In what was generally an upbeat message about the success of Cayman’s recent ‘road show’ promotion, Premier McKeeva Bush last week warned his fellow lawmakers about the departure of financial services firms from the country.
‘My ministry has learned of a small number of local financial services firms that are either in the process of relocating some of their operations and staff away from the Cayman Islands, or have already made that decision,’ Mr. Bush told the Legislative Assembly during a speech last week.
‘While…the numbers of firms are very small, it is of great concern to the government that the economic benefits of having their operations carried out in the Cayman Islands will be lost,’ he said.
Most of the firms will remain registered in Cayman, Mr. Bush said, even if they do not maintain physical offices or staff here.
International competition in the financial services industry has grown fiercer in the past decade and Mr. Bush said there are new players in the game which include Caribbean countries and African countries that previously had not been involved.
‘Not only do we need to roll out the green carpet for both foreign and local investors…we also need to quickly make efforts to ensure that existing firms continue to see this country as the first choice,’ Mr. Bush said.
International interest and confidence in the Cayman Islands remains strong, Mr. Bush said. He said that was evidenced in the recent US$312 bond issue floated on behalf of the Cayman Islands government in the US public bond market.
‘The bond issue was four times oversubscribed (with) an impressive $1.2 billion order book due to a high level of interest,’ he said.
The premier also pointed out that the interest rate for the bond issue, 5.95 per cent, was likely at least a half-point to full point lower than Cayman would have achieved if it had simply issued debt.
The lower interest rate would save the Cayman Islands some $17 million over the next 10 years compared to an amortising bond of at a 6.5 per cent rate, Mr. Bush said.
The bond issue was broadly diversified between North American investors (41 per cent), Europeans (29 per cent) and Asians (30 per cent).
Mr. Bush said his administration would renew efforts to re-establish a Cayman Islands presence in Asia.
‘It was rather unfortunate that the previous administration decided to reverse my government’s earlier decision to establish a presence in Hong Kong,’ he said. ‘If this was not discontinued, we would have been much further ahead today.’
Mr. Bush said key competitors such as the British Virgin Islands, Bahamas and the UK Crown dependency of Jersey had embarked on similar travelling promotion shows around the same time as Cayman.
‘We are not the only girl at the ball,’ Mr. Bush said of Cayman. ‘But we are still a beautiful girl.’
Two major concerns from potential investors on the November road show included the UK’s encouragement of its overseas territories to enact direct taxation, and the G20’s efforts to increase pressure on off-shore financial centres such as Cayman.
The road show took Cayman’s representatives to London, San Francisco, Boston, Los Angeles, New York, Singapore and Hong Kong. The first leg of the trip was done between 8-17 November, and a New York-London-Asia trip between 21-29 November.
The visits were organised by HSBC bank, who was involved in the US $312 bond sale on Cayman’s behalf.