutions and their clients. They are extremely well trained and there’s a desire for lifelong learning among the Bahamian financial services workforce,” says Wendy Warren, CEO and executive director of the Bahamas Financial Services Board (BFSB).
While no exhaustive list of qualifications has been compiled, statistics provided by the BFSB illustrate the depth of the talent pool. In addition to more than 830 lawyers and 400 accountants, there are 45 chartered financial analyst (CFA) charter holders, 392 members of the Bahamas branch of the Society of Trust and Estate Practitioners (as well as 161 student members) and 84 BACO/BIFS/ICA AML/Compliance Diploma holders. The Bahamas Institute of Financial Services (BIFS) has granted 556 diplomas. This does not take into account those Bahamians who have obtained degrees abroad or the qualifications held by the expatriate professionals who complement the indigenous workforce.
Andrew Law, president and CEO of International Protector Group, says the qualifications of industry members and the strong relationship between the private and public sector are working to the jurisdiction’s advantage. While many competing jurisdictions are allocating substantial resources to hiring outside firms to design legislation, The Bahamas has tapped into the local talent pool. “The Bahamas can’t compete with the money others are spending, so as a result we are slightly more resourceful in terms of how we develop legislation. We get a good idea, get people here to buy into that idea and get them to give willingly of their knowledge and time,” says Law. The obvious advantage is that those who are deciding what goes into the legislation and products are the very people who have hands-on experience working in the jurisdiction. Law himself was one of 10 local practitioners who helped design the recently enacted private trust company legislation.
Loyalty builds relationships
Its solid international reputation has helped The Bahamas attract some of the biggest names in the financial services world to operate within the country. And Robert Lotmore, head of the Bahamian arm of Butterfield Bank, himself a Bahamian, says The Bahamas is far ahead of the competition in terms of being able to fill key positions from within. Historically, Bahamians have demonstrated extreme loyalty not only to the country, but to the companies for which they work, meaning The Bahamas has developed an experienced, highly skilled homegrown workforce that is valued by clients seeking long experience and specialized expertise. “A lot of expatriates come and go and that is just natural,” says Lotmore, “but stability in these kinds of relationships is really important. On a percentage basis we’re way ahead of other jurisdictions. I don’t think there’s any comparison, really. On a proportionate basis, the work permit ratio for the industry is relatively small whereas in other jurisdictions it’s really high.”
Wendy Warren concurs, noting that “one of the big advantages of The Bahamas is the ability to attract and retain persons in institutions, so there’s longevity in employment.”
The domestic industry has also been successful at identifying areas where it can best serve its clients. Butterfield Bank (Bahamas), for instance, has targeted a niche market by providing an international mortgage facility to second homeowners, and Law’s International Protector Group, formed two years ago, is a niche service provider that exists because of The Bahamas’ success in the wealth management arena. “Our job exists only because so many people are using trusts for the first time and it’s so completely different to what they are normally used to doing at home,” he explains. “They feel the need for a safeguard and we are part of that safeguard. It’s something that is very unique to this part of the world.”
Big Four and more
It’s not enough for an international financial centre to boast an impressive cadre of banks and financial institutions. To operate efficiently, they must also have top-notch financial intermediaries, such as accountants and lawyers, on hand to facilitate transactions. To this end, the four global powerhouse accounting firms all have a solid presence in The Bahamas. The Bahamian offices of PricewaterhouseCoopers, KPMG, Ernst & Young and Deloitte & Touche are all owned and operated by Bahamian partners.
Clifford Johnson, partner at PricewaterhouseCoopers’ Bahamas operation, says that by adhering to the universally accepted standards set out by the Big Four parent companies, Bahamian accounting firms are providing their clients with the very highest level of service. “Those big firms perform at a uniform standard globally and their Bahamian affiliates have been at the forefront in training Bahamians to be professional accountants,” he remarks, adding that “more than 50 per cent of the client base of the Big Four are involved directly in the financial services industry; therefore, public accountants have a deep knowledge and are experienced in servicing the financial services industry.”
In order to best serve their multinational clients, KPMG decided a few years ago that in many instances, regional offices would need to operate as a cohesive unit rather than competing for business. This strategy, says KPMG Bahamas managing partner Tracy Knowles, has served the company well and is being emulated by other large accounting firms. “Although we are all separate entities, we now have a regional structure that consists of all the English-speaking and Dutch-speaking Caribbean offices as well as those in Malta, the Channel Islands and the Isle of Man,” he explains. “It creates synergies. We don’t all have to go out and do the same thing.”
KPMG Bahamas houses the regional Centre of Excellence for Corporate Finance. Earlier this year the group, including 15 offices in the regional group as well as a few in Latin America, completed a $500-million transaction led by the team at KPMG Bahamas.
