Cayman to suffer as funds migrate to Europe

| 17/06/2010

(HMFWeek.com): Zais Group, is moving around $500m of assets held in the Cayman Islands to Luxembourg, HFMWeek has reported. The fund manager will move all its funds with European investors away from Cayman because of the encroaching regulation that will place restrictions on funds marketing to European investors. Luxembourg is becoming an increasingly popular destination with fund managers. As funds consider reshuffling their structures to conform to the AIFM Directive’s restrictions on the marketing of US managed hedge funds to European investors, Cayman looks set to suffer the biggest impact, should hedge funds and their European investors decide to migrate their holdings away from the island.

Last week, HFMWeek reported that SkyBridge Capital was considering creating Luxembourg Sicav versions of two Cayman-based funds of hedge funds (FoHFs).

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  1. Raffaele says:

    Come o great benevolent leader stop traveling up and down talking to the great European puppet masters playing games. Signing away our financial industry and getting nothing in return, but promises to remove us from some Racial Profiling list. Their countries debts are a testimony of socialist managed economic systems failure. Why aren’t they attacking and threatening the other banking centers in the Middle East and Southeast Asia because they are not playing the victim a role that our political leadership sames to relish and put us in every time there is a discussion or threats are made. What has Europe ever done but colonize and spread conflict by in action. They are always having meetings yet nothing ever gets done and innocent people are destroyed or killed Non Europeans of course. Stop wasting our money on foolishness and focus on getting our house and environment in order.

  2. Anonymous says:

    This new European Directive was announced just over 1 year ago. The EU  must not have mentioned it in any of the inflight magazines because it seems that no one in our government has done anything about it. Other financial centres have successfully worked to get themselves on the right side of it. Here’s a thought – why doesn’t government get rid of every highly paid cronie consultant that they have and start working with people that actually know what is going on. That would be good for the budget and the economy in general.

  3. whodatis says:

    People – get real!!

    Not much, if any at all, of this is inspired by the domestic factors so frequently outlined in these posts.

    (RE-POST. Please forgive me CNS):

    My main concern is that the EU, OECD etc. already know precisely what the situation will be 12 months from now.

    Re-centralization is the order of the day!

    It is clear to the fearless and pragmatic observer that the rights of and to money, power and economic wealth in this western world are being carefully and coldly calculated and organised. Sadly, the age old method of supposed color / race / ethnic hierarchy is rearing its head once again.

    The color coded lists (White, Grey, Black) that have been paraded around are nothing but plays of entrapment – as we can see they have moved the goalpost yet again. It appears the color code is more than a simple play on words as the "in" club truly does appear to be whiter than white:

    – Jersey, Guernsey and the Isle of Man (Offshore)

    – Exclusion and hypocritical criticism of the "PIGS" (Portugal, Italy, Greece, Spain) economies of the European Union. If they were being true to their definition then surely the acronym should have really been something along the lines of (PIGSUK) – no?

    I have long told my southern European friends to be wary of their fickle EU glory. It is my observation that wherever Brits and Germans travel to in droves to enjoy contrasting weather, food, music and (life-inspiring) culture – those countries and its people need to remain on constant guard. I say this because they will never demand the respect and equal footing that is required to truly be partners. I don’t know why, but this is the way it is.

    I am guaranteed a substantial and dismissive backlash for my words here, but the facts speak for themselves. Many will be too shocked to accept this harsh reality, others too embarrassed for being exposed as secret and or perhaps sub-conscious supporters of such a system and most likely – the majority will be too "forward thinking" to even give a second to such a paranoid and primitive perspective. (I am quite sure that I am flying way over the heads of many as well – don’t worry, time will explain it all.)

    We all better wake up. It is clear for all to see how this western world works – especially Europe. These forces have never disappeared from the political arena – even within our beloved mother country e.g. Falkland Islands vs. Chagos Islands. (Someone will be happy this morning – inside joke.)

    As I always say – this world is round … nothing falls away over some imaginary cliff – gone forever. The forces that created the realities of this world are still at play. Sadly, many have convinced themselves that the now unspoken but psychologically accepted sentiments have inherently manifested themselves into the actual political and economic hierarchy of this world – failing to realize that all we see around us is by – historically overt, but currently covert – design.

    Bearing all of the above in mind – I wonder where the predominantly Black and Brown, comfortable, happy and free-spirited Caribbean nation of the Cayman Islands stands within the framework of the ultimate (EU) plan? "

    (END OF RE-POST.)

