Pointing to the recent announcement by Swiss wealth management company Julius Baer that it is closing its New Providence booking center, Progressive Liberal Party (PLP) Deputy Leader Chester Cooper said the exodus of such international financial groups could lead to the decimation of the middle class.
At least 30 Bahamians will lose their jobs as a result of the closure.
Cooper said if this trend continues, the middle class will be unrecognizable.
“To help those unfamiliar with this industry understand, these are jobs that pay very good salaries and carry excellent benefits. They allow Bahamians to purchase homes, insurance, spur construction, pay school fees, buy cars, employ others, start businesses, pay taxes and stimulate the economy in a real and measurable way,” Cooper said while contributing to debate on amendments to the Investment Funds Bill, 2020 in the House of Assembly yesterday.
“The way of life for many Bahamians is under direct threat as the industry shifts and The Bahamas is left without answers in the face of this. I am advised that another large international bank is preparing to cut as many as 27 of these very same jobs. Many of the people let go will now have to defer retirement plans, dip heavily into their savings, perhaps reconsider their children’s education and all their investments. There may be dark days ahead for some.”
Julius Baer’s reason for closing its New Providence booking center was to address margin pressure and structurally lower the group’s cost base by 2022.
The company has more than 60 locations worldwide.
The move also comes as the country’s financial services sector continues its fight to remain on the right side of international tax monitoring agencies.
“We need to now ask ourselves seriously, what the future holds for the offshore financial services industry in The Bahamas. And we need to act now. You would see that those financial institutions that have pivoted to the Latin America market with special emphasis on investment funds are best poised to survive,” Cooper said yesterday.
“However, through blacklisting and bullying, our confidentiality regime has been badly compromised and with that we have lost a great deal of our competitive edge. There must be, and this is not optional, a strategic plan by the government for the industry to enhance and protect jobs for the middle class.”
In the past two years alone, The Bahamas has endured being added to at least six “gray and blacklists” by various financial centers and global watchdogs.
Cooper said it’s time for the country to change its business model.
“Our business model has to transform. We need to focus on real international business having a presence here that is supported by the sector. We need real economic substance and presence. This will require sensible and harmonious immigration policy that is properly monitored and facilitated,” he said.
“It will require making sure we tout what is attractive for people who set up these companies to move their families here. And making sure that living and working in The Bahamas is sold as an attractive option. This will mean robust ease of doing business reforms, policies and processes to make this happen. When organizations like the BFSB go around the world selling The Bahamas, they are doing precisely that. And we have to make sure we are able to follow through.”
He continued, “We also need a more efficient companies registry. Global regulation is impacting all jurisdictions and The Bahamas must be able to compete on service delivery.
“We need to leverage opportunities in fintech, go after the captive business we lost and dig more deeply into the funds space, as this legislation allows us to do. Businesses won’t flourish if we don’t address inefficiencies in service areas that are meant to support this industry.”