A Turks and Caicos retail bank, in which Cayman National Corporation holds a majority share, made 10 staff members redundant Friday as part of a restructuring programme.
However, Stuart Dack, president and chief executive of Cayman National Corporation, said the restructuring at International Banking Group would have no bearing on Cayman National Corporation staff in the Cayman Islands.
Mr. Dack, who is also the chairman of International Banking Group, explained the redundancies in a press release issued Friday.
“… [T]he impact of a global recession, local economic slowdown, and instability in public finances coupled with delays in opening the new bank, which were outside of our control, have resulted in a slower initial development of the bank than anticipated,” he said. “With these factors in mind it is with great regret that we have made the decision to restructure the business and in the process make some staff redundant.”
In a telephone interview on Saturday, Mr. Dack said the bank was originally slated to open in the early part of 2010, but didn’t open until July 2010. In addition, he said certain operations of the bank weren’t functional until January of this year.
He said the bank started with a contingent of 32 staff members “with the expectation that the economic situation in Turk and Caicos and everywhere else would improve a lot more quickly than it has”. “Of course, it hasn’t,” he said.
“We planned some time ago that if business didn’t come in as quickly as we’d like, we’d cut the staff numbers.”
Mr. Dack said the redundancies still leave the bank with 21 staff members, which he said was “very substantial”.
“Despite the cuts we will still maintain staffing at significant levels and our delivery of service will not be affected.”
In a letter to staff members dated 2 March, International Banking Group President Ivan Browne advised of the coming redundancies. “In order to achieve sensible economies some functions will now be further supported by our parent company in Grand Cayman and in other cases existing positions will go as work volumes and activity do no justify the role at this time,” he wrote.
Mr. Dack explained that functions like IT and audit support were already conducted for International Banking Group by Cayman National Corporation on Grand Cayman and that the operational support would just expand for the time being.
“We… look forward to growing our complement of staff as soon as economic conditions allow,” the press release stated. Mr. Dack noted that there had been some positive developments in Turks and Caicos recently that could help turn the economic tide, including the commencement of JetBlue and Continental Airline flights to the country and the UK approval and guarantee of US$260 million of borrowing last month.
The International Banking Group restructuring won’t require any additional capital investment from Cayman National Corporation, Mr. Dack said, adding that part of the reason for the restructuring was to “make sure the cash flow of the new business stays on track with where we want it to be”.
“Cayman National as the major shareholder of IBG remains fully supportive and we feel that the steps being taken are sensible at this time in the development of the new bank,” the bank’s press release stated.
The Turks and Caicos Sun newspaper reported the redundancies on Friday, 3 March. In the Sun report, an unnamed International Banking Group employee said that when it opened, the bank made it clear that they didn’t expect to make a profit until after three years. Mr. Dack said that was normal.
“If you open up any new business, it takes some time to move into profitability.”