HALIFAX ? Long a source of tourists for Bermuda, the Canadian city of Halifax is becoming a source of skilled labour for the Island?s financial institutions.

The Nova Scotia capital has embarked on a strategy of becoming an administrative centre for financial companies, especially for offshore firms. And the scheme is paying dividends as five financial firms with links to Bermuda are setting up offices in the city, and plan to employ about 1,000 people eventually.

The Halifax offices will provide such services as fund administration, pricing of securities, accounting and some research functions. The city?s relatively low cost base, proximity to Bermuda and educated work force make it an ideal location for such back office functions, and the strategy should help Bermuda companies to grow without fear of labour constraints.

?We?re billing Halifax as a world centre for financial services, and from Bermuda?s perspective it allows them [Bermudian companies to grow their base internationally,?? said Stephen Lund, the chief executive of Nova Scotia Business Inc., or NSBI, the provincial agency that attracts business to the province. ?It?s all about making sure their companies have enough horsepower to keep growing.??

The parade of offshore firms, who are receiving payroll subsidies in return for coming to Halifax, began last December when West End Capital Management, a fixed-income fund manager affiliated with billionaire investor Warren Buffett, announced it would set up an office with 75 people in Halifax. Then this month, Bermuda-based Bank of N.T. Butterfield & Sons Ltd. said its fund services unit would hire about 400 people in the next seven years. Hedge fund administrators Citco Group and Olympia Capital then unveiled plans to open Halifax offices with 350 and 150 employees respectively.

Today, Marsh Inc., the insurance services arm of New York-based Marsh & McLennan Companies, Inc., will announce it is opening an office in Halifax to oversee captive solutions (an alternative source of risk management in which several parties that need insurance come together and own the vehicle providing insurance to them.) Marsh spokesman Jonathan van Bilsen said the office will employ 150-175 people within five years. Marsh already has an insurance brokerage in the city.

The courting of Bermudian businesses began about a year ago when J.P. Robicheau, a business development executive with NSBI, began to cold call the island?s financial firms and ascertain what they needed in terms of human resources and infrastructure. ?We were very sensitive about what the local citizens would think and were careful to make sure their considerations were taken into account,?? he said. Lund and Robicheau both stressed Halifax is not taking jobs from Bermuda but allowing Bermuda companies to grow by hiring new employees in Halifax.

Along with the insurers and lenders that already have offices in Halifax, officials say the city is establishing a cluster of businesses, which should allow the further growth of the sector in future years. By cluster, they mean enough administrative positions are being created in Halifax that other financial companies will feel comfortable opening offices, knowing they could draw from the existing talent pool. Fred Morley, chief economist at the Greater Halifax Partnership, a public/private sector agency that promotes the city, said about 14,000 people in the city were already employed in financial services, mainly Canadian banks and insurers, before the offshore companies made their announcement.

?The recent announcement reflects about 7 to 10 percent growth,?? said Morley. ?It?s really important, but it?s not going to overwhelm us.??

One notable facet of the recent announcements is Halifax is gaining exposure to the hedge fund industry for the first time, which is important because of the growth of these funds.

Officials in Halifax believe the city can meet the rising demand for skilled labour from two sources ? universities and expatriates. Eleven universities are based in Nova Scotia, and there are business schools at two in Halifax, Dalhousie University and St. Mary?s University. Representatives of the schools said their curriculum will gradually be tailored to meet the needs of the offshore firms so that they can continue to supply the firms with new employees.

Yet the limited opportunity in the Maritime Provinces has created a brain drain for several decades, and Nova Scotian expatriates are spread across Canada and other parts of the world. The Nova Scotia government hopes that the growth of the financial services sector will allow some to find lucrative jobs by returning home. NSBI?s Lund himself lived in Southampton, Bermuda from 1991 to 1996, where he worked for Butterfield Bank, and returned home to Nova Scotia to head the province?s business development agency. He stressed that Robicheau led the province?s negotiations with Butterfield.