Cayman National Corporation has added a new business entity to its portfolio that isn’t so new after all.
Cayman National Fund Services has been around for nearly 25 years, but it was operated from the auspices of Cayman National Trust Company, Ltd. That has now changed.
Christopher Lumsden, centre with green tie, and the Cayman National Fund Services team. Photo: Alan Markoff |
Cayman National Fund Services Ltd. recently split off from the trust company and is now a separate entity that is 100-per-cent owned by Cayman National Corporation.
The change says something about the success of the business, said Head of Fund Services Christopher Lumsden, who came on board in early 2004.
‘We’ve grown the business 500 per cent in four years,’ he said. ‘Granted, the market has been going great guns, too, but few people can say they’ve enjoyed growth like that.’
The five-fold growth in business has only required a two-fold growth in staff, which means the fund services group has become more profitable during the past four years as well.
Despite its successes, the fund services part of the business still had some perception problems because it fell under Cayman National Trust Company, Mr. Lumsden said.
‘Some clients would say: ‘Why would we engage a trust company if we want a fund administrator’?’
Part of the thinking of having the fund services under the trust company was to have the two entities share administrative and other costs. Mr. Lumsden said that when he first arrived, there was still some crossover of administrative roles between the trust company and the fund services company.
‘But for the last three-and-a-half or four years, the people working in fund services have basically been doing just that and nothing else,’ he said.
In addition, as the fund services portion of the business started to grow, the risk of potential liabilities did as well, so it was decided to separate the companies and incorporate Cayman National Fund Services as its own entity.
Functionally, the move has not altered the way CNFS does business, Mr. Lumsden said. However, it will have positive effects.
‘It’s good for Cayman National Corporation shareholders because it will allow them to gauge performance better,’ he said, noting that CNFS results were previously incorporated into the Trust Company results for reporting purposes. Separate reporting will allow for better decision making.
‘Overall as a group, we’ll end up making more money because of this,’ Mr. Lumsden said. ‘We’ll be able to make better, more informed management decisions.’
Relative to some other fund administrators, Cayman National Fund Services remains small, with 20 staff members. Mr. Lumsden said the smaller size allows the company to be more flexible with clients and to offer better, personalised service.
CNFS has mix of clientele that tends to be smaller instead of larger institutional investors, which Mr. Lumsden said generally gravitate toward the global fund administrators. These big players in the business can sometimes neglect smaller clients, and CNFS is a perfect alternative because it can give them the better service they desire.
‘If a client calls, we give them answers,’ he said. ‘We don’t return calls in three day’s time; we return them in hours. Because we’re small, we can control that more easily.’
Even though the fund services portion of the business is small, Mr. Lumsden said it offered clients the comfort level of a much larger organisation because it was part of Cayman National Corporation.
‘Clients certainly can take comfort from the fact that we have 300 staff, not just 20, and over a billion dollars in assets.’
Mr. Lumsden said the Cayman National Corporation board of directors has shown remarkable support for the fund services part of the business.
Market turmoil
Like everyone else in the fund administration industry, Cayman National Fund Services has felt the effects from the recent turmoil in the financial markets.
‘I think over the next year or two, every fund administrator will lose clients,’ Mr. Lumsden said. ‘That’s the way of the world. But I’m not despondent about the future of the fund services industry. It’s just an ever-changing market.’
Although the recent market tumble has caused many investors to lose money, others are seeing it as an opportunity.
‘There is some silver lining in this sky, which is admittedly filled with black clouds,’ he said. ‘Some people are realising it’s a good time to buy securities. Some investors have been waiting 10 years for this opportunity.’
CNFS’s small size can be an asset in the current financial environment, Mr. Lumsden said.
‘We’re fairing as well as anybody, and we’re doing better than a lot.’
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