The founder of a global private banking group, EFG International, has launched a new private bank in The Bahamas, arguing that this country's financial services sector has continued opportunities to grow notwithstanding ever-evolving global regulatory standards.
Lawrence Howells, co-founder of Capital Union Bank, has taken on eight staff to date and anticipates growing beyond the capacity of his present office space within the year. Howells has significant experience growing companies, with EFG International, where Howells served as chief executive officer until June 2011, having grown to serve clients in 30 locations globally and to employ around 3,000 staff.
"We felt The Bahamas is a wonderful jurisdiction from a growth perspective. It's clearly a low-income jurisdiction and I think the sovereign risk is interesting to people. It's close to the U.S., and the government stability is impressive when compared with what's going on elsewhere in the world, and it is certainly open to the global investment community when a number of markets aren't.
"It's an attractive long-term place, and with the growing infrastructure and a whole host of other developments coming on stream we think it is terrific. We think The Bahamas will continue to grow even after there is a global automatic exchange of information," said Howells, who co-founded Capital Union Bank along with Clement Ducasse, after 36 years in the industry.
The establishment of the bank is positive news in the wake of the decision by UBS (Bahamas) to close the banking side of its operations in The Bahamas in recent months.
Howells said that while business models that may have worked in the past in the offshore sector may no longer be viable, there are other reasons why he thinks The Bahamas can continue to attract high-net-worth individuals to bring their assets to this country.
"I think the reality is that whatever it was that was done over the last 10, 20 years by a number of high-net-worth individuals who maintained assets offshore is not a viable model going forward, but there are other reasons, sovereign risk concerns, or asset protection, the fact that U.S. people setting up trust accounts here after two years would be protected from bankruptcy claims or old business claims. Or you may have someone who says, 'I don't want to be exposed to having all my assets in the U.S. frozen when there is a civil dispute', so there are reasons like that," he said.
"I think a lot of people will also have to make decisions to manage their tax exposure by managing their travel programs. People can reduce their tax exposure if they spend less than a certain amount of days in a particular country, but you need a residence of some kind and people will look for countries of residence with lower taxation.
"Provided you have a residence and a legal, official permanent domicile and you don't spend more than 'x' amount of time in a jurisdiction, and you are not employed there, then you will not be taxed there. Then the question becomes where will you bank and it's not all that unreasonable that you will want to bank where you live," said Howell, of the opportunity he foresees for Capital Union.
Howell said he considers The Bahamas to be a "remarkable" jurisdiction as far as the ability to attract the "global ex-pat and non-pat community", given the combination of its location, a reasonable home purchase market, substantial airlift and other factors.
Focusing on custody and execution services, money market, foreign exchange, over-the-counter (OTC) and derivatives instruments, among other offerings, Capital Union, he said, will not seek to distinguish itself by its product offerings, but by its service levels.
The bank intends to go after high-net-worth individuals generally, rather than focusing on a particular market.
"I don't see any geographic constraint, but having said that the Latin American market would be a place to be more logically focused," said Howell.

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