As far as ownership is concerned, The Central Bank of The Bahamas prefers that institutions applying for an unrestricted banking licence be owned by another highly reputable financial institution, or well established entity. In the case of an existing bank applicant the outward authorisation of the relevant government regulatory authority under which it fails should be obtained in writing. Where this does not apply, The Central Bank of The Bahamas requires that the beneficial ownership be spread over a minimum of five (5) individuals independent of each other, who will hold the shares in such manner that not one person can have dominating control of the bank. Each such individual is required to submit an audited statement of his net worth or any other proof acceptable to the Bank Supervision Department.
The attached copy of Supplement Part 11 of the official Gazette dated 18 th November, 1965 will provide details of the requirements necessary for processing an application for a licence to carry on banking and/or trust business in the Bahamas. Prospective shareholders will be required to attend an interview at The Central Bank or The Bahamas some time during the application process and must submit:
- a business plan covering five years of financial projections
- details regarding operational controls to be implemented by the bank
- a five year pro-forma income statement and balance sheet
The capitalization of a bank is determined by the types of activities the institution proposes to undertake. The following information may be used as a guide:
(a) The minimum paid-up capital for a public bank and/or trust company is $2,000,000.
- Public banks and/or trust companies are required to raise their capital funds to 5% of total assets, or 8% of risk assets as their business grows.
- No more than 10-1 5% of total assets may be loaned to, or invested in, any one business or group. For public trust licensees a fidelity or bankers blanket bond coverage of $1,000,000 is also required.
(b) The minimum capital requirement for the restricted categories are specified in the schedules.
There are two ways to establish a Bahamian operation; namely (a) as a branch of a parent organisation, or (b) as a subsidiary. In either case the licence application procedure is the same, but establishing a subsidiary will involve incorporating a Bahamian company to hold the Banking Licence.
The estimated costs involved are as follows:
Formation:
Incorporation fee 2,500.00 Estimated fee for work involved in advising and assisting with the licence application to The Ministry of Finance, the Exchange Control Application and registration under Section 4 of The Banks Act. 12,000.00 First year Licence Fee 25,000.00 Total Formation Costs $39,500.00
Annual:
Government Licence Fee 25,000.00 Estimated fee for corporate representation (may vary depending on work and responsibility involved) 15,000.00 Total annual fees (estimated) U.S.$40,000.00
Account administration fees:- by appraisal.
The attached copy of the list of fees payable for various categories of financial institutions under the Banks and Trust Companies Regulation Act, 1965, indicates that a $1000 annual Government fee is also payable by Bahamian incorporated companies under the Companies Act, but which is deductible from the fees payable under The Banks and Trust Companies Regulation Act, 1965.
MANAGING AGENT
In appropriate circumstances, Deloitte & Touche Corporate Limited (DTCS) will consider acting as Managing Agent for well established banks and providing such services as may be necessary for an efficient operation, which are basically as follows:
- The nomination from the staff of DTCS of officers to fill the senior post in the local branch, e.g., the resident local manager and assistant manager. These officers will act on a part time basis and substitutions may be made from time to time by mutual agreement.
- The nomination from the staff of DTCS of a director or directors to fill Board positions as required, and as in the case of a branch, substitutions may be made from time to time by mutual agreement.
- The provision of an office in DTCS's premises for the non-exclusive use of the branch. DTCS would arrange for the exhibition of the bank's name-plate outside it's offices.
- The maintenance of the books of account under titles approved by the bank's head office. It is fairly common for the detailed accounting work to be undertaken by the parent bank which submits reports to DTCS from time to time to enable DTCS to maintain an up-to-date record of the operating position of the position of the branch or subsidiary together with a record of its of its deposits and loans.
- The preparation, in conjunction with the parent bank's head office if necessary, of any returns required for submission to the Bahamian Authorities.
- The payment on the due date of the annual license fee due to the Ministry of Finance from funds provided by the parent bank. The license fee is $25,000 per annum at present.
- Filing a copy of the parent bank's Audited Balance Sheet with the Bahamian Authorities annually; and arranging for the publication in the Official Gazette as required by law.
The scope of the Managing Agent's services and remuneration would be set out in a formal agreement, and DTCS would expect the parent bank to provide it with a suitable indemnity.
The remuneration would depend upon responsibility and the volume of transactions or other work. A fee would be quoted initially and would be subject to review and adjustment on reasonable notice in the light of experience. With a Fiduciary or International Private Banking operation, annual administration fees would normally be shared with the parent bank.
MINIMUM CAPITAL REQUIREMENTS OF LICENSEES UNDER THE BANKS AND TRUST COMPANIES REGULATION ACT, 1965
Public Categories:
Bank only $1,000,000.00
Bank & Trust $1,000,000.00
Trust only $1,000,000.00
Restricted Categories:
Bank only $ 100,000.00
Bank & Trust $ 100,000.00
Trust only $ 100,000.00
Nominee Trust $ 10,000.00
Non-Active Categories:
No minimum capital requirement is stipulated.
