Cayman Islands Financial Services

Recently, the Cayman Islands Financial Services Association (CIFSA) held an Extraordinary General Meeting at the University College of the Cayman Islands. The meeting chaired by Eduardo D’Angelo P. Silva was attendede by most of the Association’s members.

Since CIFSA was formed in 2003, it has relied on funding from its members. In the Extraordinary General Meeting, CIFSA received unanimous approval to make changes in the membership structure – to replace life-long memberships by annual memberships.

Receiving annual membership contributions from its members, the Cayman Islands Financial Services Association will be able to continue its work to communicate the integrity and quality of Cayman’s financial services to both the global and local markets.

According to CIFSA Director Eric Crutchley, CIFSA will have a consistent yearly budget and it can plan for the years ahead with an idea of what budget it has to support the activity to be undertaken.

The companies supporting and renewing their memberships in CIFSA were the following: Butterfield Bank (Cayman), Deutsche Bank (Cayman), HSBC Financial Services (Cayman), PriceWaterhouseCoopers, KPMG, Appleby, Royal Bank of Canada, Scotiabank & Trust Company (Cayman), Walkers, Cayman National Corporation, CIBC Bank and Trust Company (Cayman), Coutts (Cayman), dms Management, HSBC Financial Services (Cayman), Julius Baer Bank and Trust Company, Mourant Cayman, Queensgate Bank & Trust Company, Rawlinson & Hunter, and Sul Americal International Bank (Cayman).

Besides changing the membership structure, the Directors were delighted to inform on a very successful year for CIFSA as it increased its international awareness by means of repeated appearances in the international press. These are articles in publications like the Financial Times and the New York Times.

The CIFSA website continues to be a valuable resource for information on financial services in Cayman.

Also, CIFSA continued to work on relationships with key industry stakeholders and the Government.

The Cayman Islands is ranked 7th in the list of top investors in China.

According to the recent report, during the 1st 8 months of 2007 overseas investors set up 24 848 new enterprises in China. This number is down 5.26% year-on-year, however, the actual investment value rose 12.79% from a year earlier to USD 41.95 billion. In August 2007, the Chinese government approved 3 150 foreign ventures nationwide. While the number of investors is down 8.83% from 2006, the value of the investments rose 11.87%, with a total of USD 5.02 billion.

From January 1 to August 31, the top 10 countries and regions accounted for 86.55% of the total investment by value in China. The top investor is Hong Kong, which accounted for USD 14.1 billion. It is followed by the BVI, which accounted for USD 9.91 billion, and the Republic of Korea, which accounted for USD 2.46 billion. Japan contributed USD 2.25 billion, Singapore – USD 1.64 billion) and the US – USD 1.63 billion. The Cayman Islands takes the 7th place as its contribution accounted for USD 1.51 billion.

It is obvious that post-Ivan recovery activity is cooling in the Cayman Islands, however, it is also obvious that negative outcomes are inevitable. Recently, Financial Secretary Hon. Kenneth Jefferson informed that Cayman’s imports in 2006 fell by $89.2 million or 9%, as compared to the 2005 figure.

At the time, Jefferson was tabling in the Legislative Assembly the Cayman Islands Overseas Trade Statistics 2006.

It should be noted that the United Nations and other international organisations use reports on Cayman’s trade statistics.

Jefferson said that the decrease in imports is “directly linked to the winding down of the country’s post-Ivan reconstruction”. According to him, total value of imports of construction materials fell by 43.8% and imports of other intermediate goods fell by 39.2%.

The total value of imports in 2006 was $906.1 million.

However, data compiled by the Economic and Statistics Office of the Portfolio of Finance reveals that imports for consumption increased by 24.6%, which, according to Jefferson, could be linked to the recovery of stay-over tourism during that year. Imports for food and beverages increased by 27.6%.

The United States again dominated as the market for Cayman’s imports with $656.6 million or 71.8% of total imports of goods brought into the Cayman Islands. The 2nd was the Netherlands with $73 million or 8%, and the 3rd was Japan with $6.3 million or 0.7%.

