Butterfield to acquire Deutsche’s banking, custody biz in Cayman, Channel Islands

The Bank of NT Butterfield & Son is to acquire Deutsche Bank’s banking and custody businesses in the Cayman Islands, Jersey and Guernsey, the Bermuda-based institution  founded by Nathaniel Butterfield in 1758 has announced.

The announcement comes four months after the bank said  it was buying Deutsche Bank’s Global Trust Solutions business, excluding its US operations, as it looked to expand the geographic footprint of its trusts business, and 17 months after it listed its shares on the New York Stock Exchange for the first time.

The news also coincided with Butterfield’s fourth quarter and year-end results statement, which showed it had made a record profit last year, of US$153.3m, up from US$115.9m in 2016.

The bank boosted its quarterly dividend payment by 19% to 38 cents a share, and announced a plan to buy back up to one million shares of its stock. The shares closed on Friday down 1% at US$44.38, after having jumped 9.5% the day before, and having had their debut on the NYSE in September 2016  at US$23.50.

‘Financial intermediary, corporate clients’

The Deutsche Bank banking and custody businesses being acquired primarily look after financial intermediaries and corporate clients, Butterfield said in a statement on Friday. Terms of the agreement weren’t disclosed.

The transaction is expected to close in stages during 2018, subject to all regulatory approvals and other customary closing conditions, Butterfield said.

Deutsche Bank’s decision to sell the offshore businesses as part of a corporate strategy aimed at making its operations “simpler and more efficient”, the Butterfield statement noted.

It added that Deutsche Bank “will refer its clients to Butterfield, to which they will have the opportunity to transfer their banking relationships”, and that Butterfield “will work closely with Deutsche Bank to effect a smooth transition of accounts and services”.

“To assist with the transition, as well as the ongoing management and growth of the acquired business, Butterfield intends to offer positions to a majority of those Deutsche Bank employees available to transfer along with the acquired business,” it continued.

“This includes employees in Mauritius, who provide operations and support services to the Cayman and Channel Islands banking and custody businesses.”

Butterfield has operated in Cayman and Guernsey for more than 50 years and 45 years, respectively.

As reported last year, Butterfield’s acquisition of Deutsche’s Global Trust Solutions business also involved businesses operating in the Cayman Islands, Guernsey and Mauritius, as well as Switzerland and Singapore.

Butterfield chairman and chief executive Michael Collins said that a key element of that acquisition of the Deutsche Bank trusts business was the fact that it would give Butterfield a Singapore trust company for the first time.

“We have long had an interest in establishing operations in Singapore to support the growth of our legacy trust business in Asia,” he added, in the statement published on Friday.

“And with this banking transaction, we will gain a presence in Jersey to complement our existing Guernsey-based Channel Islands bank, giving us increased scale and the opportunity to realise operational economies in the region.

“We look forward to welcoming Deutsche Bank’s clients to Butterfield, along with the employees who are familiar with their accounts, and we are committed to ensuring that their transition to Butterfield is straightforward and seamless.”

‘Oldest bank traded on NYSE’

At the time of its IPO in October 2016, year, Collins was quoted as telling Bermuda’s Royal Gazette newspaper that Butterfield was “the oldest bank trading on the New York Stock Exchange”.

The bank grew out of a Bermuda trading company founded  in 1758; founder Nathaniel Butterfield’s son, Nathaniel T, expanded the business to include financial services.

In 1858 the Bank of NT Butterfield & Son was founded as Bermuda’s first deposit-taking institution; over the next few decades it helped to support the archipelago’s growing tourism industry and infrastructure, then evolved to accommodate the wartime economy of the early 1940s, and a need to look after military personnel stationed nearby.

By 1951 it had become the largest Bermudian-owned and held company in terms of per capita owners.

It went through a bit of a rough patch in  2010, when it posted a US$213m loss in the wake of the global financial crisis, and agreed to allow a number of outside institutions – including the Carlyle Group as well as the Canadian Imperial Bank of Commerce – to acquire a majority stake.

Subsequently it went on to acquire Guernsey-based Legis Group Holdings Ltd in 2014 and, later the same year, parts of the corporate and retail banking business of HSBC’s Cayman Islands business.

In 2015 it acquired Bermuda Trust Company Ltd and HSBC’s private banking, trust and investment business, also in Bermuda, which was reported to have US$24bn in assets under administration and US$1.5bn in assets under management.

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