Banking Accounts For 25% of Cayman Economy

by Amanda Banks, Tax-News.com, London

09 August 2006

A recent economic impact study carried out by Cayman Islands Bankers' Association (CIBA) has highlighted the importance of the banking industry to the jurisdiction's economy, estimating that the sector accounts for one-quarter of the Cayman Islands' gross domestic product.

According to the report, which is endorsed by the Cayman Islands Financial Services Association, the jurisdiction's finance industry promotional body, the banking sector contributes a total of US$500 million to the economy, with US$407 million of that being direct and the remaining being indirect and induced impact.

"The banking sector is a core part of the overall financial sector in the Cayman Islands and is the most established, so it is important to understand in quantitative terms how it contributes to the economy," commented Mr Eduardo D'Angelo P. Silva, CIFSA Director and CIBA President.

The study was carried out by StratInfo, a Miami-based research company which previously completed an impact study for the Florida International Bankers Association. Its methodology focused on all the major economic links between banking and the wider economy, including banks' purchases of administrative and professional services from other sectors of the economy, the payment of fees and indirect taxes to the government and income earned by bank employees.

The study found that the employment impact of the sector was also significant, comprising 8% of total employment in the Cayman Islands, while wage and salary related expenditure accounted for 62.5% of the total economic impact.

Direct contribution to government revenues was estimated at US$32.2 million or about 6.4% of the total impact. Mr Eric Crutchley, CIFSA Director, said the results help put in perspective CIFSA's aim to protect the international reputation of the Cayman Islands financial services sector.

"Clients continue to look for financial centres which demonstrate both quality and regulatory integrity," he said. "It is impressive that our banking sector has remained strong but also continues to be a major economic contributor to the Cayman Islands."

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