The Banker presents the first ever Financial Centres of the Future awards, which celebrate the jurisdictions that have made the greatest strides in terms of growth and infrastructure in the past year.
Most countries with a serious development agenda aspire to create an international financial centre. As well as providing funding for domestic companies, a successful financial centre will be a source of expertise, technology transfer and profits.
There are challenges, too. For some time international financial centres have been under pressure from governments and regulators (but not necessarily their own) to have proper anti-money laundering controls in place. Tax evasion is another contentious issue.
Given this backdrop, The Banker decided it was time to provide recognition to those centres excelling in terms of growth, certainly, but also in terms of quality of regulation and supervision; infrastructure and business support services; as well as overall political and economic stability.
In our first ever Financial Centres of the Future competition, entries were received from a wide range of geographical locations. Our editorial judging committee deliberated long and hard before coming to their conclusions.
Remember that, as always with The Banker, the award is made on the basis of the past year’s performance. If we just considered absolute size and sophistication, clearly centres such as London and New York would have a big advantage. Our awards give credit to the centres that have made the biggest improvements over the past 12 months.
OVERALL WINNER & ASIA-PACIFIC WINNER:
SINGAPORE
Strong regulation and diversity of instruments and service sectors have gained Singapore the award for best financial centre of the future 2005 in The Banker’s inaugural competition. With a thriving financial sector – which grew in 2004 by 17.4% to $11.9bn, contributing over 11% of GDP – the presence of 110 international banks, 141 insurance companies and 250 international fund managers, Singapore has a great story to tell.
On the capital markets front, it has the largest stock market in south-east Asia and the Asian dollar market, and it is one of the major centres for asset management in Asia-Pacific. Its treasury markets and commodities markets also have a significant presence, and its insurance sector hosts many of the region’s biggest players and some international specialists.
Singapore also enjoys a well-regulated financial system and a strong legal and judicial framework, also benefiting from the presence of international accounting and legal firms.
The city-state offers a prolific environment for finance and business in general. It takes only six working days to get a new business up and running, placing Singapore at number two, after New Zealand, in a recent World Bank report ranking 155 economies on key business regulation and reforms.
Its regulatory system aims at guaranteeing the stability of the financial system and that markets are fair, efficient and well organised. Its supervisory system provides an independent audit of the regulatory authority.
“We are pleased to be selected for this inaugural award by The Banker,” says Heng Swee Keat, managing director of the Monetary Authority of Singapore (MAS). “MAS is committed to our vision of Singapore as a leading global financial centre: one that is competitive, fosters enterprise and innovation, and maintains high supervisory standards. We have made good progress in these areas and will strive to do better.
“As Singapore prepares to host the 2006 Annual Meetings of the Board of Governors of the IMF and the World Bank Group, we look forward to welcoming some 16,000 delegates from 184 countries to Singapore.”
EUROPE WINNER:
ISLE OF MAN
The Isle of Man’s financial sector has been constantly growing in the past years, confirming its attractiveness as an international financial centre. The island has strong regulatory and supervisory systems and operates comprehensive depositor, investor and policyholder protection schemes together with its offshore financial ombudsman scheme.
Its politically stable government, stable economy, competitive operating costs and availability of international legal and accounting expertise make this island (located between Northern Ireland and England in the Irish Sea) a welcoming destination for financial institutions and businesses. Also, to further increase its attractiveness, the Isle of Man is introducing a zero rate of tax for businesses in April 2006.
“This prestigious award recognises the Isle of Man’s strength as an international jurisdiction for financial services and other business. The steps that the island is taking ensure the continued growth of its finance sector and lay the foundations for a successful future,” says treasury minister Allan Bell.
“The award also recognises the benefits to investors of the island’s political stability, general low taxation and dynamic economy, supported by a harmonious
regulatory and fiscal environment and recently endorsed by the reconfirmation of the island’s AAA long-term sovereign credit rating by Standard & Poor’s, which provides the required platform for AAA-rated companies to base themselves here.”
