The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas could soon enjoy “exponential growth” in its investment funds industry via a new product “married to the SMART Fund”, a Cabinet Minister said yesterday.

Describing the Bahamian financial services industry as having reached “a watershed moment”, Ryan Pinder, minister of financial services, said regulators were currently processing licence applications from three Brazilian firms wanting to establish a physical presence in this country.

Addressing a Bahamas Chamber of Commerce and Employers Confederation (BCCEC) luncheon, Mr Pinder said that while the country’s targeting of Latin America appeared to already be paying dividends, these positive developments were being overshadowed by a negative mood.

He described many in the financial services industry as “intimidated” by the various international initiatives seeking to undermine international financial centres (IFCs), and instead urged them to “embrace” the opportunities created by change.

Declining to divulge details on the Bahamas’ latest financial product, which is in the early stages of development, Mr Pinder said the idea came from a Brazilian attorney he met during the last Brazil promotional trip.

Anticipating favourable changes to Brazilian law, the Minister said the attorney “spoke of an opportunity for the Bahamas to create a new vehicle married to the SMART Fund.

“And if we are progressive and visionary in this regard, we can see the exponential growth in the funds industry we have been striving for for decades.”

The new product’s development was being co-ordinated with the Attorney General’s Office, and Mr Pinder added: “We believe we will be able to expedite the development of this product, attract new business to the Bahamas, and attract business from neighbouring jurisdictions to re-domicile to the Bahamas.”

The Bahamas’ SMART Fund 07 product is already tailored to the needs of Brazilian high net worth clients, and both the Government and Bahamas Financial Services Board (BFSB) have given this nation and other Latin American countries - Panama and Mexico - a heavy promotional focus.

The Bahamas’ investment funds industry, both in terms of assets under management and number of funds domiciled here, has been steadily declining in recent years, with the industry consisting largely of administrators as opposed to advisors/managers.

However, Mr Pinder said discussions with numerous Brazilian asset and investment managers on his latest trip revealed that they were looking to establish fund administration businesses in the Bahamas.

“This is a watershed moment for the Bahamas right now,” Mr Pinder said. “We are not a commodity jurisdiction; we are a physical presence jurisdiction of substance.

“There are three licence applications into the regulators now from people I met with in Brazil three weeks ago to have operations in this country.”

Having spent a year as minister of financial services, Mr Pinder said the “biggest problem” he had identified with the so-called ‘Bahamas brand’ was what the brand itself is.

Suggesting that this nation’s financial services ‘brand’ lacked clarity and was poorly defined, he reiterated that the Bahamas was not a “commodity jurisdiction” or one-product specialist, but rather a ‘full service’ centre that attracted institutions to base themselves here.

“This is the Bahamas’ brand in the financial services industry - a preeminent international financial and business centre,” Mr Pinder said. “What we have is so much better - we have product depth and product width,

“We must talk it, believe it. We are a country of substance, a country of credibility. Gone are the days when we were solely a back office jurisdiction. There is a clear move to value-added structures in response to international clientele.”

Mr Pinder acknowledged that “a skills gap may exist in the short-term” when it came to finding enough Bahamians with the talents the financial services industry needs, but his ministry, the BFSB, Bahamas Institute of Financial Services, College of the Bahamas (COB) and industry groups had “already crafted a human development strategy”.

And the Minister also conceded that there was an ongoing debate over whether “the glory days of financial services are over”, due to continuing pressures from the likes of FATCA and the G-20/OECD.

“Many in the industry are becoming intimidated, or concerned and nervous, about the changing environment in which we live in financial services,” Mr Pinder said.

“This is a legitimate concern to have, but I want all in the industry to see opportunity in the changing environment and embrace it.”

He added that the Bahamas had previously experienced “ups and downs” caused by “shifting sands” in the international regulatory landscape, and “more often than not, come out ahead”.