One bank approach
As we look ahead into a new era of international financial services, the key selling-points for financial services firms, wherever they are based, will be an ability to demonstrate a high degree of stability, specialist and sophisticated expertise and impressive global reach.
It is pleasing for Cayman, then, that it is home to a number of firms that possess precisely those qualities that will help ensure its long-term appeal and success as an international finance centre.
As far as Deutsche Bank in Cayman is concerned, for example, having the backing and stability of its parent Group has certainly been a significant advantage in this changed financial environment, both in terms of growing business in 2010 and preparing for 2011. This year, for instance, Deutsche Bank was named in Global Finance magazine’s list of the ‘World’s 50 Safest Banks for 2010’, an accolade attained by only a few select global institutions with a presence in Cayman. Whilst this certainly sends a powerful message about the Bank’s own stability, it also reflects a commitment amongst globally sound institutions to maintain a commitment to Cayman.
Having the presence of global, stable and secure organisations in Cayman is particularly good for it as a jurisdiction in a number of ways – both on a reputational level for Cayman as a centre of international financial excellence and in terms of extending specialist services to local financial services businesses and intermediaries based in Cayman, supporting them and helping them grow their businesses as challenging conditions persist. Offering those local financial services providers and intermediaries the global solutions they need to protect and grow their business – and indeed the underlying wealth of their clients – is undoubtedly an important strength.
Trust companies and family offices
One specific advantage that the global dynamic of banks can offer Cayman intermediaries is access to its wider specialist services, such as their investment bank services. This is something that Deutsche Bank, for example, is focusing on at the moment, through its ‘one-bank’ approach. Whilst banks like Deutsche Bank might have been integrating their separate business areas for some time, the current economic climate means that the partnership between a bank’s traditional wealth management business and its investment bank arm is really gathering momentum.
This is particularly the case amongst financial intermediaries, such as trust companies and family offices, who are looking increasingly beyond their immediate shores to cutting edge, specialist, and sophisticated solutions on a global scale.
Essentially, these partnerships act as a conduit for financial intermediary customers between traditional wealth management and investment banking services. The aim is to bring those intermediaries into contact with some of the leading minds within those banking institutions who might be based around the globe and provide them with access to their wider capabilities that can really enhance the service they can provide their underlying clients. By providing support and this sort of access to investment bank services to intermediaries, global banking institutions with a footprint in Cayman can ultimately support the clients of the intermediary network in Cayman.
What might these extended investment bank services look like? On the one hand there are the opportunities to access ‘global banking’ services, geared towards ‘wealth creation’. The idea is that a bank’s investment bankers around the world work together with locally-based relationship managers to become involved in a wide range of projects on behalf of intermediaries, providing family offices and trustees in Cayman with services that are usually reserved for institutional clients. This might include high level advisory services, such as support for selling a flagship asset, mergers and acquisitions, Equity Capital Markets, IPO listings, strategic hedging, monetisation and commercial lending.
The other side of this global dynamic is access to ‘global markets’ services, more geared towards ‘wealth utilisation’. This opens up opportunities for managing wealth that are ordinarily out of the reach of individuals and reserved for institutional clients. In this way, trustees and other financial intermediaries in Cayman will be treated to an institutional service. This may include tapping into specialist services, including institutional products and pricing, prime services, customised product solutions, global capital markets and access to niche markets and advisory services.
In the new financial world, maintaining client confidence is absolutely key and this means raising the bar across all business areas, concentrating on delivering a truly world class service. Traditional services are just no longer good enough for high value clients who are demanding increasingly sophisticated financial support in a constantly shifting economic climate, something that is becoming more and more evident in Cayman.
The management of family wealth in particular is changing, with families behaving more like financial institutions, making large investments, executing a lot of transactions and managing complex investment portfolios. As a result, they are looking for a more integrated approach that spans wealth management and investment banking. At the same time, they are looking for a corresponding level of service.
It is for this reason that services that span wealth management and investment banking are proving especially attractive amongst trust companies and financial intermediaries in Cayman. Having access to that sort of international expertise through a locally based team is incredibly valuable and can make a difference to their business growth plans.
Meeting the demands of increasingly sophisticated intermediary clients is crucial, but is made easier for certain banking groups as a result of their global strength and reach. Having banking businesses with global networks in Cayman is good news for the jurisdiction and for those individuals and businesses that choose a global bank as their financial partner locally. That sort of strength and stability and the ability to draw on the considerable expertise of its employees anywhere in the world can give intermediaries in Cayman that extra bit of confidence they are looking for, as they seek to be reassured that the assets of their underlying clients are properly looked after.
There are institutions in Cayman that can demonstrate such strength and international reach and this is also good from a jurisdictional perspective. It shows that those institutions have confidence in Cayman as a robust and stable international finance centre and are prepared to invest in the services they provide to local clients. Recent rankings in The Banker magazine, for example, place Cayman as the number one ‘specialised finance centre’ globally, with particular reference to its attraction in supporting international business growth – an area in which global banking institutions would certainly play a significant role.
The benefits for locally-based trustees and family offices of a partnership between traditional banking and wealth management and investment banking are clear to see. The far-reaching, specialist opportunities such a partnership can offer them through access to a global network of experts are highly sought after and can play a significant role in helping them manage the wealth of their high value clients over the months and years to come.