The SMP Partners Group is focusing on growth after its acquisition of Royal Bank of Canada’s trust, fund administration and custodian business in the Caribbean.
The independent trust and corporate services provider acquired RBC’s offices in the Cayman Islands and Barbados after buying its first regional office from RBC in the Bahamas late last year.
The firm has transitioned 40 staff from RBC, including 10 people in Barbados, six in the Bahamas and the remainder in Cayman.
SMP Partners’ Caribbean region CEO, Stephen Turner, says his team is focused on continuing to grow the business.
“The group’s expansion into the Caribbean is a landmark development for SMP Partners and part of its global growth strategy,” he says. “We are now not only offering enhanced services to existing clients, but are also intent on growing our regional presence through business development activities and cross-selling opportunities across our wider international business.”
SMP Partners Group, with headquarters in the Isle of Man, is wholly owned by its management and has 240 employees in offices in the Isle of Man, Jersey, Switzerland, Hong Kong, and now the Caribbean.
International client base
Within its group, SMP already had an international client base, including Caribbean-related business such as Cayman law trusts and Cayman companies.
In 2010, the firm acquired a book of trust business from Julius Baer in the Caribbean, as well as the financial company’s insurance business in the Bahamas.
“That was our first venture into the Caribbean, albeit the business was effectively subsumed within our other business in the Isle of Man,” Turner explains.
At the same time, SMP Partners entered into agreements with large banks that were looking to de-risk or needed assistance with outsourcing arrangements because they did not have sufficient trust administration staff to deal with the volume they experienced.
The acquisition of RBC’s wealth management division now also aims to bring in-house the firm’s ability to run its own Cayman companies to offer added value and full service to clients, says Turner.
“We saw Cayman as a natural home, not only for the business that we have acquired over the last few years, but also as a springboard for growth for our practice on an international footing. We are now looking to market into the mainland USA and into Latin America to bring services with a Cayman flavor into our product stable.”
SMP Partners was formed in 2007 after completing a management buyout from Fortis Bank. It was the largest of three Anglo-Saxon trust companies of the former Dutch-Belgian bank that had been given the option to divest itself.
“The three trust companies did not fit with [Fortis’] risk appetite, not unlike quite a number of banks in recent years,” Turner says.
The story for some time has been that “banks fall in and out of love with the trust companies,” he notes.
Just as Fortis did 10 years ago, RBC decided to exit its trust business in the Caribbean. While the larger banks are considering the strategic sale of their trust companies, which offers growth opportunities for independent firms like SMP, smaller providers, such as B-license banks, are consolidating because they are unable to cope with growing regulatory requirements and related technology and compliance costs.
Regardless of size, no trust business is immune to this trend, making growth a necessary goal to improve economies of scale.
SMP Partners’ newly acquired businesses in the Caribbean will thus quickly move to the firm’s existing system and procedures to streamline decision-making and to monitor risk as the group grows.
Confident about transition
Turner is confident that SMP has the experience to transition the business from a bank environment to an independent firm.
“We want to bring that different feel from a bank-owned trust company into the boutique independent firm, which allows us to be much more flexible in terms of our clients’ requirements.”
Whereas bank-owned trust companies are quite restricted geographically and tend to favor bankable asset type structures, he says, SMP Partners is prepared to look at structures that own different types of assets, such as yachts, aircraft or trading companies.
SMP does not claim to be a bank or an investment manager. Instead, the firm concentrates on trustee, corporate and fund administration services and then scours the market for the best banking and investment management. Turner says the firm is looking to providing a complete, independent service.
“There is a place out there for independent trust companies that use good centers of financial experience and legislation to manage their clients’ corporate and personal affairs,” he says.