Bermuda’s financial services industry will go from strength to strength as the Island’s bond with Halifax in Canada continues to grow, according to business experts.

A string of companies have announced plans to open offices in the Nova Scotia port city in recent weeks to take advantage of its emerging reputation as a leading business centre.

The trend has developed as the Nova Scotia city offers tax breaks to financial services firms to counter a brain drain and offset declines in its traditional industries.

Companies to move into Halifax so far include hedge fund administrator Olympia Capital, Butterfield Bank, reinsurer Flagstone Re and New York-based Citco Group, which has an office in Bermuda. Bermuda-based West End Capital is also planning to establish an office in the city.

Finance leaders say the link-up provides firms with an ideal way to expand without putting too much pressure on Bermuda’s infrastructure.

They say relatively routine tasks, such as accounting and administrative work, can be done overseas and still benefit businesses in Bermuda.

Firms branching into Halifax are also able to tap into the large pool of talent at the city’s high number of universities without the need to pay for work permits.

Meanwhile the fact that Halifax and Bermuda share the same time zone helps keep operations between the two as smooth as possible.

David Ezekiel, president of the Association of Bermuda International Companies, welcomed the connection with Halifax.

He said: “This is a natural progression and it will be a continuing trend. We are going to see a lot of very routine tasks outsourced to places like Nova Scotia.

“There are limited resources here in Bermuda. We are not geared to taking on increasing numbers of data processing staff that some of the financial type operations need in order to grow.

“Every operation as it gets more mature starts building up a system of processing which becomes very routine and standard. That routine work can be done elsewhere yet we retain the customers. This means businesses can continue to grow.

“It works well for us. Any new company that comes to Bermuda creates jobs. If we turn a company away because we can’t handle their tasks, we can’t create those jobs.”

Asked if Halifax could begin to rival Bermuda for future business opportunities if the trend continues, Mr. Ezekiel replied: “There is no danger. It will be complementary.

“The sort of business that comes to Bermuda is innovative and needs a lot of talent on board to keep going. It needs a certain kind of legislation and structure, which we have in Bermuda, and that is not going to stop.

“The ability to outsource is a huge positive for the Island.”

Chamber of Commerce chairman Peter Everson added: “This is an ordinary part of business and it is nothing new. It’s not a surprise, it’s evolution.

“This underlines the fact that Bermuda is going more and more towards a knowledge-based economy.

“The jobs here are still the ones with the highest value. The ones being done elsewhere are administrative support and accounting, a lot of which is functional.

“Bermuda still has the experienced professionals, good talent, infrastructure and its own government to continue to thrive. The conditions in Bermuda are right to continue to move forward.”

Last week Olympia Capital became the latest organisation to announce a move into Halifax. Bosses are expecting to create 150 new jobs in Halifax as they expand their Toronto-based services division, OC Financial Services.

As an incentive from Nova Scotia, the firm will receive a maximum payroll tax rebate of $1.5 million over a five-year period.

Company spokeswoman Carolynn Hiron said the new office would be a back-up for Olympia Capital’s work in Bermuda and stressed no jobs would be lost.

She said: “There was a combination of things that made us want to do this.

“We require chartered accountants and there is a worldwide shortage of them. It turns out for reasons unknown to us that many of the accountants that work for us have come from Canada.

“We found that when they decided they wanted to go back home, they would head back to Canada with all their gained knowledge and skills. We would then lose all that talent.

“That sent us in the direction of Canada. After that, Halifax seemed to be the best place for us. They have several universities, which gives us a pool of professional people to draw from. We were also well received by Nova Scotia Business Inc.

“This will make no difference to the way we operate in Bermuda. Our head office is still here and we will continue to do the same work we have always done well. It will have no impact on jobs in Bermuda whatsoever.”

Ms. Hiron said she could understand why other firms were forging similar links with Halifax.

She added: “I suspect companies are having the same difficulties we are having with the shortage of accountants.

“There’s no place on earth like Bermuda — we are not going to duplicate it. But Halifax is an attractive area. It is in the same time zone, the fit is nice and I can see why other businesses might find it attractive.”

Earlier this month, Butterfield Bank announced it would be setting up a fund administration centre in Halifax, employing 700 staff. The bank will receive a payroll tax break of up to $9.1 million if job targets are met within seven years. No jobs in Bermuda will be lost.

West End Capital hopes to employ up to 75 people, although it is not clear whether that includes staff working for affiliated company Flagstone Re.

Flagstone Re set up its data centre in Halifax some years ago, while Citco Group is to establish back office facilities in the city, hiring up to 350 people.

Halifax offices help Bermuda