“
Feature for feature,
Bermuda’s current online banking products compare favourably to anything available in North America or Europe, and in some respects they are more advanced.
Land space is limited and homes are often shared by multiple generations with the result that people who fi nd themselves under fi nancial pressure still tend to make paying the mortgage their fi rst priority. All of the banks have done an excellent job in working with customers who are fi nding it challenging to make their payments. More often than not, we can come up with mutually workable refi nancing solutions that keep people in their homes.
”
Despite current pressures on loan portfolios, our banks are profi table and well-capitalised. But it would be fair to say that fi nding new sources of revenue in the current environment is proving diffi cult. Deposits have been relatively stable, but against the backdrop of the economic downturn, new lending opportunities are limited.
Worldwide, rates continue to be held down by central banks trying to stimulate economic growth from the supply side of the equation, but the demand side is just not there currently. Add to that the fact that with low rates, safe investments offering decent yields are harder to fi nd and the fact that banks’ interest margins are naturally compressed, which together mean that achieving historical levels of profi tability is diffi cult.
How are banks responding to fi nancial pressures?
Cost management is of course an ongoing focus for all of us—trying to fi nd more effi cient ways of doing things. There has been a lot of investment in technology and straight-through processing in recent years to create operational effi ciencies. Complementing those efforts, the banks are becoming increasingly international in their quest for new sources of revenue.
At Butterfi eld, we’re putting excess capital into developing our core businesses in other markets with acquisitions in Cayman on the community banking side and in Guernsey in the trust business. Other banks, too, are beginning to leverage the international connections of their major shareholders to broaden their services for Bermudian clients and facilitate capital infl ows to Bermuda from abroad.
62 Bermuda Finance | 2014
How are the banks helping stimulate economic activity in Bermuda?
First, it’s important to note that the banks are among the largest employers and major consumers of goods and services locally. Just by going about the day-to-day business of running the banks, we contribute signifi cantly to the economy. There is also a strong appetite among the banks to write loans to support business expansion, which will lead to job creation.
In fact, across the industry we’re currently approving about 90 percent of loan applications, although demand is low compared to previous years.
The general consensus is that, to get the Bermuda economy growing, we need to attract more capital, more business and more people to the Island. Initiatives from the government, the Business Development Agency and the Tourism Authority are designed to create the conditions that will attract business, resident and tourist dollars to the Island. Representatives of the banks are supporting those efforts through participation on advisory councils, meeting with potential overseas investors and the like.
One of the factors overseas investors consider when evaluating jurisdictions is banking infrastructure. As a group, Bermuda’s banks have continued to invest in technology, regulatory compliance, governance and risk management initiatives that have kept us very much in step with what leading banks in other jurisdictions are able to provide.
We offer corporate fi nancing solutions on fl exible terms at competitive rates, we are globally connected to facilitate fast, secure international funds transfer and we provide customers with technology solutions that easily rival those of our larger onshore peers.
We also continue to support Bermuda’s reputation as a transparent and cooperative international fi nancial centre. All the banks committed signifi cant resources to ensure we were prepared for Foreign Account Tax Compliance Act (FATCA) compliance by the June 30, 2014 deadline. We are also currently working to ensure Basel III compliance within agreed timelines.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76