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Cayman borrows $150m from Butterfield Bank

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Michael Collins, chairman and chief executive officer, The Bank of N.T. Butterfield & Son Limited (Photograph supplied)

The Bank of Butterfield extended a large loan to the Cayman Islands Government during the last financial year, it has emerged.

The bank’s business deal with Cayman was disclosed Monday night in the balance sheet commentary as the bank reported its earnings for the financial year to the end of December.

The bank beat financial market estimates with stunning financial results, including a $214 million profit.

But during a discussion of the bank’s $5.1 billion loan portfolio at December 31, some $100 million lower than the year before, the commentary noted: “The decrease was driven by the impact of the strengthening of the US dollar on GBP-denominated balances, the early repayment of a number of commercial facilities, and partially offset by the extension of a government facility in the Cayman Islands.”

And Tuesday morning during the bank’s end-of-year online earnings call, executives fielded an analyst’s question about it and confirmed it was a $150 million loan.

The discussion came after the announcement of the fourth quarter and full year results from the bank which caused its stock price to soar on the New York Stock Exchange, rising nearly 14 per cent, up $4.80 (14.57 per cent) to $37.74 at the close.

Butterfield’s $150 million loan is a large part of the more than $400 million the island government borrowed from a consortium of banks.

The 15-year loan at 3.25 per cent, protected the Government from increased costs of borrowing in the face of rising interest rates.

Chris Saunders, Cayman’s Minister of Finance, told The Cayman Compass last June that the Government’s annual borrowing rate could have skyrocketed if the existing loan facility had not been fully utilised before its expiration on June 18.

The money was invested into two-year US Treasury notes and the funding of capital expenditure projects.

Craig Bridgewater: chief financial officer of Butterfield Group (File Photograph)

Presenters on the earnings call were Michael Collins, chairman and chief executive, Craig Bridgewater, the chief financial officer, and Michael Schrum, president and chief risk officer.

Mr Collins said: “Butterfield’s excellent results in the fourth-quarter and full-year 2022 benefited from strong positioning in our core banking and private trust markets in Bermuda, the Cayman Islands and the Channel Islands.

“In addition to these locations, we provide specialised financial and trust services in Singapore, the Bahamas and Switzerland as well as United Kingdom-based mortgage lending and high-end Central London.”

The bank is developing a profitable business in the Channel Islands, as it positions itself from a corporate bank there, to also gain more traction in retail, similar to in Bermuda and Cayman.

Mr Bridgewater said of the Channel Islands: “We’ve launched our sort of mass affluent retail initiative recently. We have over 200 million sterling in mortgages now, and sort of over about a 100 million in deposits. So over time, I think the Channel Islands will become — funding will become somewhat less expensive as we grow the retail book.”

Michael Schrum, president and group chief risk officer, The Bank of N.T. Butterfield & Son Limited (Photograph supplied)

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Published February 15, 2023 at 7:48 am (Updated February 15, 2023 at 8:36 am)

Cayman borrows $150m from Butterfield Bank

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