Deutsche Bank recently launched a new custody business in Cayman, enabling it to offer a service locally that the Cayman office had historically referred to other Deutsche Bank offshore locations.
“Although this worked for a specific segment of our client base, this also led to some time zone complications and forced us to utilise additional booking centres. The addition of custody and safekeeping to our local product range, therefore, enables us to deliver a much more streamlined and holistic offering to our clientele,” said Dan Peterson, director, Financial Intermediaries, Deutsche Bank Cayman.
Peterson, who joined Deutsche Bank Cayman in 2008, was promoted to director earlier this year. During his tenure at Deutsche Bank Cayman, Peterson has coordinated launches of several new services, including the foreign exchange desk and custody platform.
“The addition of this service also allows us to complement many existing products within the Bank’s range, including cash management services and our foreign exchange desk that launched in Cayman in 2009. Deutsche Bank is committed to the Cayman Islands, so launching this service also fits in well with our overall Caribbean strategy and is an ideal addition for the institutional component of our client base,” he said.
Peterson said challenges facing banks globally, including the poor economic climate and new US government regulations, has spurred Deutsche Bank to be flexible in its strategy of offerings.
“At the moment, major banks are still experiencing two things: margin compression and the impact of regulatory reform. Combined, these two issues have created an environment where many of our competitors have been forced to dilute their service offering in offshore jurisdictions. As a result, we felt that there was an opportunity for an organisation like Deutsche Bank to add a good deal of value in the marketplace,” he said.
Peterson said, “The Foreign Account Tax Compliance Act is the 800-pound gorilla in the room. In order to remain compliant, FATCA regulations will require banks outside of the US to grapple with not only new operational challenges but also added costs associated with meeting these challenges. For many banks the combination of tougher regulatory control, added operational stress and crushing cost-to-income ratios means that many banks will simply have to withdraw certain services and products.
“However, opportunities exist for banks that can successfully adjust their operating models. Whilst the banking industry as a whole is experiencing tectonic shifts in the way it is expected to do business, those banks that have remained alert, have a commitment to innovation and have already begun to adapt to the new ecosystem are now in the best position to pick up market share at the expense of those who cannot. Our new Cayman custody business is an example of how Deutsche Bank has, on both a global and a local level, remained sensitive to the new economic environment and able to react appropriately in terms of tailoring the services it provides,” he said.
Peterson said, “Within the Caribbean, this new service allows us to make a tactical expansion of our range of products for financial intermediaries in particular. Most financial intermediaries – fund administrators, trust companies, family offices, law firms, accounting firms – demand a strong service provider with global capability, so a locally available custody service backed by a global banking organisation is, we are finding, an attractive proposition for them.”
He said the new custody business gives clients of the Cayman office a genuine range of support for core custody services. “For example, through the Deutsche Bank global network, we are now able to provide clients with securities settlement in more than 100 markets. In addition, the prerequisite in today’s markets for asset owners and managers is the capability to offer comprehensive reporting tools, which must work in concert with their custody and safekeeping services – something that is integral to our new custody business.”
Peterson said the new service will offer clients local capabilities, as well reach into markets like Singapore, Sao Paulo and Mumbai. “We are confident that this new custody business is an area that can really grow over the coming years and, looking forward, has the potential to help our clients grow simultaneously. The Cayman financial intermediaries we service employ many local people and their businesses contribute a significant amount to the overall local economy. By supporting them as best we can, by providing the services they require such as custody, local financial intermediaries can also prosper,” he said.