The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE Bahamas should seek to improve its ranking as an international financial centre by "strengthening" the private sector and giving it the tools to keep this nation "at the cutting edge", a leading accountant said yesterday, rather than expand the size of government through a Ministry of Financial Services.

Raymond Winder, managing partner at Deloitte & Touche (Bahamas), told Tribune Business that the Bahamas should be looking "to reduce the size of government wherever we can", along with associated costs, and argued that the private sector - through the Bahamas Financial Services Board (BFSB) - would do a better job in enhancing international perceptions of the financial services sector.

Responding after the Global Financial Centres Index 2011 ranked the Bahamas 75th out of 77 global finance centres, and bottom out of 10 so-called offshore centres, Mr Winder said this nation's main rivals all relied on either private sector-led, or public-private partnerships, to lead their market positioning efforts.

"I do not think there is a need for a dedicated financial services ministry," he told Tribune Business. "We should be seeking to reduce the size of government wherever we can.

"As has been proven in the Bahamas, and around the world, the Government does not do the best job in identifying opportunities and responding to them on a timely basis."

And Mr Winder added: "Far more important is to strengthen the Bahamas Financial Services Board, give it far more resources so it can hire more economists, lawyers and accountants, and basically empower it to be on the cutting edge regarding issues of financial services.

"To move up will not require government dedicating a ministry to that, but will require a private sector-government relationship that is far more responsive."

Urging that the Bahamas take a leaf out of the playbooks employed by rival international financial centres, Mr Winder told Tribune Business: "If we look at other countries outside of the Bahamas, they do not have a dedicated financial services ministry.

"Most of them have a unit where there is either a public-private partnership, or the private sector is in control, researching and identifying opportunities and responding to matters that from time to time affect the industry. That is done more effectively through the BFSB than a government ministry."

The Global Financial Centres Index 2011 report said the Bahamas had dropped three places in the rankings year-over-year, falling from 72nd in 2010 to 75th this year.

Only Reykjavik and Athens were ranked below it, as the Bahamas was leapfrogged by Budapest and further pushed down by the inclusion of Calgary and Abu Dhabi in the 2011 rankings for the first time.

And, when it came to ranking the offshore centres, the Bahamas was placed at the bottom of the 10-strong pack. This was led by Jersey and Guernsey, in 21st and 31st spots respectively, then the Cayman Islands in 40th and Bermuda in 43rd. The British Virgin Islands were in 45th.

The Bahamas was also labelled among the financial centres described as 'local specialists'.

Michael Paton, the Lennox Paton attorney and partner, and a former Bahamas Financial Services Board (BFSB) chairman, said the rankings would "not impact" this jurisdiction's core private wealth management client base, adding that he was "more worried" about G-20 driven regulatory initiatives.

"I put very little stock in this report," he said. "I doesn't seem to impact the private banking/wealth management business we seem to focus on to any discernible degree. I don't think it will have any client impact.

"I'm not really concerned about it at all, not in the market segment and clients I deal with on a regular basis. This is not going to impact them.

"What concerns me more is if the G-20 gets initiatives going. I'm more worried about regulatory impact than perception. What worries me more is any move to co-ordinate action on an international financial centre basis by the G-20."

James Smith, former minister of state for finance in the 2002-2007 Christie-led administration, agreed with Mr Paton that it was difficult to work out the criteria used for the report, and thus how the Bahamas had been ranked and assessed.

Nevertheless, he added that the findings were something the Bahamas and its financial services industry needed to pay attention to, given that the sector was acknowledged to have been "losing" ground for some time.

"It may be that the perception of the Bahamas as a place to do business may be stagnant or dropping, and it may have very little to do with what's happening on the ground. It may have something to do with our marketing or lack of it," Mr Smith told Tribune Business.

"It's a general signal to us that the so-called second pillar continues to come under scrutiny, and those looking at it are not giving us very high ratings, which are dropping."