Archive for February, 2013

Moody’s affirms Cayman Credit Rating

Monday, February 25th, 2013

The government of the Cayman Islands has received praise from credit ratings agency Moody’s for its management of the local economy and finances, confirming the jurisdiction’s Aa3 government bond rating with a stable outlook.

The agency attributed the announcement to the jurisdiction’s comparatively low debt burden despite the recent increase in the main debt metrics, a very high per-capita income, the result of prudent macroeconomic management and a well-functioning legal system, and a strong institutional framework, including policy consensus on basic macroeconomic policy and institutional oversight from the United Kingdom.

Moody’s said that Aa3 rating balances a very high per-capita GDP, one of the highest among rated sovereigns, and a comparatively low debt burden with a small economy highly dependent on two industries, and the recent deterioration of the fiscal accounts.
According to Moody’s, the Cayman Islands could see an improvement in its government debt rating if debt levels are brought down significantly, and the Government implements policy measures to ensure that debt is kept low. Also, greater growth to increase per capita GDP relative to Cayman’s peers could lead to an upgrade.

Inflow of expatriate workers seen in Cayman in 2012

Monday, February 18th, 2013

Supported by new visa concessions, enacted in September 2012 to attract financial services businesses to the Cayman Islands, the Department of Immigration has reported a marked increase in the number of foreign workers in 2012, to 20,743 at the end of December 2012, up from 19,927 at the end of December 2011.

Last year to attract insurers to the jurisdiction, the Immigration Law was amended to introduce new 10-year work permits for executives and managers in the reinsurance industry and free work permits for various categories of administrative staff for the first 5 years of residence in the Cayman Islands.

In accordance with the latest statistics, the number of foreign workers increased from a record low of 19,106 at the end of 2010, to 19,927 in 2011, and to 20,743 at the end of December 2012.

According to the Immigration Department’s report, a total of 4,719 foreign persons were employed in the financial services, auditing, legal and medical profession at the end of 2013; 1,055 were engaged in management positions – as Financial Controllers, General Managers, Human Resource Managers, Project Managers, Sales Managers or Relationship Managers; while 773 were engaged in clerical vocations, such as accounting and bookkeeping.

Former Banking Head appointed to lead Cayman Finance

Thursday, February 14th, 2013

Cayman Finance, the organization formed to represent the Cayman Island’s financial services industry has confirmed the appointment of Gonzalo Jalles Chief Executive Officer with immediate effect.

Jalles is the former head of HSBC Cayman. Also, he formed his own financial services consulting company, Javelin Group, in 2012. Prior to his 6-year tenure at HSBC Cayman, Jalles worked as Director of International Development at the firm’s London offices, Managing Director at HSBC Bermuda, and Chief Investment Officer at HSBC Argentina.

Until 2012, Jalles was President of the Cayman Islands Bankers’ Association making him ideally placed to represent the local financial services industry.

Jalles said: “Cayman Finance plays a crucial role promoting and supporting Cayman’s financial services industry both at home and abroad. The organization has become the central, leading voice for Cayman’s financial services industry when speaking to governments locally and internationally, as well as with local and international media.”

Cayman Directors vote for FATCA IGA Model 1

Sunday, February 10th, 2013

Members of the Cayman Islands Directors Association (CIDA) have been surveyed on the reporting methods that could be used under the Foreign Account Tax Compliance Act (FATCA) and have voted in favor of Intergovernmental Agreement Model 1 (IGA Model 1).

The Cayman Islands has been offered 2 reporting methods, IGA Model 1 and IGA Model 2. Both require the nation’s banks, or “foreign financial institutions” (FFIs) to annually report information regarding accounts and substantial non-financial entities owned by US citizens. The first model would see FFIs report this information to the Cayman Island Government, which will then be responsible for communicating it to the US Internal Revenue Service (IRS), while the second Model would require the FFIs to relay the information directly to the IRS.

The CIDA members were asked for their views on the issue in response to an appeal for CIDA’s position from the Cayman Islands Government’s FATCA task force.

The 200 members of CIDA surveyed in this report consisted of directors of companies registered in the jurisdiction, some of which would come under the FFI banner for FATCA purposes.

Recently, some countries have been asking for a reciprocal deal, between themselves and the US, which could require US banks to reveal information about foreign account holders to overseas tax authorities.

Cayman aims to cut bureaucracy

Thursday, February 7th, 2013

The Cayman Islands’ new Premier, Julianna O’Connor-Connolly, has reinforced the commitment of the Cayman government to reduce bureaucracy by modernizing the government’s operations and reviewing existing processes. This measures are expected to make the business environment more inviting.

When speaking at the government’s weekly press briefing, the Premier said that one of the most common complaints raised by businesses and citizens in the jurisdiction is the amount and complexity of government formalities and paperwork and the time it takes get things done – that is bureaucracy. So, the government should help people and small business to make doing business in the Cayman Islands easier.

A recent study by the Canadian Federation of Independent Business quantified that cost at USD 37.2 million per year, equivalent to around 2% of the islands’ GDP (gross domestic product).

When exploring potential solutions, O’Connor-Connolly pointed to a new initiative launched in the United Kingdom called “Digital by Default,” which requires all government departments to explore ways of using the Internet to provide more efficient services to taxpayers and to cut red tape.

The local business community, represented by the Cayman Islands’ Chamber of Commerce, has confirmed that it will establish a body to engage with the government on the development of these initiatives.

Cayman to enhance Corporate Governance Rules

Sunday, February 3rd, 2013

The Cayman Islands Monetary Authority (CIMA) has launched a consultation that outlines plans to bolster the corporate governance guidelines Cayman to which financial services entities must adhere.

Also, the Authority has commissioned a corporate governance industry survey to run concurrently with the consultation. Feedback from both will be used to inform CIMA in the development of final proposals.

CIMA explained that the consultation has been launched due to the international regulatory response to the 2007/2008 financial crisis, which has seen a number of international regulatory organizations call for the adoption of more robust corporate governance standards, including the Basel Committee for Banking Supervision, the Technical Committee of the International Organization of Securities Commissions (IOSCO), the International Association of Insurance Supervisors, the Organization for Economic Cooperation and Development, and the Financial Stability Board (FSB).

Among its proposals, CIMA intends to extend its Statement of Guidance (SOG) on Corporate Governance to all financial services entities in the Cayman Islands, not just licensees, to meet “the heightened expectations of investors and providers of capital.”

Simultaneously, CIMA proposes to amend the current SOG with a view:
– make it more generic and suitable for cross-sectoral application, i.e. to make the SOG relevant to the funds, insurance, banking and fiduciary sectors alike; and,
– to reinforce fundamental corporate governance standards expected from entities regulated and supervised by the Authority.

CIMA said that stringent rules were not appropriate as the Cayman Islands is a sophisticated financial services jurisdiction with suitably qualified participants and service providers.