Bahamas Financial Services Board: Exit sparks offshore exodus fears

By INDERIA SAUNDERS ~ Guardian Business Reporter ~ inderia@nasguard.com:

The head of the Bahamas Financial Services Board (BFSB) is moving to allay concerns that The Bahamas will see a mass exodus of offshore banks on the heels of the pending exit of BNP Paribas.

It's a response sparked by that bank's decision to withdraw before the end of 2010 from countries gray listed by the OECD and viewed as "tax havens".

"It's a time of change and there will always be some amount of unsettlement in an industry of our size," Executive Director Wendy Warren told Guardian Business. "It's important to emphasize that government will maintain continuous dialogue with the industry... in the coming months The Bahamas will meet standards in a judicious matter."

Warren said she was unaware of any more banks that were preparing to follow in BNP's footsteps, asserting that it was mostly understood throughout the sector that The Bahamas is just months away from moving off the Organization for Economic Cooperation and Development (OECD) gray list.

A minimum number of 12 tax information exchange agreements (TIEAs) are required by a jurisdiction to satisfy the standard set by the OECD, which has now put pressure on "tax havens" for greater disclosures.

The Bahamas' current placing on the gray list is a primary reason why BNP CEO Pascal Dulau said the company has made the decision to exit the country.

"Despite its excellent financial performance in the current economic crisis, BNP Paribas has conducted a global review of its network in the context of the ongoing changes in the world financial system and G20 initiatives," said Dulau.

"In the light of this review, BNP Paribas has taken the decision to withdraw before the end of 2010 from countries grey listed by the OECD and viewed as tax havens.

"This includes The Bahamas."

According to Dulau, the bank was currently deciding the better of two options — either selling part of the business or transferring it to another jurisdiction. He did say, however, that the company had no fixed schedule for departure, saying it would depend largely on if they are able to "fix everything" before the end of 2010.

"In its exit strategy, BNP Paribas (Bahamas) Limited will preserve in the best manner the interest of its clients and 40 local staff members," he said. "As always, it is BNP Paribas' objective to act in this critical period as a responsible local and international player."

Dulau said there was no possibility to reverse the decision, even after The Bahamas moved off the gray list. Some local analysts indicate, however, that there is more to BNP's exit than the OECD's pressure.

September 28, 2009

thenassauguardian

Bahamas Caribbean Blog International

Bahamas Tax Havens Struggle

BY KENDENO N. KNOWLES:

While the Bahamas is considered one of the original tax havens, one senior official at Deloitte & Touche said recently that The Bahamas has not reaped the maximum benefits like many other tax havens in the region.

Deloitte Managing Partner Raymond Winder said recently that The Bahamas has more or less flat lined compared to other Caribbean countries.

"We like to talk about this new model of business, but let us look at the financial services sector. We have never ever been a real big player in the financial service sector like some of the other tax havens," Mr. Winder said.

"Yes, the Bahamas was the original tax haven when you make a comparison against Grand Cayman and Bermuda but, let us look at what happens in Cayman and Bermuda, and just why they have benefited so much more from the financial services sector than we have.

"We have allowed the financial services sector in the Bahamas to be hijacked by the lawyers," he said.

The only players in the financial services sector Mr. Winder claimed are lawyers; this he said has been detrimental to the success of the financial services sector and by extension, tax havens.
"We feel as if all we have to do is incorporate corporations and there’s no more to it." Mr. Winder said.

Minister of State for Finance Zhivargo Laing however tried to set the record straight last week about the governments stand point.

Mr. Laing however said that it is the legal fraternity that is partly to blame.

"What I find interesting is that when the government listens we are blamed and when we don’t listen we are blamed," Mr. Laing said.

"With the greatest respect, this notion that Mr. Winder is talking about in terms of lawyers is an absolute policy of the legal establishment.

"I can tell you that I go to Geneva and I go to New York and I talk to fund administrators all over the world. I ask them why they set up their funds in Cayman and in St. Vincent. They [the fund administrators] say that their lawyers have international practices in Geneva and St. Vincent etc., but not in the Bahamas, because they say they cannot get in the Bahamas as easily.

"This is something where the legal fraternity will have to move," Mr. Laing said.

jonesbahamas

Bahamas Caribbean Blog International