Brazilian holding acquires bank in Cayman Islands

Brazilian family conglomerate Cohab/Aboulafia Group has acquired Sul America International Bank in Cayman.  

The bank, now called Cainvest International Bank Ltd, received its letter of good standing from the Cayman Islands Monetary Authority in May, completing the transaction. 

Cohab/Aboulafia Group is one of the largest Latin American producers of synthetic fabrics, which can be found in anything from car seats and shoes to suits. 

In 2006 the holding company decided to diversify into the financial business, explained Charles Aboulafia, a member of the board of directors and head of investment products and services for Cainvest International Bank.  

The group first opened its asset management business Cainvest S.A. in 2007 in the British Virgin Islands and partnered with Banco Portugues de Investimentos in the co-management of a Brazilian and a Latin American debt fund. The group also maintains Banco de Negócios Cainvest S.A., a non-financial company specialised in structuring IPOs for small-cap and mid-cap companies. In order to strengthen its structure in financial services, the group decided to move into the private banking business by incorporating lessons learnt in the financial crisis in 2008.  

“We believe that an acquisition is the best way to gain know how and develop a presence in a new market,” Mr. Aboulafia said. “However, we realised there are many banks that offer private banking services and at the same time leverage their balance sheet, exposing their private banking customers to the risks of the bank losing money in its other operations,” he added.  

The search for a bank that was conservatively financed led the group to consider four jurisdictions.  

Strength of banking supervision 

“The main reason we came to the Cayman Islands was because of the strength of the banking supervision of the Cayman Islands Monetary Authority,” Mr. Aboulafia said, noting that stronger supervision translates into a more reliable banking business.  

In addition to the supervisory regime, he named the expertise of the local service providers and the political stability of the Cayman Islands as a UK Overseas Territory as important factors in the group’s selection process.  

“Of the other three countries we looked at, only one had this political stability, while the other two were less stable than Cayman,” he said. 

The importance of the financial services industry for Cayman’s economy in terms of its contribution to the GDP was also important, he added, “because if we are important to the government, the government is going to invest into our field and that is what is happening”. 

As a class B banking license holder, Cainvest Bank is not allowed to engage in any business activities locally, but focuses solely on international business.  

“This suits us very well because we are an international group and our client base consists of high net worth individuals from all over Latin America,” Mr. Aboulafia said. 

Cainvest offers what he calls “pure play” private banking, where clients are offered credit card and cash management services and brokerage to invest in bonds, stocks or commodities. The bank operates as a platform that caters for the whole spectrum of the high net worth client’s needs as an agent. 

As such Cainvest’s business is completely segregated from the other businesses in the group’s financial division, for example the BVI operated investment funds, Mr. Aboulafia said. The bank has also restricted any kind of leverage to ensure the long-term stability of the bank and safety of its clients’ assets. 

Mr. Aboulafia lauded the work of Walkers, as the company’s legal advisers in the acquisition and in setting up the business, and added that he “was very impressed by the quality of the service industry as a whole in the Cayman Islands”.  

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Mr. Aboulafia
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