Runner-up: Jersey
Jersey’s comprehensive regulatory framework won it the runner-up prize for the European region. Its financial regulatory and supervisory system has been upgraded to meet international standards for financial institutions and activities, anti-money laundering and combating the financing of terrorism.
The island (one of the Channel Islands located between England and France) showed an impressive growth in its financial sector and a state-of-the-art infrastructure system to meet financial institutions’ technological and operational needs.
Judges were also favourably impressed with Jersey’s partnership with Cass Business School to offer executive management education locally and to strengthen and retain talents in the area.
MIDDLE EAST & AFRICA WINNER: BAHRAIN
Bahrain is the region’s leading financial centre and the Gulf’s longest established commercial and business centre. Many years of development and experience give Bahrain a strong reputation as a business and financial centre. It offers a liberal and low-tax economic environment and is undergoing a series of important political and economic reforms.
Dr Abdul Rahman Saif, executive director, corporate services, at the Bahrain Monetary Authority (BMA), the central bank and banking sector regulator, says: “Bahrain’s continued development as a mature and sound international financial centre is a matter of pride and encouragement for all of us at the BMA, as we strive to ensure that Bahrain maintains its unrivalled reputation. The BMA also strives to maintain its own reputation as the most highly regarded and innovative regulator in the Middle East region.
“A cornerstone of the BMA’s policy has been to implement international best practice to all aspects of financial supervision,” he says. “In this regard, the BMA continues its work on a major project to review and upgrade, where necessary, the regulatory framework for the entire financial services industry, covering banking, insurance and the capital market.
“The work on the regulatory framework is matched by a new integrated licensing framework, which the BMA intends to finalise in the coming months.”
Runner up: Dubai
Although a recent creation, the Dubai International Financial Centre (DIFC) is one of the most promising financial centres in the region. Created as an onshore financial services hub for the Middle East, it spreads for 110 acres in Dubai, where tailor-made civil and commercial laws apply, leaving it outside of the United Arab Emirates’ laws.
International institutions should feel at ease with the DIFC’s laws, which are modelled after the common laws of Anglo-Saxon jurisdictions. An independent regulatory regime and judicial system apply in the DIFC, marrying international standard compliance with a tax-free environment.
ASIA-PACIFIC:
Runner up: Sydney
With the largest stock market capitalisation in the Asia-Pacific region, excluding Japan, and a financial sector that is constantly growing, Sydney is our runner-up for the financial centre of the future award in this region.
Finance and insurance sectors have been growing at a steady 5.3% rate for the past 10 years, and combined the two sectors contribute 8.5% to Australian GDP.
Regulatory and supervisory systems have been reformed in recent years, providing best practice approaches and a pro-business outlook. Such an outlook has been developed in an environment that offers competitive prices to businesses compared with other major financial centres.
AMERICAS WINNER: BAHAMAS
Based in one of the most attractive locations in the world, The Bahamas also boasts a favourable tax environment, political stability, legal structure and regulatory framework that assist its leading position as an international financial centre.
“We are delighted to be named the Financial Centre of the Future in the Americas by The Banker,” says Wendy Warren, CEO and executive director of the Bahamas Financial Services Board. “It not only reflects our long history in providing financial services, which dates back to the 1930s, but also recognises the many progressive developments in our jurisdiction in recent years as we continue to meet the requirements of an increasingly sophisticated financial services marketplace.
“Close public and private sector dialogue have played a crucial role in nurturing an environment designed to encourage the continued growth of the country’s financial services sector. The recently enacted Foundations Act, positioning The Bahamas as the first premier Common Law jurisdiction to introduce foundations and the launch of SMART funds, typifies our emphasis on market-driven legislation.”
Runner up: Cayman Islands
With a strong reputation as a major banking domicile, the Cayman Islands have developed critical mass in a variety of financial services. The Cayman Islands boast many top professionals, providing legal, accountancy, corporate services and investment advice locally. The Cayman Islands has developed a robust regulatory system accompanied by good infrastructure and services for the financial community, making it our runner-up in the Americas region.
