Deputy Premier and Minister of Finance Paula A. Cox, who was in Bahrain last week and held talks during her two-day visit to Bahrain with Minister of Finance Sheikh Ahmed bin Mohammed Al-Khalifa, said Bermuda was preparing to host the first Islamic financial institution by the year-end.

After talks with officials and bankers she was positive about the outcome of efforts aimed at establishing the first Islamic bank or Takaful company by the fourth quarter of the year.

Bermuda's deputy premier said the double taxation agreement with Bahrain has helped to create an opportunity for both financial centers to create further synergies while working in Islamic banking, Islamic insurance and fund industry.

"The landmark double taxation treaty with Bahrain, the first of its kind in the region, has paved the way for possible cooperation in a variety of areas within the financial sector. We are certain that once the joint economic committee is announced this will look into all details of future cooperation," she said.

Talking about Bermuda's preparedness to enter Islamic banking and finance she said that the spadework has already been done and further cooperation with Bahrain would help create a proper climate for such institutions to grab opportunities.

During their stay, the 12-member strong delegation led by Cox explored the opportunities of cooperation with Bahrain in the fields of Islamic banking, Takaful and other areas of interest including capital markets.

Experts from both sides discussed at length the possibility of cooperation with the possibility of how Bahrain could replicate the Islamic banking and Islamic insurance model for Bermuda in line with the recently signed double taxation agreement, also known as DTA.

Under the terms of the DTA, Bermuda and Bahrain have agreed to work together to develop a multi-faceted relationship and explore numerous opportunities covering investment, insurance and reinsurance.

Peter Hughes, group managing director, Apex Fund Services, said that the Bahrain and Bermuda cooperation would complement and strengthen the positions of both financial centers.

Peter, who has been in Bahrain for the past seven years and serving across the GCC, said the investment potential in this part of the world is very high. "As close of last year, Apex had 30 funds with asset under management worth $3 billion. We are very much active in the market and Apex has benefited from the qualified Bahraini fund managers," he added.

Colm Homan, partner at PricewaterhouseCoopers, who put together the recommendations for the Islamic insurance business, said Bermuda was ready to launch the Takaful business.

"We have conducted exhaustive study on this subject and many areas have already been covered in terms of rule and regulations. We are also seeking help from Bahrain to set up a right framework for Takaful business. Having said that, we are anticipating the first Takaful company to kick off business later this year," he added.

"The indicators of study show that Bermuda can establish itself as a Takaful center in the Western Hemisphere. Just look at the size of the US market and the chances of attracting huge business by Takaful companies based in Bermuda are very bright," he said.

Wayne L. Brown, assistant financial secretary with the Ministry of Finance, said the DTA is seen as a turning point between Bahrain and Bermuda.

"I was personally involved in developing the DTA legal framework and the contents of the agreement are very comprehensive in terms of two-way cooperation," he said.

"Bahrain being the free trade agreement (FTA) signatory with the US can get additional benefits from the Bahrain-Bermuda DTA. Businesses and companies can use Bermuda or vice versa as a launching pad to reach the US market for Bahraini businesses and to tap opportunities across the GCC by using Bahrain as a gateway by Bermuda-based businesses," he said.

"Bermuda can be an ideal destination for tourists traveling to the West from the GCC and in the coming months we will be working on enhancing cooperation in tourism and leisure industry," he said.