Financial Services Firms Set For 25% Contraction
The Bahamas will likely suffer a 25 per cent contraction in the number of financial services industry players, a senior international private banking executive said yesterday, as institutions merge to acquire scale and maintain profitability.
Ricard Tubau, Andbank’s global chief executiv, said that not only is the financial services industry facing greater transparency and stronger regulation, due to initiatives such as the US Foreign Account Tax Compliance Act (FATCA) and the European Union’s Common Reporting Standard (CRS), but increased business costs.
Mr Tubau, who was in Nassau attending a group managing directors’ meeting hosted by Andbank’s Bahamian subsidiary, said: “I think you are going to have have some concentration. It’s not only the FATCA, CRS thing; the cost of doing business is getting higher.
“Therefore, you need more volume, more assets. You are going to see banks merging in order to acquire this additional volume and keep the same level of profitability.”
Mr Tubau said that Switzerland, which had as many as 170 private banks, is now down to 130, while the Bahamas – despite the exit and downsizing of several private banking institutions in recent years – has more than 200.
According to a recent Labour Force and Household Income Survey compiled by the Department of Statistics, workers employed in the “finance, insurance, real estate and other business service sectors experienced the greatest job loss, with 36 per cent – 4,447 jobs” going in recent years.
“I would say that you need some consolidation here. That’s good for the country, the system. It makes the system more efficient. It has to happen. A reduction of 25 per cent of the players might happen,” said Mr Tubau.
Andbank (Bahamas) chief executive, Manel Martinez, said the Bahamian financial services industry needs to effectively “up its game” and differentiate itself from its competitors.
“As an industry we need to up our game, offer good quality service and differentiate ourselves by the service we provide. If we get to offer better service than our competitors, and I think that we can as we have a very good professional community here, this can be the deciding factor in our future,” Mr Martinez said.
“We have to differentiate ourselves in all aspects and service is one of the best ways. We also have to find new products and new creative ways for people to invest in the Bahamas like we are doing, like the Bahamas Financial Services Board is doing, as well as the Government with Brazil and Mexico. These initiatives are key to the future of the financial services industry in The Bahamas.”
Mr Martinez added: “The Bahamas has to fight as a jurisdiction to get a level playing field. We have to fight to get the same conditions for everyone and not be in a group that has disadvantages.
“We have to fight for bilateral agreements, and it’s very important that the Bahamas fights hard. We have to play to our strengths as a country. The Bahamas is a beautiful country that has a lot to offer to high net worth individuals that can come here and become residents. The Bahamas has to play this card and we think we can help to promote this jurisdiction.”
