By Alison Lowe
Nassau Guardian Business Editor
NASSAU, Bahamas -- The Bahamas moved up an internationally-renowned ranking of global financial centres in a newly-released international report, rising two spots to 65th place out of 83 centres ranked.
It is one of only four offshore centres that saw a rise in its ranking in the Global Financial Centres Index (GFCI) 15.
Despite improvements in its positioning, the index suggests The Bahamas faces significant competitive challenges. Overall, it placed ninth out of 11 offshore centres highlighted. Within the Americas, The Bahamas placed just above Mexico City, which finished last among financial centres ranked.
However, Mark Yeandle, associate director of the Z/Yen Group and the author of the GFCI report, gave some encouraging insight into The Bahamas’ ranking.
Yeandle said: “The Bahamas has seen the largest rise in the average of assessments given to any offshore centre this time around -- up on average by 14 points. We have heard some good things about The Bahamas from our respondents and the reputation of The Bahamas seems to be recovering faster than most offshore centres.”
The release of the report comes at a time when there is heightened discussion over the competitiveness of the Bahamian offshore financial sector, in the wake of a decision by major financial services company UBS to ends its private banking operation in The Bahamas.
The survey, the 15th since its launch in 2007, quizzed 3,246 respondents. Based on their responses, 47 centres declined on the index.
While reserving much of his commentary in the report for London, which lost its top spot in the index to New York City this year, Professor Michael Mainelli, executive chairman of the Y/Zen Group Limited, said that by and large offshore financial centres are facing “enormous problems” at present, particularly in the areas of “regulation and reputation”.
Among offshore financial centres ranked in the index, Jersey led the way in the rankings, followed by Guernsey, Cayman Islands, British Virgin Islands (BVI), Isle of Man, Gibraltar, Hamilton, Mauritius, The Bahamas, Malta and Cyprus.
The Cayman Islands, a major competitor center for The Bahamas in the Caribbean, ranked at 43, a fall from its 39th place position in GFCI 14.
Panama, a competitor in Central America, was ranked 59th, a rise from its 63rd place position last year.
Based on survey responses, the report identifies business environment, taxation, human capital, infrastructure, reputation and market access as the most important “factors for competitiveness” for a financial centre. Business environment consists of areas such as corruption, transparency and the rule of law, including issues relating to regulation.
Human capital covers areas such as labour market and immigration regulation, as well as investment in employees’ skills.
Prime Minister Perry Christie, in his speech to wrap-up the mid-year budget debate last week, signaled that the government is set to make adjustments to immigration policy in The Bahamas to make it more favorable to growing the financial services sector.
Christie said that various ministries and agencies of the government are engaged in an effort to design a “transparent, predictable and user-friendly immigration policy” that will encourage the expansion of the sector. He said moving in this direction will require “new thinking and a new level of tolerance” and as such the government will be working to sensitize people that “financial services is everyone’s business”.
He noted that wealthy economies and major offshore competitors for The Bahamas already have “transparent and predictable paths to attract foreign persons with significant talent and means to their financial services sectors”.
In the area of regulation, chartered accountant Philip Galanis told Guardian Business last week that he believes “over-regulation” must continue to be eased in this country if financial services is to be competitive. He suggested that compliance officers have made it too difficult for licensed institutions to open bank accounts in this country, acting as a “Bahamian Gestapo”.
The top ten financial centres in the index are New York, London, Hong Kong, Singapore, Zurich, Tokyo, Seoul, Boston, Geneva and San Francisco.
Middle East centres continued a rise in the rankings, while financial centres in Europe are said to be “still in turmoil”, and declined in the GFCI rankings.
The difference between the first and tenth centre is now considerably smaller than it was three years ago.
Yeandle said, “London has seen the largest fall in the top 50 centres. This seems to be based on a number of factors including fears of regulatory creep, uncertainty over Europe, the perception that London might be becoming less welcoming to foreigners and perceived levels of market manipulation.”
Minister of Financial Services Ryan Pinder, along with the Bahamas Financial Services Board, could not be reached for comment on the report on Sunday.
Republished with permission of the Nassau Guardian