Bank Of Bermuda To Stifle Cayman Subsidiary

by Mike Godfrey, Tax-News.com, New York

22 March 2002

Bank of Bermuda announced yesterday that it is restructuring its Americas activities, and will service the majority of its Cayman clients from its Bermuda headquarters in future. The bank said that this process followed a close examination of the way in which the Bank’s Cayman clients are currently serviced with a view to providing more streamlined support and ensuring all clients have access to the full depth of the Bank’s expertise.

The Bank's workforce in Cayman will be reduced from 50 to fewer than 10 people through transfers and redundancies.

The Bank’s three global businesses have a presence in the Cayman Islands, and are currently serviced by 50 employees. The cash management, fund administration and fiduciary services offered to clients from the Cayman office will now be supported from Bermuda, although Bank of Bermuda (Cayman) Limited will retain the necessary licence and presence to ensure that the Bank’s businesses continue to meet their respective client’s local requirements.

"We constantly examine whether we can improve the quality and the efficiency of our client servicing. This change enables us to improve both," explained Henry Smith, Chief Executive Officer. "We see Cayman as an important place to do business, but need to take a broader, regional view of how best we can structure ourselves."

"This kind of restructure has proved highly successful for Bank of Bermuda in the Asia Pacific region," continued Mr Smith. "It enables us to consolidate support functions, and avoid duplication of activities. All three of our global businesses have been reviewing their services in line with their business strategies and see benefits in this restructure. We expect it will make us a stronger and more focused organisation to do business with going forward."

Mr Smith added: "I would not want to make this announcement without paying tribute to our employees in the Cayman office, several of whom have been with us for a number of years. As we are only in the early stages of discussing implications of this restructure with our staff, I have no definite numbers as to how many employees will stay with us and how many will be provided with redundancy packages. Although we expect to retain approximately eight staff in the Cayman office, and we hope to redeploy some employees in other locations, we recognise that not everyone will be able or willing to move with us and will seek other opportunities elsewhere. I would like to thank them for their dedication and commitment and wish them well in their future endeavours."

There is speculation that the Bank's move may be linked to the involvement of its Cayman branch in a scam last year which led to litigation settled at a cost of US$67.5m.

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