The Tribune

By NEIL HARTNELL

Tribune Business Editor

A FORMER Bahamas Financial Services Board (BFSB) chairman yesterday said a report that ranked the Bahamas a lowly 75th out of 77 global financial centres would "not impact" this jurisdiction's core private wealth management client base, adding that he was "more worried" about G-20 driven regulatory initiatives.

Michael Paton, an attorney and partner at the Lennox Paton law firm, said he did not "put too much stock" in the newly-released Global Financial Centres Index 2011 report, which also ranked the Bahamas bottom out of 10 so-called 'offshore' or international financial centres.

Explaining that it was difficult to determine the criteria, or basis, upon which the report had assessed and ranked jurisdictions, Mr Paton told Tribune Business that while perceptions of financial centres such as the Bahamas were always important there was unlikely to be any impact on clients.

"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."

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'.

The Global Financial Centres Index 2011 report said international financial centres had "suffered significant reputational damage" over the past four years, although they had started to recover, with the effort gaining pace in 2011.

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."

And he added: "It may be worthwhile taking a look at ourselves, and doing a direct and objective review of where we want to go. We seem to be losing ground, at least in the perception of those who have something to do with this."

Mr Smith said he was unsure as to whether the Global Financial Centres Index 2011 report findings were based on the ease of doing business in the Bahamas, or whether it was a subjective client viewpoint.