Categorized | National News

MELTDOWN

The principals in the leading law firms in the Bahamas and Managers of Banks and Trust Companies in the financial services sector are increasingly worried about an ongoing meltdown of that sector.

A prominent offshore banking executive who spoke with The Bahama Journal on the condition of anonymity, said the decline in the sector is due to difficulties encountered in the conduct of what were heretofore regular banking transactions and excessive compliance demands.

Professionals in the industry are now calling on the government to address these matters with a sense of urgency as the employment of thousands of Bahamians is at stake.

“The fiduciary assets under management by private bank and trust companies in the Bahamas have declined to $80 billion. This represents a decline of 64.5 per cent of the assets under management just a few years ago”, said the Banker.

He said, “the issues of derisking (the process by which correspondant banks onshore seek to minimize their exposure to potential money-laundering) have the potential to upend the Bahamian economy, with it becoming an extreme challenge for Bahamians to secure foreign currency to pay simple expenses, such as university tuition.

“It is now becoming routine for the average Bahamian to have a small U.S dollar bank account outside the country to make their lives easier,” said the source.

In a survey of the Central Bank of the Bahamas in 2015, it was reported that 244 Bahamians lost their jobs in Banking. In 2016 the bank noted that there was a further reduction in employment of four per cent in commercial banking.

In addition, over the past two years, the number of licensed Bank and Trust operations declined by 19. It is said that operational costs in the Bahamas for these banks continue to rise. The compensation for the employees of these institutions declined by approximately 3 per cent during the same period.

“The Bahamas and other offshore financial centres are victims of a calculated disinformation campaign by the Organization for Economic Cooperation and Development (OECD) countries and their bureaucrats, whose conduct has been more like a war machine than reasoned negotiations.

“They have not taken into consideration that success on their part to bully and force regulations on the financial centres would result in the destruction of these economies.

“They have employed only the stick and have forgotten about the carrot. There has been no consideration of allocating resources towards an effort to prevent the crumbling of these financial centres. The result of this insensitive campaign has left those countries, including the Bahamas, that were offshore countries potential beggars, rather than the proud global citizens that they once were,” said the offshore banker.

He said, “one of the trends in the banking industry generally is that banks through the use of technology and outsourcing continue to shed jobs. There are some persons who think that banks deliberately allow long lines to develop at their counters in an attempt to force customers to use online banking,” the source said.

Written by Jones Bahamas

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