Last week, the British Virgin Islands held a grand opening for the Bank of Asia, an institution that offers banking services to the territory’s roughly 200,000 BVI-registered businesses with ties to Asia.
The Bank of Asia has been touted as something that will stem the tide of companies leaving the BVI.
The territory has seen the number of BVI-registered companies reduced from more than 800,000 in the mid-2000s to roughly 400,000 now, in part because the companies have had difficulties obtaining banking services there. Unlike Cayman – which has some 150 offshore banks – the BVI’s banking sector is mostly comprised of domestic banks, and has not had a new bank open there in decades.
Moreover, those BVI banks have been increasingly reluctant to do business with companies in the BVI’s offshore financial sector due to increased regulatory costs and a decreased appetite for risk. This growing trend – known as “de-risking” – has left the territory scrambling for a solution to fill the growing void left by the major international banks, and BVI officials are now counting on the Bank of Asia to be that solution.
“There is a long-term retrenchment by Western financial institutions. They are risk adverse, have weak balance sheets, and are hampered by cumbersome regulations. Many see this decline accelerating in coming years …. In a fast-moving business environment, neither the BVI nor its clients can afford to wait,” said the territory’s Premier Orlando Smith. “This is where the Bank of Asia can step in and play an important role.”
According to Bank of Asia officials, making the BVI a jurisdiction where companies can park their cash would be a value-added service that could help stop the hemorrhaging the territory has experienced since the mid-2000s.
“We expect that the number of [business companies] annually will increase to the level of previous years as more new accounts will be opened,” said Bank of Asia President Joycelyn Murraine.
Unlike typical commercial banks, the Bank of Asia will operate almost exclusively on an online platform, which officials say will keep costs low and allow the employment of “cutting-edge technology” to ensure the bank does business only with legitimate customers.
Bank of Asia will initially only offer traditional banking services, such as deposit-taking and lending, to the roughly 400,000 companies registered in the BVI – specifically, to about 200,000 companies with ties to Asia, according to Bank of Asia founder Carson Wen.
An affiliated company, BOA Financial Group, based in Hong Kong, will reportedly offer wealth management, investment advisory and investment banking advisory services.