Cayman Islands Financial Services

HSBC Financial Services (Cayman) has upgraded its retail services in the Cayman Islands. The upgrading of an ‘A’ Class licensed bank may be the start of new times in Cayman’s retail banking.

The new retail branch of HSBC located just outside Grand Cayman’s capital, George Town, will feature one-stop service and deal with personal banking, foreign exchange, loan applications and all the other modern banking services.

According to many financial experts, the HSBC move into the retail sector may be seen as an intention to provide customers with access to a worldwide banking network, and it will be difficult for the current 6 retail banks – Butterfield Bank, the Royal Bank of Canada, Cayman National, Fidelity, Scotia Bank and First Caribbean – to compete with it.

According to Gonzalo Jalles, the CEO of HSBC Financial Services (Cayman), this is in the interests of the Cayman Islands as more competition is better for the consumer.

So, HSBC hopes that the opening of its new branch will be beneficial for everyone on Grand Cayman. The Grand Cayman branch of HSBC is scheduled to open in Spring 2008.

The Alternative Investment Management Association (AIMA) recently published a revised Guide to Sound Practices for European Hedge Fund Managers, which is useful reading for hedge fund practitioners.

The Guide was initially published in 2002 to consider numerous practical aspects of the establishment and management of a hedge fund business in Europe and to recommend corresponding practices. It is meant as a practical business tool for hedge fund managers. The Guide also provides appropriate and useful information for the investors, regulators and professional service providers in the hedge fund industry.

The updated Guide was developed by the working party consisted of leading European Hedge Fund and Funds of Hedge Fund Managers, fund administrators, prime brokers as well as legal and auditing professionals.

The Guide to Sound Practices for European Hedge Fund Managers such key issues as:
- creating and managing a hedge fund business;
- portfolio administration and operational controls;
- investment process and portfolio risk management;
- raising capital and investor relations and hedge fund structures and organisation.

According to Florence Lombard, Executive Director of AIMA, the revised Guide reflects significant developments and provides guidance on the matters to be taken into consideration by a hedge fund manager.

The experts at Deutsche Bank claim that the Cayman Islands is the fastest growing captive insurance offshore jurisdiction offering a dynamic and competitive background to conduct business for banking and investment solutions.

According to Janet Hislop, Head of Institutional & Intermediary Business, Deutsche Bank (Cayman) Limited, it is natural that the Cayman Islands financial services industry has been proud of its efficient adaptability to changing market conditions, finding solutions aimed to enhance capabilities and services necessary to Cayman’s corporate and institutional investors.

It has been previously announced that Deutsche Bank has earned the award as the best private bank in the Cayman Islands in the Euromoney private banking survey in January 2007, which is important for Deutsche Bank (Cayman) Limited, Deutsche Bank’s fully owned subsidiary, which has been successfully serving customers in Cayman since 1983.

Now the bank has launched its enhanced captive insurance services to more than 50 industry professionals. In order to assist the professionals with the launch, senior bankers from the Deutsche Bank group visited the Cayman branch.

Janet Hislop said that Deutsche Bank had recently invested significant resources to enhance and expand its captive insurance solution. Now it has an offering aimed at working more closely with captive insurance managers to tailor solutions for their customers.

In accordance with Jean-Claude Emard, Regional Country Head, Deutsche Bank (Cayman) Limited, a successful franchise has been already built in Cayman, and now the bank is looking to grow its captive insurance business.

The services include hedge fund management, fixed income and structured notes as well as many others.

It has already been announced that the Cayman government expects strong growth for the economy. Financial Secretary Kenneth Jefferson announced that in the next financial year, July 2007 to June 2008, the Cayman economy is forcast to be robust.

On July 1, 2007, the Government of the Cayman Islands entered a new financial year with a budget forecasting a net surplus. In this new financial year, the government predicts to expend $471.807 million and receive $499.103 million for a net surplus of $14.861 million.

