CFAL President Anthony Ferguson said he expects that at least another five to seven offshore banks will leave this jurisdiction over the medium term, given the constant threat of blacklisting by international regulatory bodies.
Ferguson, whose private bank and trust company Ansbacher (Bahamas) Ltd. is set to acquire the Bahamas operations of Swiss wealth management firm Julius Baer – which in February announced it was closing its Nassau booking center – said he saw the writing on the wall five years ago.
“I gave a presentation at the University of The Bahamas maybe five years ago and I said at the time that financial services will continue to decline and the banks will continue to leave. The one area that I believe that will continue to do well – I wasn’t being self-serving, but I was being quite serious about it – was the investments side of the business. Regrettably, from where I sit, I fully expect at least another five to seven Swiss banks that are operational here within the next 24 months will not be here,” he said during a CFA Society The Bahamas webinar on “The Road to Economic Recovery” on Thursday.
“I think, though, there is a serious opportunity in the fintech investment side of the business and so… I believe that most people in this business are in good stead and those who are aspirant financial advisors, in particular, if the government were to make mandatory savings.”
Concern about a hemorrhaging in the country’s second pillar of the economy has mounted in particular over the past two to three years, as the country became subject to continuous scrutiny and threats of sanctioning by global financial regulatory groups like the European Union (EU) and the Organisation for Economic Cooperation and Development (OECD), which have been imposing more stringent rules for international financial centers.
The Bahamas has been subject to being “blacklisted” a handful of times in the past three years, the most recent being in May when the European Commission added this jurisdiction to its list of countries with strategic anti-money laundering/countering the financing of terrorism (AML/CFT) deficiencies.
In December, the French government added The Bahamas to its list of non-cooperative states and territories on tax matters. This came after the Bahamas government’s focus on legislative and regulatory reforms which successfully resulted in the jurisdiction avoiding being blacklisted as a tax haven by the EU last year.
Although The Bahamas may lose business in one area of financial services, Ferguson said the country is poised to thrive in other areas.
“I think we will see consolidation or contraction in terms of services from the commercial banks. Certainly, in the offshore banks there’s going to be maybe ten maximum if that much, I would say more like six or seven leaving,” Ferguson said.
“And I think we’re going to be challenged going forward, but the investment management business, the fintech side of the business and maybe the fund administration side, will continue to grow and progress.”