Reports Of Reduction In Offshore Bank Numbers Are Exaggerated Says Cayman Islands

Cayman Net News

02 July 2001

This story is reproduced by kind permission of Cayman Net News at: http://www.caymannetnews.com

There is some good news to refute alarms about banks leaving this jurisdiction. This is borne out by the figures available to date from the Cayman Islands Monetary Authority (CIMA), the regulatory body charged with the responsibility of overseeing Cayman's still much respected offshore financial centre.

Following up on some reports that quite a few banks are making their departure, Cayman Net News contacted CIMA and was supplied with the most up-to-date details on the number of banks and trust companies licensed to do business in the Cayman Islands.

There were 31 Category "A" Banks at the end of December 2000 and that figure remains the same as of the 27 June 2001. "B" Class banks number 409 today, a drop of 26 from the last December figure of 433 and there was a loss of only one Trust Licence, from 116 to 115.

Mrs. Anna McLean of that Authority confirmed that while there has been an actual reduction in the number of licensees: "this is a reflection of the global markets where financial institutions are merging for greater synergies."

"This results in the consolidation of banking activities of financial groups worldwide as the number of players in the market are reduced" the CIMA response concluded.

One financial analyst, who requested not to be quoted directly for this report, when contacted for a comment said: "With the further drop of another quarter of one percent, with the possibility of more to come in the prime lending rate in New York and the fact that the Cayman Islands has been removed from the FATF's blacklist, it is a given that we will see an increase in more sound financial operations being relocated here, because they will not be under heavy scrutiny as they may have been before"

Further good news for the players in the local financial industry is that the Immigration Board under the Chairmanship of Mrs. Sherri Booden-Cowan, herself an Attorney-at-Law, is pressing ahead with their proposal to formalize a Business Staffing Plan, whereby businesses who have filed such plans with the Board, will be able to get much faster responses ­- in as little as ten days has been suggested - to their applications for support staff.

Cayman's financial industry has always had the support of Cayman's Immigration authorities, when it comes to the acquisition of staff on Work Permits, as it is recognized that this very important pillar of the economy must suffer as little as possible from obstruction of their business operations

Some of these entities, besides granting several scholarships annually, are also now allowing a significant number of their local staff time off for studies at the Community College, so that they will become certified to take on senior responsibilities for compliance and continued good order in Cayman's financial community.

Meanwhile at the Companies Registry, there had been a significant drop of 33 percent in incorporations for the first quarter of this year. However, it was learnt that the month of May has seen a resuscitation of new registrations. Should this trend continue, the second quarter for this year will most likely see a lower-than-expected shortfall.

It is also known that with the "wait and see" attitude adopted by many investors who already have funds here, is the reason for the present slump in real estate activity.

With the Residences at the Ritz Carlton slated to go up vertically in about ten weeks, and the Dart billion dollar project waiting to take off as soon as it clears the hurdle of an appeal by the National Trust and businessman Billy Adam, it is expected that another round of construction activity will start in twelve to fourteen weeks.

With renewed confidence in the Cayman Islands following several months of "waiting to see what happens" by investors and their local financial advisers, there is now every indication that the financial sector will continue to hold steady and there will be a resurgence of offshore business with the now dormant real estate industry benefiting from the expected new business on the way.

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