The Tribune

By NEIL HARTNELL

Tribune Business Editor

A WELL-known financial services provider yesterday told Tribune Business his company was receiving an inquiry "virtually every day" on this nation's Executive Entity product, and urged the sector to "take control" of promoting the Bahamas.

Andrew Law, president and chief executive of the Nassau-based International Protector Group (IPG), said the Bahamas' latest financial services product had received "a very positive response" following several promotional events his firm held in Switzerland a fortnight ago.

Emphasising that the Bahamas had "some extremely good legislation" and financial services products, Mr Law, a former head of the Association of International Banks and Trusts (AIBT), called on the industry to be more proactive in promoting them.

Arguing that the head offices of Bahamas-based banks and trust companies did not really promote Bahamian products, or include them among solutions offered to their high net worth clients, Mr Law said rival international financial centres had beaten this jurisdiction when it came to pushing products such as private trust companies and foundations.

Recalling IPG's Swiss tour to promote Executive Entities, Mr Law told Tribune Business: "We did an event in Geneva, one in Zurich, and are planning to go back with the Bahamas Financial Services Board in June. They're planning to do something in London, and we're planning to do something in London as well.

"We've been promoting it [Executive Entities] as actively as we can. It's brand new legislation, a brand new concept. We have to tell people what it does, and then they have to figure out a way to use it. We've already had a very positive response."

IPG, Mr Law said, had produced an "extensive binder" on Executive Entities that was placed on its website, explaining the product and its legislation, and detailing its potential applications.

Telling Tribune Business that the response to IPG's promotion had exceeded his and the company's expectations, Mr Law added: "We're getting some sort of inquiry virtually every day. Many people are reading about it, saw the presentations, are coming to the website and accessing the binder.

"Eventually, that will lead into people saying they will promote this solution to their clients, and the clients saying they like the idea and want to go ahead."

The IPG said Executive Entities were likely to be primarily use as protectors, shareholding entities or trustees. But, during the company's Switzerland presentations, clients had inquired whether they could be used as executors for wills.

Using the example of a wealthy Middle Eastern investor, who had properties in both the UK and France, Mr Law said it was quite possible that different jurisdiction-specific wills would be drawn up.

This, he added, often created problems when the different executors began arguing over assets that almost inevitably fell between the two jurisdictions. "If you use the Bahamas Executive Entity to act as the executor, you can appoint lawyers from both countries to it, and have one legal entity but the skill sets of both. That's quite cool," Mr Law suggested.

Another potential Executive Entity application concerned single premium insurance products, usually worth $1 million or more, that were used as estate planning and income deferral tools. Issues often arose over the identities of the policy owner and beneficiary, with trusts often named as the latter.

However, Mr Law pointed out that few persons would want to serve as the trustee of a "dormant trust", given that these products were long-term insurance policies lasting for 20 years or more. This, he added, was where a Bahamian Executive Entity could come in, either as trustee or policyholder.

"I think acting as the shareholder of a private trust company will be a very popular one," Mr Law said of the Executive Entity's potential applications. With individual persons, in their own right, reluctant to assume key roles in wealth management structures because they felt rewards did not match risk in an increasingly litigious environment, Mr Law said that by employing the Executive Entity instead, liability would be limited "in a very big way".

Explaining why IPG had moved to promote the Executive Entity to the global wealth management community itself, Mr Law recalled what happened when the Bahamas passed legislation for its Executive Foundations product.

"None of us really promoted that, and when Jersey did similar legislation, there's was far more successful," he told Tribune Business. "The next project we worked on was private trust companies, and I don't think we did a very good job of promoting that.

"When we came out with this legislation, I thought I'd go out and promote it myself."

And Mr Law added: "I think we have some extremely good legislation, and the Bahamas does need to be out there promoting what we have.

"There was an expectation that businesses here that were foreign-owned businesses, that the head office would embrace the product and promote it for the Bahamas, which in my view does not really happen.

"If you take one of the international banks that has a branch or subsidiary in the Bahamas, the manager here might be telling head office this is a good product, but head office is not bringing that into the products for their clients.....

"Effectively, you have to take control of the promotion."

Mr Law's comments touch on the fact that the foreign-owned Bahamian banks and trust companies, which comprise almost 100 per cent of the sector, are head office-driven as opposed to jurisdiction driven, or Bahamas centric.

As a result, the burden of promoting the Bahamian financial services industry falls on, apart from the BFSB, the companies that are Bahamian-owned - meaning the attorneys, accountants and financial and corporate services providers.