The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas will have “more than our combined” level of current financial services business if it captures just a small percentage of the China/Asian market, but needs to better establish its “brand” in the region.

Fresh from a 12-day trip to Beijing, Hong Kong and Shanghai, Ryan Pinder, minister of financial services, yesterday said it appeared the Chinese high net worth market offered the potential for the ‘perfect marriage’ that could only enhance the industry’s “credibility”.

He explained that this stemmed from the fact it appeared the Chinese market could be best served by tying a corporate physical presence in the Bahamas with the provision of private wealth management services.

This, in turn, builds the model Mr Pinder believes will be required if international financial centres (IFCs) such as the Bahamas are to have a sustainable future - one where clients use this nation’s products to legitimately diversify their wealth and build a physical presence in this nation.

Yet the Minister acknowledged that the Bahamas had much work to do to build a “sustained presence” and its “brand” in the China/Asian market.

He conceded that the likes of the Cayman Islands and the British Virgin Islands were regarded as the leading Caribbean financial centres in that region, but was “upbeat and optimistic” that the Bahamas could catch up - and overtake - both.

Speaking to Tribune Business on the sidelines of yesterday’s Nassau Conference, Mr Pinder said China’s exchange control regime meant it needed to develop corporate-type products to allow Chinese high net worth individuals to move assets and money offshore.

While individual Chinese citizens have seen the annual sums they can take out of the country reduced from $50,000 to $20,000, Beijing currently allows up to $300 million to move offshore for corporate and investment-type purposes.

With Chinese high net worth individuals amassing ever-growing wealth and becoming increasingly mature, seeking to diversify their investment portfolios internationally, Mr Pinder said a ‘Bahamian physical presence’ would be necessary to meet their needs in a compliant manner.

By establishing operating businesses in the Bahamas, such as trade offices or family offices, the Minister said Chinese high net worths could legitimately move large sums out of their home country and still comply with its exchange controls.

And, by bolting private wealth management functions on to these businesses, additional work will be generated for the Bahamian financial services industry in managing and administering some of these assets.

“There’s a lot of wealth to be had,” Mr Pinder told Tribune Business “You only need a small percentage of that market to be successful as an IFC like the Bahamas.

“It’s getting the right clients and getting them confident and comfortable in the Bahamas. We don’t need the entire jurisdiction. There’s plenty of room to have a piece of the pie; it’s the differentiation of the offering that determines which piece of the pie we have.”

When it came to the type of Asian/Chinese clients the Bahamas is seeking, Mr Pinder added: “We want the legitimate business person who is looking for opportunities to have a business base in the Bahamas, regardless of scale, and one wealthy enough to appreciate private wealth opportunities - marrying commercial expertise with private client work.

“That’s where we’re best positioned, and that’s where China is best positioned.”

Asked how much potential the China/Asian region held for the Bahamas and its financial services industry, Mr Pinder said it could be “more than all we have combined now” in terms of assets under management.

“That’s just with a small percentage,” he added.

“If we can get a piece of the commercial presence here, that’s employment, wealth creation and indirect entrepreneurial opportunities.

“It’s also increasing and growing the economic platform, because if we have these commercial businesses here operating, they will have a need for compliance officers, lawyers and accountants, and independent directors to sit on the Boards.

“We have all this, plus if we marry commercial needs with wealth management, which has a direct economic impact beyond structures and assets.”

Mr Pinder, whose Asian visit involved two ‘Landfall’ presentations and sponsoring the STEP Asia conference, said properly serving the Chinese market fed into the ‘physical presence’ model required to sustain IFCs such as the Bahamas and boost their “credibility”.

“The more physical presence you can open in your industry, and diversify, the better you are going to be from a credibility point of view,” Mr Pinder added.

However, to make substantial inroads into the Chinese high net worth market, the Minister agreed that the Bahamas “definitely have to sustain our profile” in the country and wider region.

Hong Kong and Singapore, two key rivals, are based in the region, while the Cayman Islands and the British Virgin Islands were the dominant players from the Caribbean.

“I think our product and services offerings are better, and our services platforms are a lot better,” Mr Pinder said of the Bahamas in comparison to its Caribbean rivals.

While the Bahamas has pitched its financial services industry to the Asian region before, it has lacked a consistent, sustained presence and effort in that market.

Mr Pinder is now seeking to change that via a public-private partnership, employing the same model that made inroads into Latin America, albeit tweaked for the 
Asian market and its clients’ needs.

He has some building blocks on which to establish the Bahamas’ name, such as China’s extensive investments and involvement with Baha Mar, and other interests in this nation.

Baha Mar has opened a Hong Kong office, and a Bahamas’ tourism office is also due to open soon in Beijing.

Institutions such as The Winterbotham Trust Company and Deltec also have branches in Hong Kong, while the likes of Butterfield Bank do “substantial amounts of business in Asia”.

Mr Pinder said all had indicated a willingness to “help create the brand of the Bahamas in China”.

“I’m upbeat and optimistic,” Mr Pinder added.