Cayman Islands Financial Services

In March, the General Registry of the Cayman Islands Government introduced an Arabic language facility in order to enable registration and other certificates to be issued with a company’s name in both English and Arabic.

The service enhancement was the result of a round table on Islamic Finance held by the Portfolio of Finance & Economics , which included representatives from Cayman Islands Monetary Authority (CIMA), the Cayman Government and private sector professionals efficient in capital markets products. This latest development became known from a press release from the Portfolio of Finances & Economics.

Ogier, international law firm, suggests that the introduction of a new Arabic language facility will trigger more valuable business from the Islamic region. According to Ogier partner Gray Smith, this move demonstrated that the Cayman Islands recognizes the Middle East as an important area for new business.

Now both Arabic and English names can be used on all documents when setting up a company and opening offshore bank accounts.

It is worth mentioning that the same was applied to Chinese characters a few years ago. It was a huge benefit for Hong Kong, where both English and Chinese are widely used.

Also, Smith predicted further inflows of money into the Middle East because clients are increasingly marketing their funds outside the Islamic region. This will be a new growth area.

Cayman is fast becoming the leading offshore jurisdiction for Islamic finance structures. Currently, its estimated market size could be between $250 billion and $500 billion.

Cayman Islands-based real estate investor Trikona Capital plans to invest $10 billion over the next several years into the infrastructure of India.

According to a co-founder and managing director, Aashish Kalra, the company plans to decide India’s problems by being socially conscious. He suggests that financiers could accelerate Indian projects and improve their returns by investing their capital in building infrastructure that includes hospitals, roads, bridges and even low-income housing.

Kalra considers that if doing the right thing for society, it is possible to create the opportunity and make profits. In accordance with his expectations, on every project it finances in India, this Cayman Islands-based company could reap at least a 25% return.

Trikona Capital is one of the largest investors in real estate projects in the world. Trikona has its offices in Cayman, USA and India.

The Cayman Islands Chamber of Commerce (CICC) based in Grand Cayman is considered to be the ultimate resource for business, investment and financial services in the Cayman Islands. It was established to promote and protect business, commerce, trade, agriculture, industries, manufactures and public welfare of Cayman and in Cayman.

CICC is a private organization, not a government agency, funded primarily by member dues. CICC is a member-driven organization having a large affiliation with local businesses and individuals. Its programs, projects, events and products are aimed at delivering strategic solutions to them.

It is worth mentioning that CICC is the largest and most influential business organization in Cayman. It has more than 600 members; 85% of them are small businesses and about 25% are employees.

Networking opportunities, community involvement, political advocacy, image enhancement, information access, numerous discounts and additional local exposure are the benefits of CICC membership.

CICC website provides lots of information on Cayman islands’ financial services, investing in Cayman, employment opportunities, CICC member programs, visiting Cayman and many other issues.

Financial Secretary Kenneth Jefferson informed lawmakers that on January 29, 2007, the total number of listings on the Cayman Islands Stock Exchange stood at 1 263 with a total market capitalisation of nearly USD 113 billion.

Tabling the financial statements of the Cayman Islands Stock Exchange for the the last financial year ended on June 30, 2006. On March 5, 2007, Jefferson said that the Exchange has remained to be self-supporting and produce profit. Debt and Eurobond listings have also went on increasing on the exchange.

When talking to lawmakers, Jefferson highlighting the major achievements. Among them, he emphasized that new issues listed numbered 164, taking the total to 1 071 for the the last financial year ended on June 30, 2006. The total market capitalisation of these issues was USD 90.61 billion. Out of this amount, USD 75.65 billion related to mutual funds.

It is also important that the continued and significant growth in debt securities has remained during the last financial year, which is one of the results of the recognition received by the Cayman Islands Stock Exchange from the UK Inland Revenue in March 2004.

The Financial Secretary stated that Mourant Cayman Limited was the law firm to become a listing agent during the financial year and bring the total to 10 listing agents, 7 broker members and 14 registered representatives.

The Exchange revenue rose to USD 1.6 million surpassing forecasts and maintaining self-sufficiency. Jefferson noted that as the Cayman Islands Stock Exchange continues to be self-supporting, no funding from the Government is required.

The Cayman Islands were recognized by the London Stock Exchange in 1999 as part of its international trading system.

The Cayman Islands Monetary Authority (CIMA) has launched a new study. The study is necessary in order to choose the most appropriate options for implementing updated international standards aimed at determining banks’ capital adequacy.

Capital adequacy for banks is a key tool that is used by banking regulators to assess whether the capital banks have is sufficient for covering their risks and protecting the interests of depositors.

Basel II is the updated international standard – a new set of standards for establishing minimum capital requirements for banking organizations. It was developed by the Basel Committee on Banking Supervision – a group of central banks and bank supervisory authorities in the Group of 10 Industrialised Countries. The Committee’s members come from Switzerland, Belgium, Canada, Sweden, France, Luxembourg, Germany, Italy, Japan, the Netherlands, Spain, the UK and the USA. This set takes into consideration innovations in banking markets, risk management and banks’ internal processes since the 1st capital framework commonly known as Basel I or the Basel Concordat (1988).

As compared with Basel I, Basel II is a more risk-sensitive approach to capital regulation. It is being implemented not only in G10 countries but also in a number of non-Basel member jurisdictions as far as the implementation of Basel II is a requirement for banks operating in their jurisdictions.

