By RASHAD ROLLE
Tribune Staff Reporter
THE financial services sector in The Bahamas is “vibrant and dynamic,” former Prime Minister Hubert Ingraham said yesterday.
His view contrasts with Prime Minister Dr Hubert Minnis who told reporters over the weekend the sector is “dying”. Dr Minnis’ view was supported by Minister of Financial Services Brent Symonette, who later told The Tribune there has been a decrease in the sector over the past 15 to 20 years.
Mr Ingraham, former leader of the Free National Movement, said while the Bahamas will continue losing private banking business, which caters to high net-worth individuals, other elements of the industry brim will opportunity and remain strong.
“The financial services sector is comprised of many parts,” Mr Ingraham said during an interview with The Tribune at his law office yesterday.
“The part that many Bahamians know well was the banking side, the large international banks that have come here, the Swiss, Americans, Canadians etc and so people had accounts in The Bahamas at these banks.”
“Then the allegation was that people were hiding their money from the tax-man of the United States and from Europe, etc. The international community has taken a very aggressive approach towards trying to shut down such enterprises that are not onshore, meaning in New York, in London and elsewhere.
“So, we’ve taken a big hit and many, many jobs have been lost in the Bahamas as a result of that and so it’s fair to say that the private banking sector has decreased and declined substantially and will continue to do so for international persons who bank in the Bahamas.
“But our financial services sector is an evolving thing and we’ve been in this business for a long time and it is very dynamic,” the former minister of finance said. “It has included over the years Eurodollars, it included captive insurance, mutual funds; it now has ship registration, it includes trust administration, it’s now evolving to the point where wealth management and estate planning and family offices, investment funds and boutique firms have all been established. So the Bahamas has great opportunity for business in those sectors and to provide employment and other opportunities for skilled Bahamians. But on the private banking side, that business we have lost and we are losing the remainder of it.”
Mr Ingraham said though commercial banks have downsized in the wake of new technology and other factors, “that has nothing to do with trying to get additional businesses to go into the business of wealth management or boutique health facilities or call centres, etc. These are all services that can be broadly characterized as financial services in the country; banking is only one of those sectors.”
Mr Ingraham said such sectors could be developed to make up for the loss of private banking services.
“We can be more vibrant and more attractive,” he said. “When it comes to family offices or investments funds and boutique firms, there are great opportunities for the Bahamas to attract some of those and to the extent the government can tweak legislation to attract more of those, they should do so.”
The International Monetary Fund (IMF), in a report accompanying its recent Article IV assessment of the Bahamian economy, said the financial service sector’s contribution to the country’s wider economy “has remained broadly stable” despite a 65 per cent shrinkage of the industry’s total bank assets between 2011 and 2016.
In terms of the financial services industry’s impact through a combination of jobs, tax revenues and local purchases of goods and services, the IMF said: “The overall direct contribution has remained broadly stable over the last 10 years, as the bulk of it originates from the relatively stable local expenses and employment, which are not sensitive to the asset size of the system.
“An orderly adjustment of the sector to global regulatory initiatives has contributed so far to manageable direct effects on the real economy, although it is difficult to determine the full extent of the impact—including spillovers,” the IMF said.