The declining business environment in the trust industry is causing job losses in Cayman. The trust arm of Cayman National announced four redundancies after consecutive years of losses.
Michael Hodgson, president of Cayman National Trust Co. Ltd. said, “On 30 September, we regrettably made four positions redundant after a review of the business.”
The positions affected include an accountant, a trust administrator, a senior executive and a filing clerk.
“Over the past three years, our client base has reduced for various reasons; for example, some clients no longer fit our target market, some were unprofitable and some U.S. connected clients closed,” he explained.
Mr. Hodgson, who is the only non-Caymanian at Cayman National Trust Co., confirmed that all four staff affected were Caymanian and provided with severance packages in excess of what is required by law.
“Restructurings are never made without a great deal of thought and consideration at board level as obviously, people’s lives are sadly impacted,” he said.
Cayman National’s trust business has suffered from a general market decline since 2010. Even in 2009, the last year the business made a net profit – of $158,898 – the Cayman National’s annual report noted that income had come under pressure, as legacy clients reorganized their positions.
In 2010, Cayman National Trust said it was taking action and expecting that business levels would return as soon as economic conditions improve. However, since then, the trust company posted annual losses of $300,000 in 2010, $134,000 in 2011, $406,000 in 2012 and $58,000 in 2013.
Cayman National’s 2013 annual report stated that although the performance of the trust business fell short of the aim to break-even after a number of years of difficult trading in the sector, the substantial reduction of losses was a “creditable” result.
It added that while profitable trading in the trust sector remained difficult, “we are carefully controlling costs and with decent volumes of new business coming in we continue to strive towards break-even and better.”
In addition to the deteriorating business environment, regulatory and compliance costs in the finance industry have been escalating as a result of new regulations. The need for additional legal and advisory services puts an even greater emphasis on cost controls.
Personnel expenses are the largest expenditure item at Cayman National group, representing about 51 percent of total expenses. Last year, Cayman National reduced its personnel expenses by 2 percent compared to the previous.
On the trust company side, Mr. Hodgson added, the job losses were necessary because of less business activity and to preserve the remaining positions.
“With the four redundancies, our cost base better matches our revenue, we are well positioned for the future and the remaining jobs for Caymanians within the company are better secured,” he said.