Butterfield Bank plans to reduce its global workforce by 9% with as many as 22 jobs in Cayman believed to be impacted.
In a memo to all staff, seen by the Cayman Compass, CEO Michael Collins announced a group-wide restructuring.
The memo didn’t specify exact numbers of jobs cut in each jurisdiction, though the Compass has been told the expected total for Cayman. The bank had 1,341 employees globally in 2022, according to its most recent report, with just over 200 based in Cayman.
In his message to staff on 25 Sept., Collins indicated that the majority of redundancies would be ‘effective immediately’.
“I recognise this is difficult news as it means a number of talented individuals across multiple business segments will be leaving us,” he wrote.
“You may be wondering why this is happening when our financial performance has been solid. While we have done a good job containing costs we are not immune to the inflationary pressures that all companies are facing today.”
His message indicated that Butterfield’s earnings had been favourably impacted by rising interest rates but that this cycle was coming to an end and a reduction in expenses was necessary.
Chris Saunders, the former finance minister, said he was saddened by the news and is putting pressure on the bank to keep jobs in the territory. He said Butterfield makes more than half its income in Cayman and needed to give back to the jurisdiction.
“Cayman is the bread and butter of Butterfield’s operations and our people should be getting a bigger piece of the pie,” he told the Compass.
A bank spokesperson confirmed to the Compass that ‘restructuring’ was taking place and there would be employment impacts across the group, but declined to give specific information.
The bank is headquartered in Bermuda and has branches in a handful of jurisdictions including Cayman and Guernsey. It has previously moved jobs out of those jurisdictions to Halifax, Canada, where it has consolidated some of its back office functions, including card services.
In response to questions from the Compass Tuesday, a spokesman for the bank’s Cayman business confirmed, “An internal restructuring announcement to employees was made last week.”
He added, “Butterfield regularly evaluates its operations, capital levels and efficiency according to market conditions and business needs. Regrettably, some roles across the business have been impacted as part of a Group restructure to position ourselves for the future.
“We continue to operate in all of the jurisdictions we call home and there are no changes to the products and services we offer clients.”
‘Sad news for Cayman families’
Saunders, a former chief financial officer at HSBC Cayman, said he was “deeply disappointed and saddened to hear that 22 Caymanians will be losing their livelihood and their ability to feed and take care of their families”.
He said Butterfield’s public financial statements showed their dependence on Cayman to fuel near-record profits.
“It is even more disappointing when considering that Butterfield had a net profit of US $214 million in 2022 – one of the highest in their 164-year history – and that the Cayman operations were responsible for US $120 million or 56% of the net profit.”
Bermuda, where the bank is headquartered, was responsible for US$60 million or 28% of the net profits in 2022, he said. Butterfield results for 2022 show that Cayman represented 18.5% of total expenses coming in at just over US$62 million out of a total US$335 million. During the same period, Bermuda accounted for almost US$189 million or 56% of total expenses.
‘Watershed moment’
Saunders said banks fees should be contingent on their ability to create jobs in Cayman.
“More jobs should be moving to Cayman and not the other way around. It is time for us to look at legislation and regulation that encourages more jobs to come to Cayman while simultaneously discouraging this kind of practice.
“I have long argued that the fees charged by the government should be based on a company’s contribution to our economy. You create more jobs; you pay less fees. You move jobs, you pay more.”
Bermuda law requires consultation over job losses and Saunders said he was concerned that Cayman employees could be further impacted if the bank does not get what it wants in consultation with the authorities in the sister territory.
“While I understand that Bermuda’s board and management is first and foremost responsible to their shareholders, they must also recognise that they have a responsibility to their other stakeholders, and events like these create a watershed moment for us to revisit the annual fees charged by [the Cayman Islands Monetary Authority],” Saunders said.
Previous restructuring
The bank opened a service centre in Halifax, Nova Scotia in 2015, indicating around that time that the move “may involve the redefinition and relocation of select roles to Halifax”.
In 2017, it was announced that 10 jobs from Cayman and 12 from Bermuda would be transferred to Halifax. Additionally, six redundancies in Cayman were announced in 2020.
Quoted from an earnings conference call in 2017, Collins was cited in the Bermuda Royal Gazette newspaper as anticipating future reduction of costs in Bermuda and Cayman.
“Bermuda and Cayman are very expensive jurisdictions. Halifax is about 40 per cent or 50 per cent less expensive, and also [has] a very good talent pool, so we’re very excited about that,” he said at that time, according to the newspaper.
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