Fidelity Bank has undergone a corporate restructuring resulting in the sale of its Fidelity Pension Services and Fidelity Insurance businesses.

Richard Johnson, chief operating officer of Fidelity Bank Cayman, said, “This sale allows us to now focus exclusively on our core business and further enhance the service provided to our banking customers here in Cayman.”

The core services offered by the bank, which has a 40-year history in Cayman, include retail and corporate banking services, such as chequing and savings account facilities, fixed deposits, credit cards and consumer and real estate loans. Fidelity Bank’s Cayman-based management and administration teams remain in place.

Gowon Bowe, CEO of Fidelity Group.

Gowon Bowe, CEO of Fidelity Group, the Bahamas-based parent of Fidelity Bank Cayman, explained in an interview with the Cayman Compass that the restructuring originated three years ago, when Fidelity embarked on a shareholder value analysis.

This was in part prompted by the deteriorating health of Anwer Sunderji, Fidelity Group’s main shareholder, who was looking at realising his investment and the need to find the best solution for all shareholders.

The exercise was intended to give shareholders a better understanding of the value of the business and to see if larger scale businesses were interested in individual components of the group.

“When there were interested parties what became evident was that the pieces were more valuable than the whole,” Bowe said.

The ultimate purchaser of Fidelity’s pension business, Royal Fidelity Merchant Bank and Trust (RF Group), is a former subsidiary and joint venture of Fidelity Bahamas.

After Royal Fidelity underwent a management-led buyout and became independent, it entered the race to buy Fidelity’s pension arm. RF Group knew the business well, having performed administrator, back office and accounting functions for the pension plan since its inception in 2004.

The transaction commenced in May of last year and the Cayman Islands Monetary Authority approved the sale of Fidelity Pension Services, the trustee and administrator of the Fidelity Pension Plan, to RF Holdings Limited, the parent company of RF Group, on 31 Dec. 2019.

The pension business is now undergoing a transition period until the end of the year before a name change will take place and the takeover is complete.

Emergency pension withdrawals

The Fidelity Group CEO acknowledged the recent shortcomings and negative media coverage stemming from a delay in processing emergency pension withdrawal payments in Cayman.

Earlier this year, Cayman legislators changed the Pension Law to enable savers to withdraw a portion of their pension funds within 45 days to help them cope with the economic fallout of the COVID-19 pandemic and related lockdown measures.

RF Group officially became the manager of the Fidelity Pension Plan on 1 May, the same day the changes to the Pension Law came into effect.

While “mind and management” of the company and any legal liabilities are no longer with Fidelity Group or the bank in Cayman, Bowe said, given the common history and name, Fidelity naturally has an interest in seeing “all persons being satisfied” in the matter.

As far as the bank is concerned, Bowe said, he is comfortable that all payments were made as soon as payment instructions were received by Fidelity.

Last month, RF Group apologised to its 11,000 pension plan members for any delays.

Michael Anderson, the CEO of RF Group, said the sheer number of requests had overwhelmed the pension provider and the various processes required to facilitate the withdrawals had created significant challenges. However, these issues were resolved.

The Fidelity Pension Cayman-based administration team will remain in place to assist customers. Brett Hill, who was part of the Royal Fidelity management buy-out, will join the team as RF Cayman president and country head, in addition to his responsibilities as president and CEO of Fidelity Bank Cayman, during the transition period.

The RF Group said it intends to broaden the range of products and services in Cayman by including most of the wealth management and investment banking services it currently provides in both the Bahamas and Barbados.

As a result of the sale of its pension business, Fidelity Bank can still accept the payment of pension contributions, but the bank is no longer able to handle any queries related to a member’s holdings in the Fidelity Pension Plan.

The same applies to the payment of Fidelity Insurance premiums which can still be accepted by Fidelity Bank. The bank will also provide certain transition services to the insurance business until September 2021.

However, due to the sale of the business to Royal Star Assurance and Guardian General Insurance on 30 Sept. 2019, the two former principal insurance carriers of the business, the bank is not able to handle any queries related to policies held through Fidelity Insurance.

In the past 20 years, Fidelity Insurance acted as a local agent for both insurance companies for health insurance.

Bowe noted that the divestment of the two businesses will narrow the management focus on banking. “Banking is not the easiest thing in the world now,” he said.

There are challenges around correspondent banks, the interest rate environment and the COVID-19 pandemic, in addition to a need for liquidity and credit management, Bowe explained.

Many entities over the years have expanded in many different service lines and many are now starting to contract to give greater focus on what they know best, he added.

The synergies that exist between the bank in Cayman and in the Bahamas in terms of common systems, policies and procedures will now be streamlined.

“What we intend to come out of this is an enhanced customer experience,” the Fidelity Group CEO said.

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