In the coming fiscal year, the government plans to borrow $129.8 million. Borrowings of loans is controlled by law stipulating that interest, other debt-servicing expenses, and repayments on the principal amount borrowed must not exceed 10% of revenue. The debt ratio is expected to remain within the limit, at 6.6%.

According to the Cayman Islands Financial Services Association (CIFSA), the Cayman Islands Stock Exchange (CSX), which in June celebrated its 10th anniversary, has made a major contribution to the Cayman financial services industry.

CIFSA suggests that the 1st decade of achievements of the Cayman Islands Stock Exchange is a great contribution to the strength of the financial sector in the Cayman Islands. CIFSA director Eduardo Silva said that “the growth of the Cayman Islands Stock Exchange over the past decade has underpinned the growth across the financial services sector, increasing the attractiveness of the various industry segments to international clients, while ensuring that participating investors can rely on the jurisdiction meeting the highest standards of compliance”.

He also added that the development of hedge funds and structured finance in the Cayman market was a result of the quality of the listing services and growing international reputation of the CSX.

The CSX was initially established to provide a listing facility for the mutual funds and specialist debt products in the Cayman Islands, however, now it covers a great variety of complicated vehicles and structures including Eurobonds, depository receipts, derivative warrants, preferred shares and international equity. Currently there are more than 1 400 listings on the Exchange.

The growth in listings was stimulated by the international recognitions received by the CSX.

Particularly, in March 2004 the UK’s Inland Revenue named the CSX as a “Recognised Stock Exchange”, which made it more commercially attractive to UK investors. Also, in 2003, the CSX was also admitted as an affiliate member of the International Organisation of Securities Commissions (IOSCO). In 2001, the Cayman Islands Stock Exchange became the 1st (and is still the only) offshore exchange that joined the Intermarket Surveillance Group dealing with information sharing and enhancing market surveillance. In 1999, the CSX became the 1st offshore stock exchange registered with the London Stock Exchange.

The Who’s Who Legal Awards has nemd the global offshore law firm Walkers the “Cayman Islands Law Firm of the Year” for the 2nd year as it won the inaugural award last year.

It should be noted that Walkers is the only Cayman Islands law firm to have ever received this honourable award.

To identify the leading law firms in 48 countries and 5 US states, Who’s Who Legal used nominations received from clients and private practice professionals. The formal announcement of the winners was a compendium edition of all the individual Who’s Who Legal publications – the International Who’s Who of Business Lawyers 2007.

According to Callum Campbell, editor in chief, to win the Who’s Who Legal Cayman Islands Law Firm of the Year Award for a second time is an great achievement. He said that “Walkers’ continuing success demonstrates its consistent and unparalleled level of individual and collective talent” and that there was hesitation whether to declare Walkers the leading firm in the Cayman Islands.

CIMA Chairman explains Cayman’s Success

In the middle of June, Chairman of the Cayman Islands Monetary Authority (CIMA), Timothy Ridley, has indicated a “combination of fundamental core factors” responsible for the development of the Cayman Islands into 1 of the world’s largest and most successful international financial services centres.

At the Caribbean Investment Forum organised by Euromoney Conferences in Jamaica, Ridley spoke to some 400 delegates from the Caribbean, the US, Latin America and other regions, when discussing successful offshore financial centres in the Caribbean.

Ridley stated that the success of Cayman Islands was due to “providing the infrastructure, services and operational freedom and flexibility for international investors and businesses on a foundation of stable, certain, intelligent and balanced political, economic, social, legal and regulatory regimes.” The CIMA Chairman highlighted the industry’s growth and noted that it is connected with with policy and legislative developments and international cooperation. He also indicated that the role of the jurisdiction’s private sector and the institutional framework were very essential.

Ridley also mentioned some challenges that the Cayman Islands faced while continuedly developing of the industry as well as the ways it was dealing with them. These were as follows:
- pressure from the leading economic powers aimed at curtailing the activities of offshore financial centres;
- initiatives by international standard setters;
- building up resilience to natural and man-made shocks;
- immigration and human resource issues in the context of the worldwide shortage of skilled labour in the industry.