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Deal to give Butterfield Singapore platform

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The Lion City: Butterfield Bank will be expanding into Singapore with the acquisition of GTS

Butterfield Bank will have a presence in two new jurisdictions next year when it completes its planned acquisition of Deutsche Bank’s Global Trust Solutions business.

Of particular note is the expansion opportunity into Singapore. Asia is viewed as a growth market for the bank.

“Having a platform in Singapore will allow us to grow,” said Michael Collins, the bank’s chairman and CEO.

During an earnings conference call only hours after the planned acquisition was announced yesterday, he said: “Singapore is obviously a market we have wanted to get into for a long time.

“And it goes back historically to our trust business from a lot of the Hong Kong families. So having a presence there is really important.”

Butterfield has entered into an agreement to acquire GTS, excluding its US operations, from Deutsche Bank.

Upon completion of the transaction, which is subject to regulatory approvals, Butterfield will take over the ongoing management and administration of the GTS portfolio, comprising of approximately 1,000 trust structures for some 900 private clients.

The bank is offering positions to about 90 employees who are fully dedicated to GTS in the Cayman Islands, Guernsey, Switzerland, Singapore and Mauritius.

While the terms of the agreement have not been disclosed, there are some clues about the scale of the deal.

Mr Collins said the purchase price is under $50 million, and the new trust business was about 20 to 25 per cent the size of the bank’s existing trust business. At the end of September, Butterfield Trust had assets under management of approximately $95.2 billion.

The Singapore platform that Butterfield will acquire is understood to have about 15 staff, and will generate about 20 per cent of the additional trust business revenue.

Butterfield will partner with Deutsche Bank to provide trust solutions to German bank’s clients on an ongoing basis.

In a statement, Mr Collins, said: “Trust is a core business for us, and the acquisition of the Deutsche Bank Global Trust Solutions business enables us to add scale and professional bench strength to our trust operations in Switzerland, Guernsey and Cayman.

“It also provides us with a physical presence in Asia, which we view as a growth market for Butterfield. We look forward to welcoming GTS clients and staff to Butterfield and to the development of new business from an ongoing partnership with Deutsche Bank’s wealth management team.”

Deutsche Bank, which is headquartered in Frankfurt, is one of the world’s largest banks by total assets. Its wealth management business is also one of the largest in the world, with client assets of around €299 billion.

Referring to the announced acquisition, Fabrizio Campelli, Deutsche Bank’s global head of wealth management, said: “Butterfield is a well-known leader in the trust industry and we look forward to working with them to provide our clients with a broader product offering. The divestiture represents an important step in our strategy of simplifying our business and positioning wealth management for growth in our core markets.”

Outside Bermuda, Butterfield has operations in Cayman Islands, The Bahamas, Britain, Guernsey and Switzerland.

Mr Collins said the acquisition of GTS ticked a number of boxes for the bank, such as being at least two-thirds private trust business.

“We are less interested in, or not interested in, fund administration and company secretarial works and that sort of stuff. This is obviously 100-per cent private trust,” he explained during a question and answer portion of yesterday’s conference call.

He also said it was important for the locations to be in the bank’s existing jurisdictions where it has scale — which is the case with GTS, with the exception of Singapore and Mauritius.

Mr Collins added: “We expect it to generate stable trust fee income for the bank and be accretive once integrated.”

It is the fourth significant acquisition for the bank since 2014. The transaction is expected to close in the first half of 2018, subject to customary closing conditions.

Michael Collins, chairman and CEO of Butterfield Bank