Amid concerns that Sagicor’s decision to move its headquarters from Barbados would be a major blow, a Government official has insisted it is no cause for panic as Barbados is still seen as “an attractive location”.
Minister of Commerce and International Business Donville Inniss contended in an interview with Barbados TODAY that there was no need to fear that other financial services companies would follow suit.
“It is a business decision that they have taken . . . They are here for tax planning purposes . . . ,” he said, adding that, for example, “there are several companies here in Barbados for years operating that have their headquarters in St Lucia because St Lucia’s international business and financial services structure may be advantageous”.
“I would be wrong if I said I didn’t have a bit of initial concern but not to the extent to cause or create panic in the investment business world, or even in society. Staffing levels and other things at Sagicor, as far as I am concerned, remain in tact.”
On heels of former prime minister Owen Arthur saying the relocation would be a “disaster” for Barbados, economist Ryan Straughn and prominent businessman Peter Boos both said the move was not good for the country and should not be taken lightly by Government.
Boos told Barbados TODAY it would be “a huge black eye” for Barbados given its importance as a large company, and he was “significantly” concerned.
“It is obviously relocating its headquarters because of our low sovereign debt rating by S&P and that is a very serious matter, not one to be ignored or taken lightly,” said Boos.
“Barbados aspires to be recognized as a global business centre of high quality. That is our ambition. And to have Sagicor, a major financial institution with long history in Barbados, pull out from being domiciled here – and that is because of the sovereign rating we have now – that is a major problem. It is going to make selling the idea of Barbados as a high quality jurisdiction very difficult.”
“[Returning] Barbados to a higher credit rating and investment quality is critical to our national strategy . . . Weak management of our Government finances is a major concern for any business.”
In a separate interview, Straughn said the reported move was confirmation that a downgrade of the country’s long-term sovereign rating would impact some companies’ operation here, especially those seeking to raise capital on the international market at competitive rates.
Following the country’s sovereign rating downgrade last month by Standard & Poor’s last month, Prime Minister Freundel Stuart defended the island’s economic strategy, while the Central Bank insisted that the downgrade was unjustified.
However, Straughn said that given Sagicor’s decision, the downgrade could not be ignored.
“At a time when we are trying to attract capital, we have a Barbadian company now moving to get capital cheaper. So there is a slight mismatch there in terms of what the policymakers say was important or not important or not substantial or whatever the terms they chose to use.”
He said the decision also indicated that the economy was “not turning the corner as we would like”.
In a statement issued today, president of the Barbados Chamber of Commerce and Industry (BCCI) Tracey Shuffler said while several locally based businesses had solid financials and reasonable prospects for future development, the underlying country risk “cannot be underestimated or dismissed”.
“Growth and recovery are key to an improved economy, improved investment ratings and a return of investor confidence,” said Shuffler.
Although Sagicor is not a member of the Barbados International Business Association (BIBA) given that it is a local company, executive director Henderson Holmes weighed in on the discussion, telling Barbados TODAY that “we all ought to be aware that Barbados is in a very precarious position right now in terms of its rating. That rating has significant implications for financial institutions operating from here.”
However, Minister Inniss insisted that Barbados was still in a good position to attract new business.
He said the Government’s focus was on getting the economy “back up to investment grade level” and he believed the strategy was working.
“I am satisfied, based on all that I have seen, that we are poised to grow. Now, will we grow at the rate over the next 24 months or next 12 months to get us back up to AAA rating? I can’t speak to that, but I can certainly give you the assurance that we are on the right path,” he said.
Meanwhile, responding to questions from Barbados TODAY Sagicor explained that the proposed move related to Sagicor Financial Corporation and would therefore have no impact on the location or operations of its life insurance company Sagicor Life Inc.
The company also said there should be no concern about employment being impacted.
“The total staff complement of Sagicor Financial Corporation is about 15, inclusive of executive and staff. Most of these executives operate in a virtual business environment, spending quite a lot of time travelling to the various locations in which we operate. Re-domiciliation will have minimal impact on the 15 Sagicor Financial Corporation staff. There will be no impact on staff of the insurance company Sagicor Life,” it assured.