|The Bahamas Investor Magazine
December 8, 2010
December 8, 2010
In the latest Global Financial Centres (GFC) ratings report, published by the City of London Corp last year, London and New York tied in first place. Earlier in the year, The World Economic Forum put the United Kingdom at the top of the leader board, as the world’s number one financial center. The continued dominance of the UK in the international financial arena puts The Bahamas in a unique position to capitalize on the long and robust ties that it shares with its former colonial ruler.
Independent since 1973, The Bahamas still maintains the Queen as its head of state, and has a parliamentary system that is modelled on Westminster. There is still a non-resident British High Commissioner of The Bahamas in Jamaica. The highest court of appeal remains the London-based Privy Council and many of the jurisdiction’s lawyers and politicians studied in the UK and are members of the Bar of England and Wales.
It is not only in the legal and political fields, however, where the UK’s legacy is still being felt. In 1823, it was the imperial government that suggested establishing savings banks in all British colonies, The Bahamas included. Twelve years later, the first savings bank began operations here.
Furthermore, the roots of today’s exchange controls–the rules which govern all foreign currency transactions in The Bahamas–lie in the early economic relationship that existed between the UK and British Commonwealth countries. British colonies, such as The Bahamas, conducted their transactions with each other and carried most of their currency reserve in sterling. The term “sterling area” was adopted in 1931 and included those countries both within and outside the British Empire whose monetary policies were governed more or less directly by Britain. For the most part, there were no exchange restrictions between the member countries. That is, capital was allowed to flow freely from the UK to anywhere in the sterling area. Members adopted common exchange control policies to ensure that the reserves were protected and spent only in the interest of all concerned.
The relationship came to an end in 1972, with the dissolution of the sterling area, upon the British government’s decision to float sterling and join the European Economic Community. However, the Bahamian government decided to continue to maintain exchange controls, reflecting a desire to ensure disciplined use of the country’s foreign currency reserves and to assist in its balance of payments.
The strong ties in the banking sector have led to a continued symbiosis in the financial services industry between the two nations.
Founded in 1974, The Bahamas Institute for Financial Services (BIFS) –formerly The Bahamas Institute of Bankers–is an educational organization that has historically enjoyed a strategic partnership with the UK. “Initially, when we started, we offered the trust and the banking course under the Chartered Institute of Bankers out of the UK,” recalls Jane Major, chair of the institute’s Education Committee. “Later, we got our accreditation from the UK.”
The institute’s mandate is to ensure that professional development and training opportunities are available to employees at all levels. Consequently, as things evolved in the Bahamian financial services industry, the institute changed its name to be more all encompassing.
According to Major, who is also a trust officer at Banque Privée Edmond de Rothschild Ltd, today training opportunities are not only provided for bankers, but also for the employees of other financial institutions, which make up its 46-strong membership. Aside from domestic and offshore banks and trusts, the institute’s members include the Bahamas Law Enforcement Co-operative Credit Union, in addition to regulatory bodies such as The Central Bank of The Bahamas and The Securities Commission.
It is the cross-border partnership for the educational development of these professionals that makes the training provided “internationally relevant,” says Major. Whether enrolled in the BIFS Associate Programme, originally based on the London Institute of Bankers stage I, or the International Compliance Association Diploma in Anti Money Laundering and Compliance, participants are guaranteed a first-rate education. “It’s not just limited to what’s happening in The Bahamas in terms of our financial structure. You have the international certification that is recognized anywhere in the world,” says Major.
Last year the BIFS launched its affiliation with the Scottish Institute of Bankers. “It has endorsed our Certified Financial Planner Programme,” says Kim Bodie, BIFS director. In designing the course, the BIFS worked with Keith Checkley & Associates of London. The programme aims to help financial services institutions develop and certify competency levels for professional financial planners.
In 2001, the institute launched the diploma programme in anti-money laundering and compliance. The course is a result of a tripartite arrangement between BIFS, the Bahamas Association of Compliance Officers (BACO) and the UK’s Compliance Association–the latter, working in association with Manchester Business School at the University of Manchester.
These continued relations with the UK help keep The Bahamas relevant in a fast-changing global environment and ensure that the pool of professional financial services providers is constantly being replenished with qualified individuals.
Global Financial Centre ratings
The seventh biannual Global Financial Centres (GFC) report, commissioned and published by the City of London, was released in March 2010. The
in-depth industry assessment is based on responses gathered from market practitioners and regulators, as well as instrumental factors (external indices) and takes into account factors such as “connectivity,” “diversity,” and “speciality” sectors. The top 10 GFCs, according to the survey, are as follows:
City Rank Change in
London =1 ?0
New York =1 ›1
Hong Kong 3 ?0
Singapore 4 ?0
Tokyo 5 ›2
Chicago 6 ›2
Zurich 7 ?-1
Geneva 8 ›1
Shenzhen =9 ?-4
Sydney =9 ›2
• There are 112 Bahamian students studying and 142 Bahamians working in London, according to The Bahamas High Commission.
• According to the Bahamas Investment Authority, property sold/inherited in The Bahamas by British nationals since 1994 total $1.46 billion.
• Presently, UK nationals are involved in 22 local projects that are either on the drawing board, or in the operational stage. Among them are the eco-friendly Tiamo Resort, South Andros; Caves Heights condominium on New Providence; and the exclusive residential community Hideaway Bahamas in Grand Bahama.