|The Bahamas Investor Magazine
January 1, 2009
January 1, 2009
Tosheena Robinson-Blair and Vanessa Clarke
Launched in April 1998, the Bahamas Financial Services Board (BFSB) has been at the forefront of the continuing evolution of The Bahamas’ financial services sector for over ten years. Playing a hands-on role in the creation and modification of legislation, while vigilantly promoting the jurisdiction’s services worldwide, the multidisciplinary body has underpinned the success of the sector and helped the country maintain a strong international position.
At the helm of the BFSB’s efforts is chief executive officer Wendy Warren. The organization’s first female CEO, Warren took up the post in 2001 and has overseen a number of key developments that have helped spur on client-driven and competitive focused initiatives, all with view to attracting and retaining quality clients.
More than ten years on from its inception, the BFSB is currently facing one of the most testing times in economic history. “Quite frankly, I think we’re up to the task,” says Warren, who started her career as a chartered accountant and went on to hold senior positions in a global private banking institution, and served as a member of the BFSB board of directors before becoming CEO. “I think The Bahamas is still very competitive—our fundamentals are still relevant to clients: our political/fiscal stability, tax neutrality, and location. I think the availability of land, and the availability to grow your business in The Bahamas, as well as a pool of human resources, remain among our major assets. I think the challenge of The Bahamas is to utilize its experience in financial services, but to be absolutely determined to be responsive and to remake itself so that it is nimble and relevant.”
In the beginning
Ensuring this was one of the main driving forces behind the creation of the BFSB in the first place. Back in the early days, one of the key players was Barry Malcolm, the founding executive director.
“The BFSB actually was the brainchild of a financial advisory group that Prime Minister Ingraham set up back in 1992 or shortly thereafter,” recalls Malcolm, who is now the managing director of Scotiabank (Bahamas)?Ltd. “This advisory group worked with the government on a whole range of financial services issues and out of that came the concept of having a formal board that would promote the development, growth and well-being of the financial services industry in the country.” BFSB was the first organization of its kind among international financial centres.
From this grew a symbiotic relationship between the government and the private sector, allowing financial services in The Bahamas to stay ahead of the game. In addition to overseeing the coordination of programmes to increase confidence and expand knowledge of The Bahamas among international businesses and investors, Warren and the private sector-led BFSB consult with the government to develop new initiatives to meet the rapidly changing demands of international financial markets.
BFSB represents and promotes the development of all sectors of the industry including banking, private banking and trust services, mutual funds, capital markets and investment advisory services. Other initiatives include the financial services board’s information programme, which comprises a content-rich website, a comprehensive newsletter and public awareness and education activities.
With its leadership, fact-finding missions and attendance at international conferences to keep the industry cutting edge, the board’s chairman Craig “Tony” Gomez credits the institution with being the “dynamo” driving the financial services industry.
Even though the industry continues to thrive, Gomez is quick to point out that it still has challenges. “We must continue to develop our regulatory, judicial and other aspects of our financial community to make sure that we can attract the kind of foreign investor that we wish to domicile here,” explains Gomez, an accountant with some 30 years experience, who also serves as the managing partner of Baker Tilly Gomez chartered accountants.
This role within the regulatory and legislative environment has led to some important developments. Warren believes that two integral pieces of legislation (The IBC Act and the Trustee Act) and innovative product offerings (foundations and SMART© funds) have helped to shape The Bahamas into the success story it is today.
The International Business Company (IBC) Act, 1992, is tailored to suit the needs of international business persons. Although incorporated and domiciled in The Bahamas, the IBC is designed to facilitate the undertaking of legitimate business anywhere in the world. It can act as a holding company, trading company, a private investment vehicle or an insurance company for non-domestic business.
Other uses include its ability to form part of a more sophisticated structure involving a combination of trust, foundation or other specialized corporate elements.
“It was really a major step taken by The Bahamas to respond to what was then the new trend in financial services,” explains Warren. “The IBC opened a critical entry point giving us the opportunity to move into this business in a significant way again.”
