
Number of institutions drops while total assets have plunged to $173.2 billion

The financial services sector in The Bahamas continued to shrink last year with the closure of a number of financial institutions, as they buckled under the harsh conditions brought on by the COVID-19 pandemic.
The number of institutions in the eastern Caribbean country has declined to 217 while the total assets of the financial services sector have plunged to $173.2 billion. This is a contraction in the sector, where in the last five years there has been a bottoming out in the sector.
In 2019, the number of financial institutions in the country was cut to 221 coming from 231 in 2018 and 249 in 2015. At the same time, there has been a commensurate plunge in total assets in the sector.
In 2019, total assets plunged to $186.6 billion coming from $262 billion in 2015. Employment in the financial services sector dropped to 3,843 in 2020, compared to 4,001 in 2019 and 4,366 in 2015.
Some growth in the financial sector
However, despite this decline in the sector, Central Bank Governor John Rolle is highlighting that there has been some growth in the public bank and trust companies segment, which currently is comprised of 84 financial institutions.
Rolle states that, “we’ve seen some gradual interest in private trust companies, which is a relatively new construct within the bank and trust companies regulation framework, so that is an area with growth”.

According to the Central Bank Governor, “…that doesn’t necessarily translate into on-the-surface growth in the level of employment and other shifts that one would see in the core operations. In the core operations of the banks and trust companies, what has really been driving trends is the global shift in the tax compliance regime, we believe more so than even the AML (anti-money laundering) and other pressures in the sense that clientele in many cases are going back to the European or OECD (Organization for Economic Co-operation and Development) home countries for tax compliance reasons. So that has led to a lot of the investments which we continue to see.”
Rolle observed that, financial institutions are seeing very satisfactory business growth in some new markets such as in Latin America, “so I think that bodes well for potential future opportunities, but it also hints at the ongoing need to monitor how one adjusts to the tax compliance mandates”.
Financial sector under considerable pressure in recent years
The local financial services sector has been under considerable pressure in recent years, as international regulatory bodies impose ever-shifting global standards. The government has placed significant legislative focus on compliance to ensure this jurisdiction avoids or is removed from black and grey lists.
The recently released Global Financial Centers Index 29, which is compiled each year by Z/Yen Partners in collaboration with the China Development Institute, showed that The Bahamas dropped four rankings in terms of financial services to 73 this year.
Speaking to the regulatory pressures, Rolle posits that, “part of this we have to always appreciate as an industry is that we export financial services and a large amount of our standards and our approach is to make certain that our jurisdiction lines up with the global assessments. So that drives a considerable amount of the regulatory structure that we have”.
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