This study investigates the role and nature of offshore financial centres (OFCs) and the performance of banks that operate in these jurisdictions. The major contribution of this study is that it provides (as far as we are aware) the first detailed empirical analysis not only of the evolution and characteristics of OFCs but also of the characteristics, performance and efficiency of banks that operate in OFCs. The first part of the study evaluates the factors leading to the emergence of offshore finance and details the characteristics of the countries involved in terms of their history, geography, culture and regulation. We also provide an extensive review of the main issues surrounding the development of private/offshore banking business. The second part of the study investigates the financial features of banks operating in OFCs. Overall, there are wide variations in the financial structure and performance of the banks both within and across jurisdictions. The study is completed by an assessment of the profit efficiency of these banks. Overall, it is found that profit efficiency has increased in most jurisdictions, and this appears to be related to competition in the financial sector and the economic development of the jurisdiction. There does not seem to be a relation between bank size and profit efficiency as some of the world's largest and smallest banks operating in OFCs are found to be among the most profit efficient operators.