Director of the Sir Arthur Lewis Institute of Social and Economic Studies (SALISES) Dr Don Marshall says there is no need for alarm over last night’s approval of Sagicor Financial Corporation’s (SFC) plan to move its headquarters to Bermuda.
Marshall told Barbados TODAY the decision would not impact negatively on the island, as it was purely a business decision.
“I don’t see this as a cause for concern, except of course, you are going to be pointing to the legacy and the history and obviously the sort of cultural residue that an association with Sagicor has meant for Barbadians over time,” Marshall, whose research encompasses offshore financial centres, said.
“This is more by way of a cultural understanding that is being upended in the face of the need for the public as well as the shareholders to understand that management is just simply making a commercial or business decision. I say a cultural understanding being upended because the history of Sagicor in its previous incarnation as the Mutual, goes back to 1840 and there has been a long affinity in Barbados to that company in its predecessor form and then in its successive form,” he explained in reference to the founding of the 125-year-old company.
Last evening’s nod from Sagicor’s shareholders was in response Standard & Poor’s (S&P) downgrading of Sagicor Life’s rating from BB+ to BB minus and Sagicor Finance Ltd’s US$150 million ten-year senior unsecured notes to B from BB minus on the heels of the lowering of Barbados’ sovereign rating to B from BB minus by the same ratings agency.
Following last night’s approval of the resolution, Sagicor Chairman Stephen McNamara said it was a bitter-sweet moment for everyone “because as we all know the company was founded in Barbados, it is 175 years old and so it is a bit of a wrench”.
McNamara said while it was an emotional process for company bosses, “at the end of the day I think it is the right decision for the company and its shareholders”.
Marshall predicted that the move would come as a shock to many who believed that “by right Barbados should be home for wooing and retaining such business”.
However, the SALISES Director reasoned that as various jurisdictions compete for international business, companies had to consider a number of factors when choosing where to register their operations.
“There is more to site factors other than the tax benefits. [There are] the cost of doing business, the efficiency of operations associated with doing business and so on that are looked at.
“And it will appear to me that Bermuda obviously offers a better environment in relation to the corporate commercial requirements of Sagicor at this time than let’s say Barbados. So at best what I would say is that we are simply losing out to our better rival in Bermuda and I don’t think it spells, in relation to the efficiencies of the business climate here, I don’t necessarily believe that it spells . . . trouble or that is a stain or blight. I just simply see it as a business decision being taken by the powers that be in Sagicor,” Marshall stressed.