With 831 qualified lawyers in The Bahamas, there is clearly no shortage of legal talent. Large corporate and commercial firms and newer boutiques are renowned for their work across an array of financial services speciality areas, for their status as top tier partnerships in independent legal directories like International Financial Law Review (IFLR), and for their collaboration with financial service providers in developing progressive legislation for the industry. The newest progression—private trust company (PTC) legislation, which was enacted at the end of 2006 as an amendment to the Banks and Trust Companies Regulations Act, 2000—was designed through such collaboration to augment the scope of financial services offered within The Bahamas and promote high standards of business conduct for PTCs.
Fast as the bigger firms are moving, there are young turks in the Bahamian legal profession who want change to come even quicker. Bryan Glinton is the resident financial services expert at Glinton, Sweeting, O’Brien, a firm he started in 2005 with two former colleagues from the well-established Lennox Paton. Glinton says the proliferation of innovative financial services products, coupled with rising demand by clients, will require an increase in legal talent and a greater diversity of specialized expertise.
The field of law enjoys special status in The Bahamas and is reserved primarily for Bahamian practitioners, although many firms also recruit attorneys from throughout the Caribbean, Europe, Asia and North and South America. Based in The Bahamas, these local law firms benefit from strong connections with leading onshore firms through independent legal associations.
The firm of McKinney, Bancroft & Hughes, for example, increases its catchment area for international clients by being the only Bahamian member of Lex Mundi, a network of more than 160 law firms distributed around 99 countries. Callenders & Co and Lennox Paton are building their own international footprints, opening offices in the UK. Callenders has established links with Jincheng & Tongda, one of the new generation of independent law firms in Beijing, China.
The versatility of the Bahamian legal profession is replicated within individual companies. A firm’s prestige depends crucially upon having partners who, between them, represent a portfolio of expertise. For example, Graham, Thompson & Co is highly successful because it possesses a combination of property law and corporate litigation skills, along with commercial law acumen.
The Private Client and Wealth Management Group at Higgs & Johnson is reaping international acclaim for its advances with private clientele, being named Best in Inheritance & Succession Planning by Euromoney magazine’s Private Banking Survey 2007, and short-listed for the Offshore Legal Team of the Year award during the first Private Banking Awards held by the Society of Trust and Estate Practitioners (STEP) in London in 2006. Earl Cash, head of the Group, says attorneys have a continued focus on professional and sector development. “Training is something we’re focused on even more aggressively this year,” he says. Another private wealth practitioner and past chairperson of STEP, Heather L Thompson, was closely involved in the preparation of PTC, purpose trust and foundations legislation.
Maintaining a competitive edge
The Bahamas is already recognized as a leading international financial centre; however, if it is to maintain and grow its share, ongoing training is essential. “If we become victims of our own success, then we lose an opportunity to grow the industry,” says Warren of the BFSB. “We’ve got to make sure we stay on top of things. We’ve got to be sure that we’re building sufficient human capacity in areas that are required.” Accordingly, individual firms in all areas of the industry continue to provide more training opportunities for their teams and there are a number of institutions working to ensure that there are always new, highly skilled Bahamians ready to fill positions.
The College of The Bahamas, which is quickly moving toward university status, has conferred degrees on 309 graduates in its School of Business Bachelor of Arts programme, and has awarded an additional 2,934 associate degrees. Roughly 75 per cent of these graduates majored in financial services-related disciplines.
The Bahamas Institute of Financial Services (BIFS) has been the primary provider of training for the banking sector over the past 32 years. Nearly 50 private sector institutions contribute annually to ensure that the programmes are fully funded. Director Kim Bodie says that the BIFS works hard to stay on top of developments in the industry. “Wherever there is an immediate demand for training, then we respond to that demand to ensure Bahamians are positioned to fill any gaps,” she says. The BIFS offers courses and degrees in all aspects of financial services and is about to embark on a new programme called the Certified Wealth Manager.
There are more specialized training institutes popping up as well. The Nastac Group was formed in 1998 to offer Bahamians securities training. “Whether you are trading or not, knowledge of securities markets is key,” says Nastac president Reece Chipman. “People who take the Series 6 and Series 7 courses are going to ensure they are well rounded, and trust officers find that by doing this they are best positioned to manage their clients’ portfolios.”
And there are a number of less structured educational opportunities available to industry practitioners throughout the year designed to help them hone their skills and stay current. The Nassau Conference, now in its third year, features local and international experts presenting on a wide range of technical topics and issues relevant to the competitive marketplace.
The 2007 conference included sessions on everything from global tax models to the evolution of structures and products. Such events, along with more formal academic programmes, should help ensure that The Bahamas maintains and grows its intellectual capital to remain the top international financial centre in the hemisphere.