Equity Bank And Trust Bahamas Limited is successfully competing with the established large global financial institutions. IFC Caribbean spoke to Equity’s Chairman, Gilbert Cassar (GC), Vice Chairman Ivylyn Cassar (IC) and Managing Director Dillon Dean (DD) about the company’s success and the importance of small boutique financial institutions competing with the global giants.
IFC: How important is it that The Bahamas and other offshore jurisdictions nurture home grown organisations and financial institutions?
GC: Equity Bank and Trust celebrates 30 years in business this year and sees itself as a forerunner for the growing need for locally owned private banking institutions. It is no secret that considerable consolidation has occurred and will likely continue to take place among the larger global private banking institutions. Offshore jurisdictions are dominated by these global giants but the evolving wealth management environment is not only forcing them to examine how they deliver services to clients but from which centres these services are to be provided. For jurisdictions like The Bahamas, it means the door is slowly opening for home-grown and managed institutions to compete with larger players in the industry.
As an independent boutique bank and trust company Equity competes with a vast array of multinational players many of which are located in The Bahamas. The Bahamas is one of the leading international financial centres in the world with more than 280 banks and trust companies from 36 countries managing approximately US $200 billion in total assets. Many are branches or subsidiaries of financial institutions operating in countries such as the United States, Canada, Switzerland, the UK and Japan. These institutions have located in The Bahamas to take advantage of the country’s stable political and economic system to offer private banking services to high-net-worth and ultra-high-net-worth individuals and families.
It is important and desirable to have a larger number of Bahamians exercising greater control over the private banking industry. An increase in Bahamian ownership of private banking institutions in The Bahamas is the basis of a healthy competitive environment for both local and foreign owned firms. It also influences the level and quality of service and reduces operating costs and product pricing. As more locally owned institutions come about, there will be less need to import foreign management staff thus avoiding the frequent changes in personnel which is often the case with foreign-owned banking entities.
IFC: How difficult is it for smaller banks to not only compete against the global giants but also manage the pan-global organisations and their rafts of regulatory demands?
GC: Despite the far reaching implications of FACTA and a higher global focus on compliance, The Bahamas still maintains its position as one of the leading offshore financial centers and Equity’s ‘boutique’ nature is proving an advantage when competing with other larger institutions in its home base of Nassau. We have great respect for the large global wealth management institutions located in The Bahamas and the reality is that some clients prefer to work with large organizations. Quite frankly The Bahamas would not be in the wealth management business and would not have evolved into one of the leading international financial centres if some of the large foreign banks did not establish themselves here more than 80 years ago to provide services to their high net worth clients who even back then were beginning to establish residence in The Bahamas and manage their financial affairs from here.
Ironically like our large international counterparts, we too have the advantage of size, or rather our relative lack of it. We are convinced that our strength is our size. With growing emphasis on the Individual, focusing on the client is essential. It is a message we have taken to heart. Smaller firms like ours tend to avoid unwieldy bureaucratic structures, being free to concentrate fully on the client and his or her needs and treating him/her as if he/she were our one and only client.
IFC: How is your business changing?
IC: Many of our clients are now located in all corners of the world, and while wealth is still primarily in the hands of an older generation, wealth transfer from one generation to the next and the rapid and growing emergence of a younger wealth class are challenges facing both large and boutique firms.
The younger generation is more demanding and requires a greater level of reports. However, they are generally less concerned about costs but have high expectations in terms of service quality, flexibility and performance. They also have a tendency to purchase homes or condominiums in different jurisdictions away from their home base. This necessitates the establishment of locations beyond our head office to better service our clientele. As such we have established an affiliate office in Dubai which is now part of the Equity Group of Companies also located in British Virgin Islands, Panama and Switzerland. The breadth of our multi-jurisdictional group of companies and affiliates provides us with the flexibility to devise and establish entities and relationships not only in The Bahamas but elsewhere if this is in the best interest of a client.
IFC: Does your size affect your ability to operate on the global stage?
DD: Operating in multiple jurisdictions is in a way copying the playbook of larger international institutions and may not suit or be a practical undertaking for most small locally owned banks. It can be a financial stretch for a small firm to maintain an international network of offices or affiliates but you can’t rely solely on organic growth from your client base to grow your bank’s business. Big institutions have their own internal feeder systems .We can’t just sit here complacently in The Bahamas hoping for clients to knock our door. A small firm has to compete more aggressively and be prepared to step outside of its comfort zone while at same time staying true to what distinguishes its reputation and relationship with clients.
IFC: Do you feel that The Bahamas is supportive of its home grown financial institutions?
DD: Capital constraints and The Bahamas stringent regulatory review, acceptance process and corporate governance requirements are factors that will slow the growth of locally owned private banks but we at Equity favour this type of approach for the Bahamian corporate private wealth management industry. The government and its regulatory bodies such as the Central Bank of the Bahamas and the Securities Commission of the Bahamas ensure that The Bahamas continues to be recognized as a progressive but compliant centre for financial services. The country’s reputation in this regard cannot be compromised. Equity and other Bahamian owned banks have benefited from these operating standards. Others will undoubtedly follow our lead which will not only boost recognition of the Bahamas’ capacity to deliver world class and home grown expertise and service by locally owned firms but give the local economy a great boost through the employment opportunities this will create.
IFC: And what does The Bahamas offer potential clients?
GC: For those clients who are considering relocation or a second home away from their home base the advantages of living in The Bahamas are as clear as the crystal waters that surround it. The Bahamas is located in one of the most idyllic tropical settings in the world and offers many incentives to relocate permanently or to establish a second home. The most advantageous conditions have been created for wealthy individuals and their families to live and work in a tropical paradise where their assets are protected and their confidentiality is assured.
IFC: How do you see Equity Bank and Trust developing?
GC: The constantly changing global economic environment demands an increasingly complex process for personal wealth management and a service provider that understands the intricacies and challenges that come with that responsibility and mandate.
Such a broad range of services for a bank built on a boutique framework is a pressure point for training and professional development at Equity. We espouse a high standard of service to our clients and back that up with ongoing training for our key personnel to meet the diverse needs of our clients. Our skill goes beyond our core competence as we have learned over time that those who cling to the past generally find themselves left behind.
This is why we set ourselves new standards for efficiency, quality discretion and authority with each new client. This can also mean that we may find ourselves specializing in areas tomorrow that do not yet belong to our core competence today. For us, as a comprehensive and boutique bank and trust company, there is simply no other way to ensure that our clients’ complex requirements receive the attention they deserve whether we are advising individuals, business owners or companies.
*Equity Bank And Trust Bahamas Limited is one of a small group of Bahamian owned and managed banks and trust companies that is competing successfully on the international stage. Since its establishment in 1985, Equity and its affiliates have developed the broadest range of banking, investment funds, trusts, foundations, corporate products, trustee of pension funds, private trust companies and related services. Private banking is the foundation of the Bahamas comprehensive financial services offerings and Equity is at the forefront of independent Bahamian banks with the knowledge, agility and experience to meet the evolving needs of international clients.