    Interestingly, the overall gist as well as the most controversial part of the above perspective is supported by none other than Mr. Dan Mitchell – Senior Fellow of The Cato Institute and guest speaker at The Cayman Finance Summit on May 6, 2010 at the Ritz Carlton. (I have a recently discovered web link to this fact for the doubters.)

    The Anglo-Americans are currently shaking in their boots for as they look around they realize that they have apparently flat-lined. The "emerging economies" all have much brighter futures and it is the fault of none other than the Anglo-American system of cannibalistic capitalism and globalization. This made 5% of its people stupendously rich and the remaining 95% – not so much. However, it was done for the most part on thebacks of others all around the world – no surprise there whatsoever.

    So, things are not looking very bright for any of us. Cayman’s future appears very uncertain as does the future of every other western (super) nation.

    To those of you who find joy in our predicted demise – pray tell, what is your alternative? You came here for economic reasons did you not? How is your home country shaping up? Austerity much? (Ok Canadians – you guys get a bit of a pass.)

    The UK is not looking very welcoming at all these days. Even if you are / were a high flier in Cayman circles you are still facing a forthcoming reality of a 50% income tax on that high salary of yours. Add to that all of the other economic difficulties plaguing the EU right now and it is clear that this is really no time for smugness.

    To my fellow Caymanians – regardless of what anyone says or may try to have you believe – none of this has come about by any doing on our part.

    We are sitting ducks in this entire debacle as the non-elected dictator-esque elites of the European countries are the true shot callers in this issue (as many others). Not even the British, German or French voting bodies have an actual say in their economic futures any more – therefore, how could we?

    This is nothing but a ridiculous and purposely dragged out game with a long-established end result.

  4. Simon Boxall says:

    I have been studying the thumbs up and thumbs down icons and it appears that there are some people who visit this site who are just really negative about Cayman. Anything even slightly positive they hit the thumbs down and they enthusiastically and consistently hit the thumbs up for anything undermining and pessimistic. Really, why don’t you just go away, just leave. Constructive criticism is fine but the really unhappy, miserable crowd that makes a point of cheering when things head south and treating the positive with suspicion and distrust, why don’t you go and find another Island or some other place to live? There are so many wonderful things about this place but I appreciate it is not right for everyone. If it is not right for you, quietly pack your things up and go.   

    • Caymanian to the Bone says:

      Simon I am happy to read your comments, because this is very true.  Negative people who are making their living off the Island yet they are so envious because they are not resident or status holders. Give it up,negative thumbs down.

  5. Raffaele says:

    What happen to all these fool fool agreements. i thought we were EU compliant too. It appears to me by rushing and signing and meeting all these failed EU countries representatives we are in essence acknowledging or sending the wrong message and that is, that we are in someway to blame or responsible for the EU economic woes. Something they have inferred or stated several times. it sure funny how our relationship is improving but our business is leaving. The receiver is always happy but it is the person giving who is always left contemplating the gift’s value.

  6. Anonymous says:

    Time to sell the house, car, boat and scuba gear while you can still recoup some value.

    Sure is a buyer’s/renter’s market these days.

    My heart goes out to all those Caymanian landlords that gouged the expats for so long.  Good luck paying off your rental unit.

  7. Twyla Vargas says:

    Of course Cayman  will miss them, but life goes on. as we believe in the saying, that when one door closes a window of opportunity will open.  Blessed.

    • Common Sense says:

      Twyla, I’m sorry to advise that the window opening is just another unemployed Cayman-dweller breaking into your house to rifle through your purse and steal your car and TV. 

      The future of Cayman is very bleak indeed as directives, regulations, tax initiatives and overwhelming costs drive away the financial services sector, and the murderous crime rampage going on in Cayman drives away the tourists (and the costs to a visitor in Cayman as well – Cayman’s target tourist is quite rich and doesn’t have to come to a war zone).

      Quaint sayings won’t change the spiral that we’re all seeing.

      • Twyla Vargas says:

        You are entitled to speak your mind the way you feel about leaving, however, it saddens me to read about companies having to pick up and leave.  However I canot agree that by another window opening will cause another Caymanian unemployed-dweller breaking into someones house and stealing.

        I also believe the future of most places on earth today looks very bleak; (travel to other places in the Caribbean, Europe, Central America, USA, Cuba. phillipines, Canada,  and the list could go on)  You will be shocked after six months, and say " You know something, Cayman was’nt that bad after all"  I travel,  and I compare, and I would not change this little  piece of rock just yet, still remaining and putting up with hurricanes, earthquakes, the broiling hot sun, no rain  and even the crime as you speak of, because it is much worse out there in the places I have named.  I have been there so I know.. I dont know where on this planet you are from but I do believe that anyone who can live here up untill the rollover time has a reason for being here otherwise they would have left long ago. Enjoy. 