FEES PAYABLE UNDER THE BANKS AND TRUST COMPANIES REGULATION ACT, 1965
CATEGORIES OF LICENCES FEES PAYABLE
Authorised Agents and Authorised Dealers $ 160,000.00
Authorised Dealers $ 100,000.00
Authorised Agents $ 60,000.00
Other Public Institutions $ 25,000.00
Restricted Bank and Trust $ 5,000.00
Restricted Bank $ 5,000.00
Restricted Trust $ 3,000.00
Non-Active Bank and Trust $ 1,800.00
NOTE:
An annual fee of $1000 is payable on January 1 each year under the Companies Act to The Registrar of Companies, in addition to the fees described above, but only where the Licensee is a Bahamian registered company. This is deductible from the Licence Fee.
SCHEDULE(Regulation 2)
In this Schedule, 'applicant' means the applicant for a licence under section 4 of the Act.
PART I
Particulars to be supplied by every applicant for a licence.
1. Name of the bank or trust company.
2. Address of Head or Registered Office.
3. If Head or Registered Office is outside the Colony:
a) Address of Principal Offices in the Colony.
b) Name of the Officer who is to be the Bank's or Trust Company's authorised agent in the Commonwealth of the Bahamas.
c) Name of the other Officer, who in the absence or inability to act for the Officer named under (b) above is to the Bank's or Trust Company's authorised agent in the Commonwealth.
4. Financial year of the Bank or Trust Company.
PART II
Additional particulars to be supplied by applicants for licences other than banks or trust companies specified in the Schedule of the Act.
1. Name, address and professional qualifications of Auditor or Auditors.
2. Full names with addresses, nationalities and references of all persons who are directors, partners managers or officers.
3. Names with addresses and nationalities of all persons who are shareholders.
4. Name of all subsidiary companies of the applicant with addresses of their registered offices.
5. Copy of the Act, Charter, Certificate of Incorporation or Memorandum of Association and Articles of Association or Partnership Agreement of the applicant, as may be appropriate, verified by a statutory declaration made by a director, secretary or partner and duly authenticated as follows:
- In the case of a company incorporated in the Commonwealth of The Bahamas, certified in accordance with the provision of Section 15(4) of the Companies Act.
- In the case of a foreign company and authenticated under public seal of the country, city or place under the laws of which such company has been incorporated.
- In any other case, authenticated in like manner to a deed or document when required to be registered under the provisions of the Registration of Records Act.
6. References, including one from a Bank or Trust company.
7. Status for the purpose of the Exchange Control Regulations Act and any regulation made thereunder and in force at the date of the application.
8. True and full yearly statement of its account certified by a director and the Auditor that such statement is properly drawn up so as to exhibit a true and correct view of the state of the applicant's affairs in respect of:
- The accounts of the last financial year; and
- The accounts of the penultimate financial year.
9. Statement of assets and liabilities at the end of the month prior to the submission of the application certified by a Director or Senior Officer.
10.Statement of capital of any other company held, directly or through a subsidiary or a nominee as an asset of the applicant.
DEFINITION OF TERMS
Authorised Dealer:
An authorised dealer is a bank which has been authorised by the Central Bank to deal in gold and all foreign currencies, within the limits laid down in Exchange Control Notices issued by the Bank. Under authority delegated by The Central Bank, an authorised dealer can approve certain applications for foreign currency within specified currency and specified limits.
Authorised Agent:
An authorised agent is a bank or trust company authorised by The Central Bank to deal in Bahamian and foreign currency securities and to receive securities into deposits (i.e. to act as custodians) in accordance with the terms of Exchange Control Regulations Act 1956 and Exchange Control Notices issued by The Central Bank.
Public Licensee:
One who is permitted to carry on banking and/or trust business with members of the public. The institution's exchange control designation determines whether the licence is 'resident' or 'non-resident".
Resident:
A resident status allows a bank for trust company to deal only in Bahamian Dollars, but operations in foreign currencies require Exchange Control authorisation. Trust companies with resident status are allowed to deal in foreign currency securities on behalf of non-resident customers.
Non-Resident:
A non-resident designation permits a bank and/or trust company to operate freely in foreign currencies, but Exchange Control approval is necessary to operate a Bahamian Dollar account to pay local expenses.
Restricted:
A restricted bank and/or trust company is one which is allowed to carry on business for certain specified persons whose names appear in the licence.
Non-Active:
A non-active company is one which is either in voluntary liquidation or wishes to keep the word "bank' for "trust' in the company's name even though it is not carry on any banking or trust business.
Nominee:
A nominee company is one which holds securities and other assets in its name on behalf of clients of its parent bank or trust company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
