Cayman Islands Financial Services

On September 19, 2006, the global offshore law firm Walkers reported that their Dubai office is experiencing an increase in the use of sukuk, Shari’ah-compliant bonds. This means raising finance and accessing debt markets adhering to Islamic religious principles. This signifies that the Cayman Islands is becoming one of most preferred and leading domiciles for the vehicles in the world.

Although the sukuk market is still very small in comparison with the conventional debt market, it has enormous potential to grow from both local investors and international markets. The sukuk market is obviously of a great interest for the banks outside the region. Sukuk can be important in accessing debt without the violation of Shari’ah rules.

Taking into account that new regulations for sukuk transactions and securitization have been introduced by the Capital Markets Authority and the Dow Jones Citigroup Sukuk Index has been launched this year, sukuks seem to be filling many gaps left in the Islamic market. Sukuk has funded general business and acquisition finance, project finance as well as securitizations.

The largest sukuk in history – USD 3.5 billion bond issue by Dubai Ports – has been issued this year. A USD 200 million issue from Tabreed (July 2006) became the 1st sukuk listed on the London Stock Exchange and rated by Standard & Poors.

Managing Partner of Walkers’ Dubai office, Sukuk Al-Musharakah, said that the sukuk market continues to grow, therefore Walkers are developing more innovative sukuk structures.

Investor demand remains huge. The recent listing of sukuk issued in Cayman Islands on both the London Stock Exchange and the Dubai International Financial Exchange is expected to strengthen this demand.

Developed and marketed in the Middle East, Sukuk predominantly use Cayman Islands-domiciled issuers.

Walkers is based in the Cayman Islands with offices in the British Virgin Islands, Dubai, Jersey, Hong Kong and London. The offshore firm offers high-level skills across the legal spectrum for Cayman, BVI, and Jersey law.

Walkers was listed as the top law firm for hedge funds by total assets of funds and assets of non-U.S. funds by HedgeWorld Limited. It also was named the 2006 Who’s Who Legal Law Firm of the Year: Cayman Islands, the PLC Which Lawyer? Yearbook 2006 Leading Cayman Islands Law Firm. Also, it was called The Lawyer’s 2006 Offshore Law Firm of the Year. The company aims at providing clear and practical advice based on its knowledge of the legal, regulatory and commercial environment in the Cayman Islands and the BVI.

All over the world the Cayman Islands is considered as a sophisticated, efficient, diverse and thriving offshore financial centre. This financial services jurisdiction maintains its banking industry as a cornerstone of its success.

The Cayman Islands is famous for its stability, commercial strength, innovative legislation, Government support as well as the absence of corporate, income, capital gains, payroll and withholding taxes on domestic or foreign entities.

Currently, the banking system of the Cayman Islands consists over 389 banking companies that include 43 of the world’s largest 50 banks and the Basle Committee on Banking Supervision which is a regulatory body.

Around 30 banks hold the Category “A” licenses allowing them to carry on business with both residents and non-residents, while the remaining banks hold Category “B” licenses and are mostly restricted to offshore transactions with non-residents. Banks licensed in the country represent more than 60 countries.

The Cayman Islands is an active member state of the Basle Committee’s Offshore Group of Bank Supervisors.

The jurisdiction maintains an anti-money laundering regime extending to the proceeds of all serious crime defined as a so-called ‘gateway’ legislation.

By the way, the banking industry is one of the largest employers in the country, which ensures an experienced work force able to meet the market needs.