        • Anonymous says:

          I don’t think the actual Cayman Fund Assets have work permits or can be rolled over; the article is about the assets being re-ledgered to European jurisdictions due to Cayman’s slowness to adapt to known global initiatives.  This is entirely separate from work permit roll over policies.   

  8. what a mess says:

     DAMNNNNN!!!!! OUCH!

  9. Isnt this what we the poor layman people have been warning the powers to be about, we could see it coming,the high cost of doing business here in the Cayman islands, the anti expat attitude and the thought that this is my Cayman I deserve to have this job and the politicians allowing the whinning voters to demand that they get what they want even if they do not WANT to work.

    Watch for more to take place in the next few weeks. The U K have carefully set the guide lines for the sinking of the Ship SS.Cayman Islands. With the E U, steering it.

    We had better start fixing up the cart and wech to start thatch rope making and get those fish pots and plantations up and running again, as I see it we may just have to revert back to this, more bicycles, no fancy cars,poor us.

     

    • Anonymous says:

      The movement of the domicile of the hedge funds has nothing whatever to do with "the high cost of doing business here in the Cayman islands, the anti expat attitude and the thought that this is my Cayman I deserve to have this job and the politicians allowing the whinning voters to demand that they get what they want even if they do not WANT to work". Specifically it has to do with the imminentAIFM Directive, while more generally such movements are induced by the threat of onshore legislation to move to jurisdictions which have a double taxation treaty with the U.S. I am surprised you didn’t slip in the ‘rollover policy’ – the usual scapegoat – as the culprit.  The AIFM Directive in its present EU Parliament draft form would also adversely affect the UK’s funds industry.  

      • Anonymous says:

        You’re both right and you’re both wrong.  The movement of the domicile of hedge funds is because of the AIFM Directive which in turn exists because of the "whining voters who demand that they get what they want even if they do not WANT to work" from EUROPE!!!  They’ve run out of other people’s money to spend so they’re expanding their grab to Cayman.

        • Anonymous says:

          You are reaching. The comment was clearly in reference to Caymanian politicians and voters.

    • Anonymous says:

      The articles indicates that the business is being moved because of encroaching regulations that will place restrictions on funds marketing European Investors. What does this have to do with Cayman’s immigration regulations?

      It seems to be that some people just love to play the expat card over and over again,no matter whether it has any merit or not.

    • Caymanian to the Bone says:

      Just serve you right,  Cayman was living too high off the Hog anyway and need some belt tigtening.  Driving 21 miles in fast cars when the bicycle will give more exercise.

  10. Anonymous says:

    But it is cold and grey there. Why would any one want to live in Luxembourg over Cayman?  

    • Anonymous says:

      Several reasons:  Lower crime rate; more amenities; close to so many excellent travel destinations; cheaper cost of living; very good schools; etc. etc. etc.

      • Anonymous says:

        Have you ever been to Luxembourg before?  I will agree with some sediment listed such as more amenities and a decent travel destination. Let me provide you with some simple facts about Luxembourg.

        1. The crime rate is very similar to that of Cayman. 
         
        2. The cost of living in Luxembourg is also similar to Cayman, if not higher!
         
        3. Schools – it is mandatory for students to speak four languages (like other continent based European countries), however the language taught in Luxembourg is very broken. French in particular.
         
        Let me be clear, I am notanti-Luxembourg at all; actually, I love the place very much.  However, enough with the scaremongering tactics. Companies are relocating to Luxembourg simply because its cost efficient. Cayman has displaced itself out of the financial service sector due to having exorbitant prices. 
        Lower Valley Resident.
        • Anonymous says:

          You started off well but then finished with this completely inaccurate statement: "Companies are relocating to Luxembourg simply because its cost efficient. Cayman has displaced itself out of the financial service sector due to having exorbitant prices". That is not why hedge funds are moving to Luxembourg at all. In fact it will be more expensive to domicile funds in Luxembourg than in Cayman. It’s all about the AIFM Directive. However, it is nonetheless true that the fee increases by govt. means that we will lose business to offshore competitors.     

    • Pit Bull says:

      Culture, good food, decent transport links, equal opportunities in the work place, human rights, avoidance of American TV  . . . .

