The COVID-19 pandemic added to the challenges of banking and trust activities in The Bahamas, which continue to shrink year over year. The most recent financial sector survey showed continued downsizing in employment and operational costs in the sector, although the overall contribution to government revenue in 2021 increased to $189.2 million from $164.4 million in 2020, even higher than before than pandemic.
“The 2021 survey of financial sector activities continues to underscore adjustment to challenges for the industry which predate the COVID-19 pandemic, and are most concentrated in banking and trust activities. Aside from the response to evolving global regulatory compliance standards, the sector also continues to consolidate along efficiency lines. These have been further summarized, in downward adjustments in staffing levels in both international and domestic banking,” The Central Bank of The Bahamas said in the recently released Gross Economic Contribution of the Financial Sector in The Bahamas.
“The international securities business also experienced recent retrenchment, though mostly in terms of registrants rather than the volume of assets under management. That said, the business model of international firms is showing growth potential in markets outside of Europe and North America and in the expanded regulated focus of the jurisdiction on digital assets.”
The domestic component of the financial sector, on the other hand, is forecast to remain stable or possibly expand in the near future.
“Adjustment pressures appear less acute for domestic insurance, with expansionary to stable trends. Meanwhile, credit unions’ prospects reflected ongoing adjustment to more concentrated credit exposures than the rest of the domestic banking sector and smaller capital and liquidity surpluses in such regards. The jurisdiction’s prospects for expanded economic returns in international services remains favorably linked to ongoing strengthening of the regulatory landscape, including increasing effectiveness in delivering upon obligations for financial integrity and tax transparency,” the CBOB said.
“Going forward, the Central Bank will sustain its efforts to strengthen the regulatory framework for its SFIs [supervised financial institutions]. Equally, the collaborative stance across all regulators will continue to be strengthened, so as to support the growth and resilience of the financial sector. The bank will also remained focused on initiatives to strengthen financial inclusion and deepen financial literacy.”