The CIMA impact study and assessment have 2 main objectives. The first is to develop a clear understanding of the requirements and implications of implementing the various options of Basel II for the CIMA. and Cayman Islands’ banking industry. The second CIMA’s objective is to assess the best options for implementation through a cost benefit analysis.

The study is expected to take about 4 months. It is a key step to determine Cayman’s approach to Basel II and ensure that the jurisdiction maintains its competitiveness being a key player in the world financial markets while implementing and adopting appropriate international standards.

Deutsche Bank has earned the award as the best private bank in the Cayman Islands as well as in the Channel Islands in the Euromoney private banking survey 2007. This news was released by the Bank on January 8, 2007.

The survey by Euromoney reflects the opinions of advisers to private clients and other wealth management companies taking into account many factors such as assets under management, profitability, the services offered, ratio of clients to relationship managers, etc.

The results of the survey include a long list of the world’s best private banks, fund and investment management houses and private client stockbrokers to provide a qualitative and quantitative review of the best services in private banking.

Deutsche Bank located in Cayman, Jersey and Guernsey has been named in the top spot of the rating for the 1st time.

For Deutsche Bank in Cayman this award is very significant as this year it is continuing to build on its range of specialist services by means of the expansion of solutions available to the Cayman Captive Insurance market.

Deutsche Bank Offshore Group is operating in Cayman, Guernsey, Jersey and Mauritius employing more than 450 staff. The offshore group operates a geographic franchise on behalf of Deutsche Bank AG – its parent – present in Cayman, Guernsey, Jersey, Mauritius, Delaware, Luxembourg, Ireland, the Netherlands and Switzerland supplemented by a representative presence in Singapore, Hong Kong and New York.

Globally, Deutsche Bank has reached 6th Place (as compared to 12th last year) in the Euromoney Private Banking Survey 2007.

On February 19, 2007, a Channel Islands-based international law firm, Mourant du Feu & Jeune, announced that it intends to merge with Cayman firm Quin & Hampson. This move is aimed at increasing its presence in the Cayman Islands.

Since it opened a Cayman office in 2004, Mourant, a firm providing offshore and onshore law and financial services, has been seeking to build on the established base. Joining with an established Cayman firm was seen as the most effective option to rapidly enhance the firm’s competitiveness in Cayman.

Now the partners of Quin & Hampson will form part of a new Mourant partnership in the Cayman Islands. Also, the employees of Quin & Hampson will transfer to Mourant.

Mourant is also acquiring Q&H Corporate Services Ltd., which is the corporate services affiliate of Quin & Hampson.

Joint operations that are subjected to regulatory approval are scheduled to begin by the end of April 2007.

Quin & Hampson will rebrand as Mourant on October 1, 2007.

Chief Executive of Mourant, Nicola Davies, explained that the Cayman Islands is an important element in firm’s strategy to developing a substantial presence in the major offshore and onshore centres widely used by the international financial markets.

Senior Partner of Quin & Hampson, Charles Quin, said that there are “strong cultural and professional similarities between Quin & Hampson and Mourant” and that Quin & Hampson is excited about the common future after the merger.

According the government, quoting a new credit rating report, the Cayman Islands not only continued to maintain its leadership position in international financial services and national economic performance, but also also is managing to move ahead of competitor.

Moody’s – an international credit rating agency and an independent provider of economic information – has raised Cayman’s ratings. The Cayman Islands’ ceiling for foreign currency bonds and notes rose from Aa3 or high grade to Aaa or exceptional. This means that now the jurisdiction is alongside the US, UK, Canada and Bermuda. Although the foreign currency country ceilings were raised for approximately 70 countries, the Cayman Islands is among only 3 countries the ceilings of which were upgraded to Aaa.

In accordance with Moody’s advice, an Aaa country ceiling for foreign currency bonds and notes can be interpreted as “having the best and/or exceptional quality with the smallest of investment risk”. This means that Moody’s expects a very low risk that a limit on the foreign currency debt payments of the borrowing entity will be imposed by the government.

As to the Cayman foreign currency ceiling for short-term debt of P-1, it was already at the highest ratings category for short-term debt – this position has been held by Cayman since 1997.

The highest rating of P-1 in the area of foreign currency deposits with local banks has been held by the Cayman Islands since 1989. This is the ceiling which is applicable to onshore-licensed banks in Cayman.

The Cayman Islands continues to maintain an Aa3 (high grade) ceiling for long-term foreign currency bank deposits and an Aa3 rating for government bonds issued in foreign currency.

The Aa3 long-term foreign currency bank deposit ceiling places the offshore jurisdiction on one level with Hong Kong. It also places it a level above the Bahamas and the rest of the Caribbean. Also, Cayman government’s Aa3 rating is the highest in the Caribbean.

Positive macroeconomic and political factors that contributed to Cayman’s current ratings has been listed by Moody’s. This list included the following:

• the stable political environment and the current administration’s commitment to the Public Management and Finance Law;
• the well-established tradition of fiscal prudence;
• no pressure on the currency board regime or the exchange rate;
• Cayman’s recovery efforts from the effects of Hurricane Ivan which boosted growth and investment and produced an exceptional surge in exports;
• the level of public debt contained despite large reconstruction costs.