Swiss bank exec: Bahamas has ‘crucial position globally’
Guardian Business Editor
Published: Oct 17, 2013
As the global financial services industry faces ever more “battles” over what services it may legitimately offer to clients, The Bahamas has unique competitive advantages over other jurisdictions, a top swiss banking executive has argued.
Francesco Vanacore, director, head of products and solutions, Credit Suisse Trust, Zurich, said The Bahamas has an opportunity to be the “door to critical jurisdictions”.
In an interview with Guardian Business after he addressed the Nassau Conference yesterday, an annual financial sector conference hosted by the Association of International Banks and Trusts (AIBT), Vanacore said he sees the future of the industry in The Bahamas as safe, given certain competitive advantages stemming from the jurisdiction’s geographical position, sovereignty and strong public/private sector linkages, among other factors.
His comments came after a speech in which he highlighted the rapidly shifting regulatory environment surrounding the financial services sector, in which ever more stringent demands for tax-related transparency have been placed on offshore jurisdictions.
“Personally I think with the geographical position and also the infrastructure (The Bahamas has) really a crucial position globally,” said Vanacore.
“Europe is under pressure and they have very strong political connections but also political fights. Then you have Asia-Pacific which has other dimensions. The Bahamas is the door to critical jurisdictions that want to channel their business through U.S. or Latam.”
Agreeing with Minister of Financial Services Ryan Pinder on the importance of Bahamian sovereignty as a competitive advantage for this country in the global industry, Vanacore described this feature of The Bahamas as this country’s “most important advantage”.
The Bahamas is the largest sovereign offshore financial center in the Caribbean region.
“Because you are independent you can decide on your own what are your priorities, which are your clients, and how you deal with them,” said Vanacore of the impact of this characteristic.
“With other jurisdictions before they implement a new law it takes years. I think timing is crucial and linked with your independence you have the best starting point.”
The director added that all financial services jurisdictions are now in a position in which they have to “define their strategy for the next five or ten years” for the sector in light of competitive threats.
“You have the time to do this, one simply has to decide and implement it,” he added, noting that the “strong connection between the industry, the regulator and the politicians” gives The Bahamas “a combination you can’t find in other jurisdictions”.
During his address at the Nassau Conference, the top international banking executive said that at the heart of the challenge facing the global financial services industry at present is the difference between what is “legal” and what is “legitimate” as it relates to the moving of assets around the globe by individuals or companies.
“What does legitimate mean? The difference is really crucial, because we are in an area where no one has clear rules,” said Vanacore.
Illustrating how the focus has shifted from ensuring business is “legal” to ensuring it is “legitimate”, Vanacore pointed to the case of Starbucks in the U.K., which used what he termed “legal” measures to avoid paying taxes in the U.K. However, after a public backlash over its lack of payment, it made a $5 million offering to the U.K. government.
“Was it a payment? A gift? It was made to keep public opinion quiet. However I think (Starbucks) did something very legal.
“(So) this is the area where the battle is really going on. This is a battle. It’s an area that is not regulated in a comprehensive way.”
Meanwhile, the executive revealed he is “convinced” that the passive holding company, with no operations of its own, has little future as an investment vehicle given that it can be “easily attacked”.