In some ways it feels like a time warp: the burning issues of today for the offshore banking world h...
In some ways it feels like a time warp: the burning issues of today for the offshore banking world have remained the same since the last offshore banking supplement we published 12 months ago. This is not a reflection of how slowly the world of banking moves but how big and complex the issues facing it are.
The most prominent problem facing banking is still the EU Savings Tax Directive, which is making a brave attempt to juggle being almost entirely pointless with being aggressively fought over for as long as possible while at the same time ensuring there will be almost no significant end result from the process.
The vast majority of countries are simply not ready to implement the directive by its July deadline. On the whole, the only countries which have made serious efforts to put the required systems in place are ironically the non-EU ones who have no legal need to follow the directive but were dragged into the debate for political reasons.
In any case, if and when the directive is finally implemented, the general bet is that the amount of extra tax revenues that will be collected will be insigificant in comparison to the hundreds of millions of dollars that have been spent by the banking industry upgrading their systems to cope with the new requirements. Not that banks will be subsidised for their efforts.
The second underlying issue for banks is the state of the economy. The recovery from the equity fallout in 2000 has been erratic to say the least. While this normally would be a bonanza situation for deposit takers, the low rates of interest have made traditional banking products relatively unattractive and unprofitable.
In the long term, tough conditions are not a bad thing for an industry, encouraging as they do innovation and progress. The attempts to fill the equity gap with protected products and bond wraps, combined with an attempt to incorporate and minimise the impact of the Savings Directive has pushed the offshore banking world into fresh ways of thinking that should ensure its future - that is, at least until the next burning issue arises.
Dylan Emery, editor
View from the front row
Project Libra unveiled
Including SJP and investment trusts
Spent two years at Sanlam
Will also assess FCA's actions