      • Hmm... says:

        Let’s see

        If you can’t find good food here, I have to wonder where you eat. Far as I know most of our chefs are from western and central Europe– or from Asia doing a somewhat more flavourful and fusion-inspired cuisine, if that is what you like. Caymanian cuisine is actually very similar to that of most other countries with significant coastline– a similar style of cooking exists in most of the Mediterranean countries, the Caribbean countries, some parts of India, Africa etc– and hence many of the finer restaurants in gourmand havens like London. Hence I am not convinced that the cuisine in Luxembourg is going to be significantly better or worse than here. 

        As for culture– well they say you take it with you– and no place ever lacks it. Ask your anthropology professor if you don’t believe me. A thriving cultural scene in each district and even each neighbourhood of the Cayman Islands is certainly something that we should always have been working towards and is much needed. I wonder if all of the people who like to sneer at the what they call the absence, or in some cases inherent inferiority, of culture here, may not have at least subconsciously convinced our nobly intentioned elected representatives that there is little to be gained from looking at low cost ways of developing diverse, high-quality cultural offerings and attractions in each community.  But I do hate to give the MLAs the benefit of the doubt. 

        Having recently checked out the average per capita income in Luxembourg I think you may be in for a bit of a shock if you think it is going to be significantly cheaper.

        I also have a suspicion that you will find people like Ezzard– and the rest of the anti-expat, entitled crowd–  in pretty much every corner of the world.

        Cheap effective public transport would be nice– so would a lower cost of living. Perhaps we could hire some people from abroad with fancy qualifications to work on how we achieve the latter while eliminating all barriers to immigration and getting rid of the already limited regulation that exists in the private sector (the better to grow the economy ya know.)

        On the whole I have to agree with Simon, I think I’ll take Cayman. I completely understand if you don’t want to however. Here’s hoping your company finds a way to transfer you to Luxembourg very soon! Best of luck when you go. Don’t worry about us, it’ll be hard, but we’ll make do without you.

      • Anonymous says:

        But you won’t be able to avoid the goofy BBC and its products

    • Anonymous says:

      Let me list the reasons.

      Jobs

      Culture

      Civilization

      Seasons

      Cheaper cost of living

      No Hurricanes

      No anti Expat bashers (Ezzard)

      No Entitlement attitude from the locals

       

      • CESAR AN SARAH says:

        Why did you come here in the first place if that is how you feel.

        That Rollover is a bitch to some souls isnt it?

  11. Anonymous says:

    Did they nail up that Inward investment arrow facing in the wrong direction?

    All you could hear/see from these leaders are things being done to please the financial sector yet they all seem to be leaving anyway, and on the other hand things only seem to be getting more expensive on this island everyday with the bright ideas we see coming out of the leaders,

     

  12. Anonymous says:

    Hm – all the people who have claimed in the past that Immigration issues are to blame for businesses leaving, the above clearly confirms that (as I have said many times in the past), Immigration issue is just a small part of the bigger picture. Some of the other companies who have left Cayman were just a step ahead, anticipating changes and increased cost in conducting business in Cayman.

    • Anonymous says:

      Immigration is just one of the issues driving business out of Cayman, but it is still a big issue. Other issues include the increasingly bad name Cayman is getting and the concerted efforts by Obuma and Europe to close Cayman down.

      The cost of doing business, both through increasing fees, lack of quality staff, high rents and cost of living are some more issues.

      Whilst no individual issue is solely responsible for the emigration of business from Cayman, a collection of the factors including immigration and an anti expat mentality along with an incompetent government and the increasing threats against the islands are all partly to blame.

      • Anonymous says:

        Immigration has nothing to do with these investment funds leaving. Immigration has nothing to do with the holdings companies moving. Immigration had little to do with the Fund Administrators leaving. FACT: If we gave every expat in Cayman permanent residence tomorrow it would do absolutely nothing to stem the out flow of these businesses.    

        • Anonymous says:

          Correct! It’s all about tax and regulatory arbitrage combined with a large dose of socialist intervention. Luxembourg gets a pass because it sits in the middle of the EU. It’s part of the continental team. Cayman is on the Brit team, and the Brit team is getting screwed by the EU (thank Germany) on the hedge fund issue. It’s too late to get on the US team, and the EU is screwing it anyway along with the Brits. The hedge fund business in Cayman is hardly a decade old, and it can disappear as fast as it arrived. The ones that want to market in the EU will be gone within 24 months. May as well go back to the good old money-laundering days and clear your money transfers through Venezuela and Panama because that’s going to be the only game left.