Bahamas Offshore Company

The financial services industry continues to account for a major share of the Bahamas' economy after a steady year of performance in 2005, the country's Central Bank has reported.

In its latest Quarterly Review, the Regulatory Authority revealed that according to official estimates, the financial sector’s share of value added in the Bahamas’ GDP is between 15% - 20%.

The report states that a significant share of this contribution is derived from the marketing of international products and services.

The Central Bank stated that there are a number of reasons why the Bahamas maintains a competitive edge in these activities, including "its ability to support functional operations, backed by a sizeable pool of skilled labour, and a comprehensive regulatory infrastructure which sustains international confidence in the jurisdiction”.

Of particular note is that banking sector employment increased, with gains concentrated in the positions held by Bahamians. The banks’ total outlays in the economy amounted to some $419 million during 2005, with salaries representing the major component of expenditures, at 49.5%.

The banking sector's contribution to GDP remained stable to positive in 2005. Mergers and rationalisations of operations resulted in the revocation of 25 licenses last year, with nine new licenses being granted. The total number of banking licensees fell to 250 from 266 in 2004.

Estimated employment among domestic banks and trust companies increased by 48 (1.5%) to 3,300 during 2005, contrasting with nine (0.8%) fewer positions in the offshore sector at 1,105.

Data from the Securities Commission revealed that the number of fund administrators, which supported the bulk of the sector's employment and expenditure, remained at 59 in 2005. Although the number of active funds under management decreased to 699 from 838, indications are that business activity increased during the year as the value of assets under management rose by 7.2% to US$175.2 billion. Fund administrators also reported an increase in the number of IBCs under management.

Regulatory developments during 2005 were headlined by the government's appointment in June of that year of a Financial Services Regulatory Reform Commission to consider options for consolidating the supervision of financial services activities in the Bahamas. It is chaired by the Minister of Finance, Senator James Smith and has representation from all government agencies.

"A sound, dynamic and efficient regulatory infrastructure is vital to the operations of the financial services sector," the Central Bank concluded.