Banking on the Dominican Republic
By Ken Stier

(FORTUNE Magazine) – Still recovering from a scandal that brought down its second-largest bank three years ago--and another $400 million financial fraud this year--the Dominican Republic wouldn't seem the best place for an international banking center. But that hasn't deterred Gaetan Bucher, a 38-year-old Swiss-Dominican banker, from trying to build a Latin American financial center near Santo Domingo. Bucher, who refers to the 2003 bankruptcy of Banco Intercontinental as a "necessary evil" that resulted in long-overdue banking reforms and ushered in a new "intolerance for corruption," wants to tap into the multitrillion-dollar pool of emerging-market debt, attract private and corporate banking, and eventually start a regional stock exchange. He says that he and his backers have already spent $20 million developing a plan with the help of Deloitte Consulting; Mercer Human Resource; Washington, D.C., law firm Patton Boggs; and Charles Manatt, a former chairman of the Democratic National Committee and onetime ambassador to the Dominican Republic. "They are well aware of the challenge they face," says Manatt, referring to the country's troubled banking past. The financial center will operate under free-trade-zone law, independent of local authorities. "The extraterritoriality," Bucher says, "gives us distance from local evils to allow us to run an efficient financial center." But Bucher, whose father was director of the Dominican sugar council, faces other challenges. Although emerging-market debt is growing--up 18% last year, to $5.5 trillion--the large financial institutions that hold much of that debt aren't comfortable dealing with unproven startups. "It's tough enough to do if you are sitting at 55 Water Street," says Michael Chamberlin, executive director of the Emerging Markets Trading Association. "I don't see it explained in a way that shows me how well-thought-out it is." That's the hurdle Bucher will have to overcome when he starts raising $800 million this fall.