WHAT-TO-DO - NASSAU, CABLE BEACH & PARADISE ISLAND - JAN 2006 EDITION
If you’re visiting downtown Nassau or travelling along Bay St for the first time, you’ll quickly notice something aside from the remarkable colonial-era architecture: all the signs bearing familiar names in banking and finance from your own corner of the world. Here you’ll see top banking and trust company groups from all the G-10 countries, including UBS, Credit Suisse, Credit Agricole Suisse, HSBC, BankBoston Trust, Cititrust, Mitsubishi, Credit Lyonnais, JP Morgan, Scotiabank, Royal Bank of Canada, Mizhuo Corporate Bank and many more.
A few of these banks have street-front retail operations to serve resident Bahamians and tourists – so you can access funds locally using your bank card. But most are private banks that offer financial services to wealthy people and multinational corporations around the world.
Service since the 1930s
“We have been providing private banking and wealth management services to high-net-worth clientele since the 1930s, and our success has been attributed to a number of factors,” says Wendy Craigg, governor of The Central Bank of The Bahamas, the country’s regulator of banks and trust companies. These organizations – locally based and subsidiaries of international institutions – numbered more than 250 in 2005.
What’s kept The Bahamas among the ranks of leading offshore financial centres through changing economic tides is its tax neutrality and track record as a stable and reliable jurisdiction for long-term planning, whether for individual wealth management or handling corporate holdings through an international business company (IBC).
Political stability
“Political and economic stability rank high on the list of important elements in choosing a jurisdiction to use in preservation of wealth, and The Bahamas offers such an environment,” says Craigg. “The Bahamas has a strong democratic tradition – more than 276 years of parliamentary rule with political stability. We also have a legal system modelled on the British tradition and stable macroeconomic fundamentals and performance. Our solid standing has been confirmed by the international credit rating agencies: Standard & Poors has assigned an A2 short-term credit rating to The Bahamas and Moody’s, an A3 rating.”
As the world of finance and investment evolved over the past decade – due largely to the fight against money laundering and tax evasion – The Bahamas’ financial services industry modernized in step with the new realities. The country has added to and strengthened its regulations to stay in sync with international standards while, at the same time, introducing a range of innovative products and services.
Vital sector in economy
The financial services industry is vital to the national economy – responsible for an estimated 15 per cent of the gross domestic product. The Bahamas now has one of the most highly developed financial centres in the world, with products and services that include commercial and private banking, trusts, mutual funds, insurance accounting, legal services and wealth management. It’s a little known fact that The Bahamas has a highly respected ship registry, the third largest in the world, and this helps to grow the financial services industry.
Regulatory changes initially prompted by organizations such as the Financial Action Task Force, the Organization for Economic Cooperation and Development and the US Treasury Department (with whom The Bahamas has signed a Tax Information Exchange Agreement) prompted the government and the private sector to work together to enhance the nation’s standing as a financial services centre.
“We felt strongly that it was important for The Bahamas to seize an added opportunity for this industry to re-examine ourselves and position ourselves for the next five or 10 years,” says Wendy Warren, executive director of the Bahamas Financial Services Board.
Attractive products
In recent years, the House of Assembly introduced laws enabling a variety of new products that have helped to increase The Bahamas’ competitive edge.
Amendments to the Perpetuities Act made The Bahamas a more attractive place for estate planning by allowing wealthy families to plan for five generations. Enhancements to the International Business Companies Act strengthened Bahamian IBCs, empowering them to handle many types of financial services businesses. The Segregated Accounts Companies Act allows corporate structures to segregate assets into self-contained accounts, independent from each other and from the core account.
More recently, the Foundations Act of 2004 created new opportunities for high-net-worth individuals to manage their wealth here. The Bahamas became the first common-law jurisdiction in the world to recognize foundations, which are useful in succession and inheritance planning.
Foundations increase the country’s appeal to European and Latin American clients, says Warren. “That’s what they grew up with, and that’s what they want to use. And there are a large number of countries that use foundations as opposed to trusts.”
Expertise is here
There are more than 800 legal professionals in the country, and most firms maintain close working relationships with the major North American, Latin American and European law practices.
The Bahamas Financial Services Board maintains an extensive website (www.bfsb-bahamas.com) which lists financial services companies and professional associations as well as issuing reports on developments in the financial services industry of interest to anyone thinking about banking or finance in The Bahamas.
The official government website (www.bahamas.gov.bs) also has information on investing, banking and financial services.
Disclaimer: The information in this article/release was accurate at
press time; however, we suggest you confirm all details and prices
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