Prime Minister Dr Hubert Minnis.
By RASHAD ROLLE
Tribune Staff Reporter
THE financial services sector is “dying,” Prime Minister Dr Hubert Minnis said Saturday while stressing the importance of creating new economic pillars.
He was speaking about the Commercial Enterprises Bill, which passed the House of Assembly Wednesday evening with full support of the Free National Movement but none from the Progressive Liberal Party. The bill would liberalise the granting of work permits to enterprises that wish to establish themselves in the Bahamas in niche sectors and require work permits for management and key personnel. The government has said the legislation will attract new industries and create jobs and training opportunities for Bahamians.
“If we want to grow this economy then we must think outside the box and we must create new pillars,” Dr Minnis said. “We have tourism, yes; we have a financial sector, yes, but the financial sector is dying. The middle class is dying, so it’s our job to expand the middle class and move [people] from the poverty level into the middle class and the middle class into the wealthy class; that’s our job, that’s our goal, and we will do that.”
On the Commercial Enterprises Bill, which critics claim would allow foreigners to get preferential treatment over Bahamians, Dr Minnis said: “I think it will move forward but we cannot continue to live in a bubble; the world is now digital, the Bahamas cannot remain analog.”
Financial Services Minister Brent Symonette yesterday echoed Dr Minnis’ take on the health of the financial services industry, a sector that has traditionally comprised a significant percentage of the country’s GDP.
“Over the last 15 to 20 years there has been a decrease in financial services,” Mr Symonette said.
“Domestic banks such as Royal Bank of Canada (RBC), Bank of the Bahamas (BOB) and CIBC and others have been consolidating operations in Barbados and Trinidad and you’ve seen layoffs by those banks and also the closing of branches. This is because of decisions in Canada and head offices as businesses are moving towards computerisation and modernisation.
“The offshore banking sector has seen change with regard to the OECD and tax reporting and you’ve seen several banks are no longer here; a couple are open. There has been a change in the financial services industry and change in employment in that area. That’s the drift behind what the prime minister said and we debate the Commercial Enterprises Bill and other matters coming to Parliament so we can provide other means of employment and other avenues to cause the economy to come back up.”
Last month, the Bank of the Bahamas announced 30 job losses following recent branch closures. There have also been several instances of Royal Bank of the Canada (RBC) closing branches.
Former Prime Minister Hubert Ingraham last year said the condition of the financial sector will worsen. And although she didn’t rebut him directly, former Financial Services Minister Hope Strachan appeared to target his commentary during a House of Assembly session soon after his remarks, accusing people of having “foot in mouth disease” when it comes to the sector.
“Sufferers of this disease are prone to making fatalistic statements about the financial services industry without regard for the potential harm caused by such statements,” she said at the time.
“It could be anyone, but the opposition past and present is prone to suffer from this disease from time to time, and for obvious political reasons. Contrary to what some might believe, though challenged, the financial services industry in the Bahamas is not dead. There are literally thousands of Bahamian people employed in the sector, directly and indirectly. The suggestion that we should no longer place reliance on the survivability of the industry should be rejected outright. These statements, when reduced to writing, articulated on the airwaves and blasted on social media, are damaging to the sector.”
Mr Ingraham had told The Nassau Guardian that because of de-risking, the number of banks capable of authorising wire transfers and accepting deposits would be “reduced, and reduced, and reduced” until only several big banks remain with the ability to engage in domestic banking, “but nothing overseas.”
“We have lost international private banking,” he said last year. “What hasn’t left yet will leave. So the full downsizing of that sector has not yet taken place. That’s a reality. We wish it was otherwise, but it ain’t gonna be otherwise. The developed world is determined to squeeze small places like the Bahamas where they claim their tax dollars are hidden, and we need to find something else.”
On whether the country has seen the worst of financial services decline, Mr Ingraham said previously: “No we have not. It’s just a matter of time.”
The financial services sector is the country’s second largest industry.