consistent theme across the world, with only slight difference of focus when it comes to liquidity and capital. But with Basel III it becomes increasingly standardised with some local flavour, but the regulatory environment has changed completely and for good reason. The banks had a bad period and things had to be cleaned up so it’s not a local issue, it’s global.
Swan: From our perspective, some of the challenges we see during this persistent low interest rate environment, are managing the increased demands of regulation as well as the cost of technology that is required to allow banks to compete on a global basis.
Truran: The Bermuda Monetary Authority (BMA) has done a great job in trying to balance and apply a risk-based approach to regulation here on-Island. For all of us in financial services, it’s about how we create opportunities from the regulation that we find ourselves under and how do we manage the associated costs in adhering to that regulation.
All of us have teams of individuals who are making sure that we don’t end up like the big global banks with fines against us. We are monitoring and reporting in a far more proactive manner than we have historically, which is exactly what the regulation is designed to do, but the cost factor is immense, so it’s a balancing act between optimising performance and adherence.
The new regulation is causing us to have to look at the way in which we are doing business going forward outside of the costs of regulation, so if we are going to utilise our balance sheet it’s going to be in quality assets in order to optimise the capital that we have in the organisation.
If you invest in less risky assets the rewards are going to be lower. If we’re investing in lower risk assets, getting lower returns on those assets, how are we going to derive returns that are acceptable to an investor?
John Whiley: In the fund administration industry, we’ve been working harder for less money for a number of years. The economic challenges
54 Bermuda Finance | 2014
“Interest rates have not moved much and the market is competitive, so how do the banks begin to grow the revenue?” Chris Maiato
from competition and regulation have been on the table, not just in Bermuda, but globally. SS&C GlobeOp expanded in to Bermuda in 2013 following the acquisition of Prime Management Limited.
SS&C GlobeOp was attracted to Bermuda because Prime was able to provide innovative solutions within the insurance-linked securities (ILS) asset class and turn the challenges into opportunities by working smarter, harder, and leveraging technology to meet these challenges. Since 2008, the larger fund administrators pulled out of Bermuda—or left a brass nameplate—because they did not see the opportunities from having operational teams on the ground.
Now we’re starting to see a new wave of investment coming back to the Island because the jurisdiction is looking attractive for investment managers establishing a presence from the Island, and/or for their funds to be domiciled from Bermuda. Why? Because there is sensible regulation at an appropriate cost supported by a hard-working professional services sector.
As a leading fund administrator in Bermuda, we are excited about what the Bermuda Business Development Agency (BBDA) has accomplished to get the Bermuda message out. The BBDA, working with the BMA, Bermuda government and all service providers has effectively sold Bermuda as a leading jurisdiction to do business. In addition to the growth from the ILS sector we are now seeing more interest in Bermuda from global fund groups and asset managers.
Collins: There’s two parts to the economy, one is the international capital flows which have held up quite nicely. On the local side, which
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