The Tribune

A Bahamian financial services provider yesterday said it has the infrastructure to support a “doubling” in size to over $900 million in assets under administration, as it seeks to avoid being “pigeon-holed” in the corporate market.

Kenwood Kerr, Providence Advisors’ chief executive, told Tribune Business that it was broadening its product menu to attract retail clients with the 10th anniversary of its founding just days away.

The firm, which is based in the Goodman’s Bay Corporate Centre, has seen assets under administration increase by around 170 per cent since its creation out of S G Hambros (Bank & Trust’s) domestic financial services operation on June 30, 2006.

And Mr Kerr said it now possessed the information technology (IT) and staff infrastructure to again support a ‘doubling’ in its client asset base, should the opportunity arise.

“Our current infrastructure could allow us to double our size in terms of assets under administration,” Mr Kerr told Tribune Business.

“Originally, we had one person and two clients. Now, we have 16 staff and 45 clients. In our early years, we had a more rapid accumulation in assets under administration, and now probably have between $450-$460 million in our care. We started with $170 million.”

While Providence Advisors now has the ability to support more than $900 million in client assets under administration, Mr Kerr said the economy and increased competition were factors acting as a barrier to such growth.

“The fact of the matter for us is that on the revenue side, the marketplace has not had that kind of growth, the economy has not had that kind of growth, and we have an increasingly competitive landscape.

“More competition has been created for an industry, and book of business, that has not seen the growth that justifies a lot of market entrants.”

Banks, such as Scotiabank, CIBC FirstCaribbean and Citibank, have all developed capital markets units in recent years, while the likes of Leno Corporate Services, Family Guardian and BAF Financial further increased the competitive pressures.

To counter these forces, Mr Kerr said Providence Advisors was seeking to transform its image from a firm focused on institutional business, via asset management and pension administrator, to a diversified enterprise that also welcomed retail (individual) clients.

“We have lots of work to do in advancing the brand to the public, and making them fully aware,” Mr Kerr said.

“We still have some work to do to expand our product menu and its reach to potential retail customers. Right now, the focus has been principally institutional, and we want to deepen our products to the retail market.”

He added: “Asset management, pensions administration was the core thrust. We’ve broadened that to grow into a first class financial services business, not only for the institutional but the retail market, rather than being pigeon-holed as a pension administrator dedicated to a group of clients.”

Mr Kerr disclosed that Providence Advisors had also diversified via “investments into other areas of financial services”, taking equity stakes in two Bahamas-based providers to the ‘offshore’ or international market.

“We have an interest in an offshore private bank in a limited way,” he told Tribune Business. “We’re in that space through investment in an affiliate.

“We reallocated capital and resources on the balance sheet to create better shareholder value.”

Despite the challenging environment facing the financial services industry, both globally and in the Bahamas, Mr Kerr added: “Moving forward, we’re trying to make the [Providence Advisors] brand as synonymous with financial services in the Bahamas as possible.

“We improve the brand by the product menu, and reaching into the local and regional community through the services we provide.

“We’re moving forward to address issues that put us in step with where the market is going, so we can have a deeper role in the retail market. We’re overhauling our IT infrastructure continually.”

Mr Kerr said Providence Advisors would “aggressively” target new ideas and growth opportunities, but be cautious in execution.

“We will be very aggressive and open to things, but conservatively execute a plan for growth, achieving our ambitions for the future in a very detailed, conservative way,” he told Tribune Business.

“We will continue to dream big, and execute cautiously on that dream. We can only hope that we’re making the right decisions to guide us through these uncertain times. We feel that we have the shareholder and Board commitment to keep us stable.”

Providence Advisors’ creation was spawned from SG Hambros Bank & Trust (Bahamas) decision to exit the Bahamian domestic financial services market, a space it had occupied since the mid-1930s when it developed offshore private banking in this nation.

It initially looked to sell the ‘book of business’ to existing players, such as CFAL and RoyalFidelity, but Mr Kerr, then an SG Hambros executive, used the opportunity to “pursue the idea I’s always had to create an independent financial services provider to give some competition in the marketplace”.

He was aided by the fact that SG Hambros’ main domestic Bahamian client, the two hotel industry pension funds, also wanted to be serviced by an independent financial services provider.

These shared interests ensured that Providence Advisors was born, and started life with a ready-made ‘book of business’.

“What happened to be a road less travelled became, for me, the only thing to do,” Mr Kerr said. “With the support of the pension funds, I set out to create a business model.”