IFC: How is business for Butterfield Trust in the Caribbean?
A: Both our Bahamas and Cayman Islands businesses are seeing steady new business flows despite the challenging global financial conditions for many of our clients. Our core markets in Latin America, North America, Asia and Europe remain our primary focus and both jurisdictions continue to play an important role for the structuring of cross border assets and wealth. We believe that establishing long term personal relationships with clients and their advisers is a fundamental component of successful fiduciary relationships. At Butterfield we have both the capability and the expertise to administer a variety of financial and non financial assets within complex fiduciary structures and as such these two locations are regarded as key jurisdictions for future growth.
IFC: What developments in the Cayman Islands or The Bahamas, your key markets in the region, are impacting upon business there?
A: Both The Bahamas and the Cayman Islands are regarded as strong jurisdictions for wealth management solutions and we see this not only continuing but growing in the future. Both jurisdictions have moved quickly and decisively on matters of international interest, such as FATCA, which is seen as a positive step, not only by existing clients, but by prospective clients and their advisers alike. Infrastructure development has continued and is attracting the attention of HNWI & UHNW’s who are considering their next move as regards residency, a key area The Bahamas is specifically encouraging and an area of development supported by the wealth management and financial industry as a whole.
IFC: There have been quite a number of headline hitting events in the offshore industry in the last six months – What has been the effect on your business offshore?
A: International Finance Centres (IFCs) will continue to face challenges from policy decisions taken by larger onshore jurisdictions. However IFCs have positively responded to those challenges by enacting legislation and regulations that meet international standards.
IFC: Are the Cayman Islands and The Bahamas still holding their own in terms of their share of the wealth management market?
A: We believe that both the Cayman Islands and The Bahamas are each holding their own in terms of market share and actually growing their market share globally. Continued interest in solutions such as Private Trust Companies, Foundations and new wealth management solutions available such as the Bahamas Executive Entity, often make both the Cayman Islands and The Bahamas jurisdictions of choice for a significant proportion of advisers requiring structuring arrangements for their clients. This can only be possible by having progressive and modern laws supporting these trust and fiduciary services solutions. Both jurisdictions have been good at developing such legislation and refining their product offering to meet the needs of market participants.
IFC: How do these jurisdictions remain competitive in today’s turbulent market?
A: We believe both jurisdictions can remain competitive by ensuring they maintain their progressive approach in the development of laws which enhance the wealth management business, delivered through a genuinely focused and consistent service driven environment. Throughout the Butterfield Group network we have access to solutions in alternative jurisdictions depending on an individual’s requirements.
IFC: Which areas of business are seeing growth and which less so?
A: The days when business “comes to those who wait” have gone; you must be progressive and be prepared to be as proactive as you can be to generate business growth across an increasingly competitive market place not least for trust and fiduciary business. We continue to see growth in these business lines, especially for more complex sophisticated structuring through Private Trust Companies and Private Investment Funds.
IFC: Are the demands being made by the likes of FATCA mere window dressing or are they making fundamental changes to the way business is being done?
A: New and enhanced regulation including FATCA, will lead to increased costs of compliance. However, we remain convinced that the process of complying with these directives has also raised the profile of the jurisdictions that are fully compliant and has provided a positive platform for promotion of the region.We now frequently see intermediaries seeking service providers within compliant jurisdictions who can talk confidently around these processes. Key to this is having a stable government environment, which we have in all the jurisdictions in which we operate. At Butterfield, we have a dedicated team focused on FATCA ensuring that we are compliant with its requirements.
IFC: Is privacy / secrecy a thing of the past?
A: As with so many expressions of this nature, it can be a matter of interpretation. It seems that both privacy and secrecy have become loaded with negative overtones. However, we believe strongly that individuals have a legitimate right to confidentiality in relation to their sensitive financial information. Having said that, IFC’s have embraced the notion of transparency and disclosure as evidenced by the acceptance of FATCA and other emerging disclosure regimes. This concept is entirely consistent with compliance with local laws and regulations in both The Bahamas and the Cayman Islands.
IFC: How important are the on-going OECD Peer Reviews and ratings as a measure of an IFC’s legitimacy?
A: Globally, it’s important the IFCs support this process, both to build public perception and understanding of the jurisdictions, and to ensure the IFCs are considered as an important part of the international financial system. The word “offshore” can be perceived in a negative light and offshore IFCs have received negative publicity in the past. As IFCs embrace the international regulatory standards, sign TIEAs and recognise and participate in OECD Peer Reviews, it becomes easier to dispel the myths and illustrate that offshore IFCs are willing and able to ‘play-ball’ on a level playing field. Both The Bahamas and the Cayman Islands appear on the OECD ‘White List,’ further enhancing their commitment in this area.
IFC: Are the demands being made on IFCs excessive when compared to how ‘onshore’ jurisdictions are assessed?
A: Understandably there is a focus on IFCs and it is a positive that IFCs have complied and adapted to the demands and recommendations of the international regulatory standard setting bodies. Whether this is ‘excessive’ or not isn’t particularly relevant as the IFCs we operate in have through their individual stable government environments, met these challenges and we believe the business environments have improved to enable us to continue to build strong and credible business.
IFC: Is it reasonable or feasible to expect synergy between the Caribbean IFCs? Would the region benefit from the IFCs there working together?
A: Each IFC brings something unique to the client or their adviser and the fact that a ‘choice’ exists is considered positive by our target markets. With clients seeking alternatives to residence and opportunities for the growth of their operating businesses which many times result in taking advantages of the internationally recognised agreements and TIEAs that are in place with each jurisdiction. It is likely that from an international perspective interests will be become more aligned in time.
IFC: What does the future hold for your business in the region?
A: At Butterfield, we are confident about the future opportunities for our businesses in the region. We believe we will continue to see growth and increased business volumes, all due to a genuinely focused and consistent service driven culture. By ensuring that we continue to deliver to the highest of standards and adapt with the changing environment, we believe the future is bright for Butterfield in the international financial services industry.
Brian Balleine has nearly 30 years of experience in the field of international wealth planning as well as trust and fiduciary administration. He has spent the last 18 years leading and managing trust businesses in Asia, Europe and the Caribbean. In addition to his Master of Business Administration Degree, Brian is a Chartered Fellow of the Chartered Institute for Securities and Investment. He is also a member of the Society of Trust and Estate Practitioners.
Julien Martel joined Butterfield in Guernsey in January 2000. In 2006, he transferred to Butterfield's Bahamas operation where he was responsible for the management and development of the Trust and Fiduciary business prior to his appointment as Managing Director in 2011. Julien is a Director of the Association of Banks and Trust Companies in The Bahamas and served as Deputy Chairman of The Bahamas Financial Services Board until September 2012.