The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Financial Services Minister yesterday urged the Government to establish an operational Chinese currency trading platform within 12 months, and not let “a great opportunity pass us by.”

Ryan Pinder, now Deltec Bank & Trust’s wealth management head and chief legal officer, told Tribune Business that the highly competitive financial services market meant the Bahamas had to act on growth possibilities “sooner rather than later” if it was to keep pace.

“It’s a competitive global environment in this industry of financial services,” the Elizabeth MP said. “I think that we have to act on opportunities in a swift fashion otherwise they may pass us by.”

The Bahamas was given designated status as a platform for trading and settlement using China’s national currency, the renminbi, during Prime Minister Perry Christie’s trip to Beijing earlier this year.

However, much remains to be done to make this a reality and, in the meantime, China has granted the same status to another Latin American nation in the shape of Chile.

“I think it was a tremendous opportunity that was negotiated by the Prime Minister and the Government, and it should be pursued,” Mr Pinder said, adding that he had already “reached out” to the administration on the issue since leaving office.

“I would like to see the platform put in place and attracting business within 12 months,” he told Tribune Business yesterday.

Mr Pinder also used his 2015-2016 Budget address to advance this cause, suggesting that a Chinese currency trading platform would provide “a key area of growth and diversification” for Bahamian financial services.

By moving on this opportunity now, Mr Pinder said the Bahamas’ efforts would coincide with China’s development of a Western Hemisphere version of DragonMart in Panama.

DragonMart is a buyers’ emporium, which attracts thousands of businesses to one location, where they assess and purchase products from hundreds of Chinese traders and manufacturers.

Developing the renminbi trading and settlement hub, Mr Pinder added, would enable the Bahamas to offer financial services to some 3,000 Chinese companies doing $10 billion worth of business annually - trade financing, currency conversion, short-term debt paper issuance and commercial loans.

And, ultimately, the renminbi trading platform would also give Bahamian private wealth management practitioners access to Chinese entrepreneurs.

“It’s a multi-faceted opportunity for the Bahamas, but is based on putting in place a renminbi trading and settlement platform,” Mr Pinder told Tribune Business.

“It’s not something you turn the key on overnight, but it should be put in place sooner rather than later.”

He added that a private sector committee had been established to help the Government understand the commercial opportunities flowing from such a clearing and settlement platform.

Mr Pinder expressed confidence that the Christie administration would move on the opportunity, adding that it was “moving in that direction for sure”.

However, in his Budget debate contribution, Mr Pinder called on the Government to launch the renminbi trading and settlement platform “without unnecessary delay”, especially given other Chinese initiatives.

“These opportunities will not sit idly by,” he warned than. “New opportunities will develop for, and in other, jurisdictions. As an example, since the award, Chile has been granted status to trade and settle renminbi.

“It is also anticipated that China will launch by the end of this year a pilot program that is called the China International Payments System (CIPS).”

Mr Pinder said this initiative was designed as an alternative payments system to SWIFT, and would diminish the advantages of being a renminbi trading hub once expanded internationally.

“It is very important that we launch and develop this platform as a currency trading hub in the shortest amount of time to gain a first mover advantage in this hemisphere,” he warned.

Much remains to be done. Mr Pinder said it required the Central Bank of the Bahamas to show an interest at the ‘working group’ level, and engage with the People’s Bank of China.

A Chinese bank would have to establish itself in the Bahamas, while a Memorandum of Understanding between the Bahamas and China would have to be signed and all necessary regulatory approvals obtained.

Mr Pinder, meanwhile, added that there were “measurable opportunities” for the Bahamas in Latin America beyond Brazil and Mexico.

With traditional source markets under pressure, Mr Pinder said the Bahamian financial services sector had to “position ourselves to be a factor in these new markets”, identifying two possibilities as Colombia and Chile.

Yet “to do effective business” in Colombia, the Bahamas needed to agree a Tax Information Exchange Agreement (TIEA) with that nation, otherwise wealthy Colombians would be subject to ‘withholding’ penalties and unable to use this nation to diversify their assets and income.