Private banking system leader to leave Bahamas

By TANEKA

HOMPSON

Tribune Staff Reporter

tthompson@tribunemedia.net

A LEADER in the private banking system has decided to withdraw from the Bahamas before the end of the year because this country has failed to escape the powerful OECD's "grey-list" of so-called tax havens.

French-based bank BNP Paribas (Bahamas) Limited -- which operates in more than 80 countries -- said despite "excellent" financial performance in the current economic crisis it had to review its network "in the context of the ongoing changes in the world financial system and G20 initiatives."

"In the light of this review, BNP Paribas has taken the decision to withdraw before the end of 2010 from countries grey listed by the OECD and viewed as Tax Havens. This includes the Bahamas," said a brief statement released by the company yesterday.

The bank said it will try its best to maintain its clients' interests, but the fate of the 40 persons employed there is uncertain.

According to a well-placed source, BNP's move is "a political one", in line with French President Nicholas Sarkozy's views.

"It's definitely political -- they don't want to be seen in grey or black-listed places," said the source, who believes other private banks may follow BNP's lead.

When contacted for comment yesterday, State Finance Minister Zhirvargo Laing said while the bank's decision was "regrettable" the Bahamas was working feverishly to meet the OECD's minimum requirements by the end of the year.

"It's a regrettable decision to the extent that you don't want to see a reputable bank like Paribas leaving. It has significant implications for their staff and their clients and there's also the tendency to have the jurisdiction lose a valuable presence. But again this is one of the reasons why we are working as feverishly as we have been to meet the (OECD's) standards.

"We know there might be those entities that will find it difficult to remain (here), if the Bahamas remains in the grey list. We fully expect to meet that standard by the end of the year but that does not mean we cannot meet it sooner," he said.

The OECD requires 12 tax information exchange agreements (TIEA) as a minimum requirement to be "white-listed." Mr Laing said the Bahamas has signed three -- one with the United States, one with Monaco, and the latest signed yesterday with San Morino.

The news came the same day the powerful G-20 leaders met in Pittsburgh to discuss, among other things, ways to crack down on tax havens. The group was expected to assess the progress of off-shore jurisdictions that had not met the OECD's white list requirements.

International reports state that French President Nicolas Sarkozy is urging his G20 counterparts to agree to impose sanctions on uncooperative tax havens as early as 2010. Meantime, Pascal Dulau, CEO of BNP Paribas (Bahamas) Ltd said there is no firm date when the bank will pull its services out of the country.

"We don't close, we are exiting meaning that we are trying to find a solution by trying to sell or transfer the business depending on the clients -- but there is no official date where we say we turn out the lights. We will withdraw from the Bahamas but will take the necessary (steps)."

When asked if the bank would reconsider its position if the Bahamas managed to make it onto the OECD's white-list before the end of the year, Mr Dulau said: "Once you take this decision you can't go back."

The Bahamas was placed on the OECD's grey list, part of a naming and shaming of so-called tax havens by the G20 nations, in April.

Published On:Friday, September 25, 2009