Matthew Elderfield, CEO of the Bermuda Monetary Authority (BMA) has released a press statement designed to assuage the fears of those with a stake in Bermuda's financial services industry in the light of the global financial crisis.
Despite turmoil overseas Elderfield is of the view that Bermuda has little to be worried about, stating: “Our ongoing analysis shows that the market here has proved to be resilient.”
He added:
“These difficult conditions may continue for a while; however history has shown that Bermuda’s people and financial markets are no stranger to storms... The strength, quality and resilience of our financial markets means Bermuda is well placed for the current challenging environment."
“We welcome the passage by the US legislature last week of the federal funding package designed to purchase troubled assets. While the anticipated impact of this development may take some time, it is a significant step towards addressing the current dislocation in the global financial markets.”
Although it is his belief that Bermuda would remain unaffected from current events he did move to dissuade retail investors from investing into the more volatile markets. He also reassured those with pensions that their money is safe.
"Investors should contact their pension or investment manager with any questions," he explained. "They should also note that investment firms and pension managers are required to keep those funds separate so they are safe if anything goes wrong, unless the investor has explicitly agreed otherwise and the BMA has accepted that satisfactory alternative arrangements are in place."
Despite some Bermuda banks having investments in sub prime assets, Elderfield said that their actual losses to date have been limited.
Elderfield added: “Bermuda’s banks are also subject to strict rules that require them to maintain strong liquidity, or cash, positions... Bermuda’s banks are in a strong financial position despite the problems elsewhere associated with sub prime and Bermuda has a much stronger housing market than the US or UK. The banks have fully disclosed their positions to the Authority. No Bermuda bank has suffered a credit rating downgrade as a result of the sub prime crisis.”
Bermuda’s insurance sector also has had limited investment exposure to sub prime, according to the BMA chief.
“A small number of firms have had significant underwriting exposure through their financial guaranty business. Over the past few months there has been progress in achieving acceptable commutation agreements to eliminate some of these exposures," he explained.
He added that the Authority has taken a proactive role since market disruption occurred in August 2007 through a combination of specialised market surveys, stress testing, enhanced supervisory monitoring, and restructuring negotiations with challenged financial guaranty companies.
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