NASSAU, Bahamas – Legislative amendments to allow for the formation of Private Trust Companies has been introduced in the Bahamas, Parliamentary Secretary, Ministry of Finance, Michael Halkitis said.
These amendments demonstrated the government’s “firm commitment to ensuring the delivery of superior financial services to local and international clients,” he said.
“This is a progressive step in the continued growth and development of our financial services industry and of our economy.”
There was consultation with relevant stakeholders – the Association of International Banks and Trust Companies, the Bahamas Financial Services Board, the Society of Trust and Estate Planners, the Financial Services Consultative Forum, the Central Bank of The Bahamas, various members of law firms, the Attorney General’s Office, the Ministry of Finance, and the Ministry of Labour and Financial Services.
Mr. Halkitis was giving the welcoming address at last week’s Private Trust Company seminar at Sandals.
The seminar was designed to discuss the use and review of legislation pertaining to Private Trust Companies.
Speakers included Michael F. L. Allen, partner at McKinney, Bancroft and Hughes; Heather L. Thompson, partner at Higgs and Johnson; and, Rochelle Deleveaux, Legal Counsel at the Central Bank of the Bahamas.
Mr. Allen explained that a private trust company is a concern formed for the specific purpose of acting as trustee of a single trust, or a group of related trusts for the benefit of members of the same family.
“Generally it has no intrinsic value; its sole purpose is to act as trustee of the family trust and so its value is usually no more than the amount of its paid-up share capital,” he said.
A substantial portion of the world’s wealth is “ultimately controlled by private individuals and their families” and the management and preservation of family wealth is a major aspect of Private Wealth Management (PWM).
PWM, Mr. Allen said, is arguably the most successful and enduring dimension of financial services for the Bahamas.
PWM for family wealth involves the creation of structures to generate wealth in a cost efficient manner, protect wealth from attack by predators and control the transfer of wealth across generations.
PWM services are typically geared to high net worth individuals and high net worth families, and managing high net worth financial wealth is a big business, Mr. Allen said.
In 2003, the money owned by these high network individuals was valued at US $29 trillion and expected to grow to about US $41 trillion by 2008, he explained.
In the Bahamas, the current regulatory environment allows for the licensing of such family trust companies with a restricted license, Mr. Allen said.
“The Bahamas has not been a jurisdiction of choice for such companies due to the costly and time consuming licensing process.”
Mr. Allen reminded the participants that approximately 27 per cent of Bahamian GDP is directly or indirectly attributable to the financial services industry; it supports around 22,000 jobs in the Bahamas, representing over 13 per cent of total employment and job opportunities are among the best-rewarded jobs available.
“Activities in the financial services sector bring high-end customers and high-end investment to the tourism industry and real estate industry in the Bahamas.
“The success of our financial service products and the industry as a whole is critical to maintaining the quality of life and ensuring a better Bahamas for the next generation,” Mr. Allen said.