Equally important to the financial services sector was the implementation of the Trustee Act, says Warren.
The trust is a unique relationship which allows an individual or legal entity (the settlor) to transfer assets of almost any type to a third party (the trustee) to administer for the benefit of persons chosen by the settlor (the beneficiaries) in accordance with the provisions of a document (the trust deed). A trust’s assets may include securities, real estate, artwork and bank accounts.
The provisions of the innovative 1998 Trustee Act set the standard for trust legislation and include the retention by the settlor of certain powers without compromising the validity of the trust.
“The Bahamas was actually the first jurisdiction to produce a trust legislation of that nature,” notes Warren. “Many are unaware of this fact, perhaps because it wasn’t as aggressively marketed by us as by some of our competitors shortly thereafter, but the Trustee Act really repositioned The Bahamas.”
She believes the nation is still “reaping the fruits” of that piece of legislation and even now the legislation is being revised to stay ahead of the competition.
Such innovative thinking was also what led to the birth of SMART funds and foundations, helping the jurisdiction to maintain its competitive edge.
SMART funds allow private investment funds to enjoy a supervisory environment that is appropriate to the fund rather than a broad brush regulatory approach, while The Bahamas was the first premier common law jurisdiction to introduce foundations—long recognized in civil law countries.
The Bahamas foundation allows for private, commercial or charitable use. “Foundations, SMART funds, and the recently introduced private trust companies are actually creating positive energy and driving our competitors to respond, which I think is always a good thing,” says Warren. “If you see others having to respond either by the same name or a different name, but it’s the same product, I think that’s a very good sign.”
The road ahead
Bahamas financial services providers in conjunction with the BFSB are now well positioned to build on these key innovations.
Among other things coming up in the future the board hopes to see a new external insurance act tabled. In addition, the Domestic Insurance Act is expected to introduce and create an entirely new insurance regulator. “For us, the most important step is not the legislation, it’s the work that’s being done in the regulatory environment in The Bahamas,” says Warren. “Together they signify our seriousness in the re-launch of international insurance services from The Bahamas.”
The board also expects further improvements on the Foundations Act, even as it continues its work on several other pieces of legislation.
“Efficiency and quality of services delivered by government agencies or public authorities are critical,” continues Warren, adding that it is critical that the ongoing investment in infrastructure remains top priority. “Our clients don’t have any tolerance for excuses or for inadequacies so we have to remain on the cutting edge with respect to infrastructural developments.”
With regards to the state of the global economy and a new US president ascending to the Oval Office, Warren says, “I believe that the industry’s clients feel that The Bahamas, by and large, has positioned itself quite well in what are very uncertain times.
“As for the BFSB, we are very excited about the possibilities and continued possibilities of The Bahamas,” continues Warren. “These are unprecedented times and the opportunities are there and I think it’s really up to all of us to look, be attentive, and be aggressive to maintain our brand as a leading financial centre. I fully believe we are capable of doing that but it will require that all of us are not only on board but also actively pulling in the same direction.”
Upcoming events 2009
Bahamas Financial Services Retreat 2009, The Westin & Sheraton at Our Lucaya, Freeport, Grand Bahama
This annual event brings together stakeholders to discuss the key drivers of the industry and to formulate strategies for the growth of The Bahamas financial services industry, while also providing opportunities for networking.
Retreat sessions traditionally are structured to provide information on financial services developments in international financial centres, private banking and insurance, trade matters and regulation—all with the view of defining action required by Bahamian industry stakeholders.
Private Banking World Bahamas, The Bahamas
Global event where the world’s most influential private banking and family office CEOs come to shape their future investment and operational decisions.
For more information visit: www.terrapinn.com/2009/pbworld/
Alternative Investment Summit, São Paulo, Brazil
Having attracted hundreds of attendees in 2008, AIS Brasil is set to continue its growth as the largest hedge fund event on the calendar and plans to welcome over 600 delegates in 2009.
For more information visit:www.terrapinn.com/2009/aisbrasil