Many reasons to bank at this acclaimed international finance centre
WHAT-TO-DO – NASSAU, CABLE BEACH & PARADISE ISLAND – JAN 2007 EDITION
Over the past six decades, and particularly over the past five or six years, The Bahamas has carved out an enviable reputation as a financial centre. It’s now rated among the best in the world.
Favouring US, Swiss and Canadian institutions, the country is home to more than 250 banks and trust companies. About 60 institutions are licensed to administer funds and another 93 provide broker-dealer and/or advisory services.
These firms have combined balance sheet assets of more than $300 billion and $1 trillion in assets under administration, according to The Central Bank of The Bahamas.
SOUND ECONOMY, NO TAXES
One of the country’s biggest draws is the absence of direct taxes. When investors use The Bahamas as a domicile for their corporate and personal assets, for example, there are no Bahamian taxes on profits, income, capital gains, corporate earnings, sales, inheritance or dividends.
Another positive feature is the country’s economic and political stability. The Bahamas has been an independent nation since 1973, with a parliamentary tradition that actually goes back to the early 1700s. The economy, based largely on tourism, is robust. About half of gross national product is related to tourism, which employs more than 50 per cent of the workforce.
Foreign reserves held by the Central Bank rose to $600 million in 2006 from $312 million in 2001. This enabled the Central Bank to relax currency exchange controls and that, in turn, helped the local business community and bolstered the country’s still-developing capital market.
James Smith, the country’s Minister of State for Finance, says the outlook is so good that he expects “a high rate of economic growth in at least seven out of 10 years between 2002 and 2012.”
This outlook is supported by outside organizations as well, including the International Monetary Fund, which predicts a 6.5 per cent nominal growth in gross domestic product for the 2006/07 fiscal year and 6.7 per cent for 2007/08.
Other indicators, such as a moderate rate of inflation, rising employment and strengthened external reserves, all point to a stable economy, says Wendy Craigg, governor of the Central Bank. “I’m optimistic concerning the favourable fundamentals driving the economy,” she said. Standard & Poor’s affirms the bullish outlook, rating The Bahamas A-1/Stable/A-2, citing the country’s political and economic stability. S&P also noted what it called “widespread consensus (between the government and the private sector) on major economic reform.”
CONFIDENTIALITY AND DEPTH
The government’s recent regulatory changes should assure the private banking industry here for many years to come, according to Ivanhoe Sands, a native-born Bahamian who is now managing director of Credit Agricole Suisse (Bahamas) Ltd.
In an article in The Bahamas Investor, Sands wrote: “New and revised financial services legislation, coupled with groundbreaking product advancements, has granted The Bahamas a pole position in the international private banking arena.”
And despite a widely held misconception, Sands added that “confidentiality remains an attractive and active component of the banking services available in this jurisdiction.”
Other contributors to the economy are a booming construction sector (accounting for about 10 per cent of gross domestic product), driven by domestic building and huge and ongoing investments in resorts and second homes. Nearly 150 major projects are either underway or in the advanced planning stage in The Bahamas, worth an estimated $18.8 billion.
A CRITICAL MASS
Over the years, a critical mass of financial services expertise has developed in The Bahamas, from accountancy and legal services to wealth management, insurance, private banking and advisory services.
As just one example of the depth of expertise, more than 800 lawyers are members of the Bahamas Bar Association and five Nassau firms have been listed by the International Financial Law Review as either Tier 1 or Tier 2 recommended firms.
There are other, less obvious but still compelling, reasons why foreign investors favour The Bahamas over other international financial centres.
Bahamian currency, for example, is pegged one-to-one with the American dollar, which makes for easier and more convenient transactions.
The country is on Eastern Standard Time, the same as New York, Boston, Miami, Toronto and Montreal. This means that, at the beginning of the work day in Nassau at 9am, for example, it is 2pm in London and 3pm in Geneva.
Finally, there is the advantage of having money domiciled in a country that’s blessed with a climate that is warm and inviting year round. Add to that an ocean of the clearest and most colourful water imaginable and a lifestyle that includes yachting, fine dining, fishing, sailing, diving and golf.
Many investors came to The Bahamas for sound business reasons. Then they followed their money to live here.
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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