Jefferson said it is good that the percentage of unclassified imports declined significantly – from 20.1% in 2005 to 8.9% in 2006.

Legal action over Bear Sterns hedge funds has already been described previously. To remind, Bear Stearns was forced to liquidate 2 hedge funds based in the Cayman Islands – Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd and Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Master Fund Ltd – with estimated losses of USD 4 billion. It has also been discussed that experts consider the failure of 2 hedge funds could have severe repercussions on the offshore banking industry in Cayman.

Recently, it was revealed that the liquidators of Bear Stearns’s 2 bankrupt funds have appealed the ruling in the US Bankruptcy Court, which denied the request processed by the liquidators Simon Whicker and Kristen Beighton to liquidate not in the US, but in Cayman.

The liquidators are appealing the decision made by the court on August 30, which denied the Chapter 15 request covering cross-border liquidations. The hedge funds would have been allowed to use Chapter 15 protection in order to liquidate in Cayman, which would give them a higher degree of protection from creditors in the United States; but the request was denied as far as Judge Lifland decided that the hedge funds did not have enough presence in the Cayman Islands to have grounds for the Chapter 15 request. According to Judge Lifland, no employees or managers are located in the Cayman Islands, the investment manager for the funds is located in New York, while the administrator is in the United States along with the funds’ books and records.

However, it should be noted that Lifland granted Bear Stearns 30 days in order to refile the request before investors are seize assets.

It is known that the Cayman Islands is among the most competitive financial centres in the world. Last year, the jurisdiction maintained its international ranking of 6th place for total banking assets held by Cayman. The growth of the Cayman economy outpaced the growth of of the United States.

Financial Secretary Kenneth Jefferson has reported to the Cayman Legislative Assembly that in 2006 of the total global banking assets of USD 29.4 trillion, the Cayman Islands held USD 1.7 trillion, which represents a growth of 37.2% during the year, while the global growth was 22.9%.

The Cayman economy grew by 4.6%, and outpaced its main trading partner – the United States, the economy of which grew by 3.2%.

Jefferson said that the jurisdiction had continued good performance and in the beginning of September presented the Cayman Islands Annual Economic Report 2006.

Financial Secretary informed the House that increases in the financial sector were observed in company registrations, insurance company licences, mutual funds, as well as in stock exchange listings and capitalisation.

Caymanian Certified Public Accountant (CPA) Adam Ridley has become a financial controller for Island Heritage Insurance. Island Heritage CEO Brian Murphy said that the company is proud of Ridley who will join the group of talented Caymanians taking Island Heritage forward. He also said that Ridley is committed to his job and deserved this promotion.

Adam Ridley began his career as a CPA with KPMG in 1999, and has worked for Island Heritage as assistant controller since 2006. He successfully demonstrated his knowledge and expertise in the field.

Ridley welcome d his new opportunity and looks forward to long cooperation with top property insurers of the Caribbean.

Island Heritage was established in 1996 as the 1st company in the Caribbean that targeted the property insurance market providing numerous residential and commercial policies paying a special attention to catastrophe insurance. Its headquarters are located in the Cayman Islands, while the company’s operations are carried out currently has operations in the BVI, Bahamas, Turks & Caicos, St Kitts, Barbados, Anguilla, Grenada,Antigua, Aruba, Curacao, Dominica, Jamaica, St Maarten, USVI, and the Netherlands Antilles.

The Cayman Islands is moving towards giving legislative grounds to the public’s right to access most records of the government. According to Government Business, the information to be freely accessed is to include records of statutory authorities and government-owned companies.

The Freedom of Information Bill was passed into law by the Legislative Assembly on August 31, 2007. It is scheduled to become law on January 1, 2009. So, now the document had come full circle since it was introduced as a paper for public discussion and consultation to the House in November 2005.

In accordance with the government, the bill’s 14 month roll-out period is needed to ensure that all governmental departments are ready process requests for information from the public.

According to the bill, Government ministries, portfolios and statutory authorities are defined as public authorities and even Cabinet cannot not excluded from a Freedom of Information request.