THIS is an important time for the island’s financial companies in the wake of economic problems across the globe.
That was one of the messages to come out of a seminar where speakers included a leading expert on regulatory issues.
Giles Williams is a partner in the EMA Regulatory Services Centre of Excellence with KPMG in London.
Mr Williams spoke on The Regulatory Change Agenda, which included how business and operating models were changing in response to regulatory pressures and how banks can manage the implementation of new processes.
He said: ‘What has happened in Spain has indicated that local banks need to be rigorous with their funding position, their capital position and their interconnectivity with the rest of their group in order to limit the risk they pose to their host nation.
‘For the Isle of Man this is an important time to understand the balance between the potential for profit offered by global banking groups and minimising exposure for both local and overseas taxpayers.
‘In the aftermath of Iceland, international financial centres such as this one will have to work hard to make sure they are not perceived as a jurisdiction that will create instability elsewhere.’
The second guest speaker was Andrew Kermode, deputy director of Banking at the Financial Supervision Commission.
His topic was banking supervision, including a detailed summary of the requirements and implications of Basel III.
Mr Kermode explained that the Isle of Man was taking a ‘co-ordinated approach’ with the Channel Islands towards compliance, which had already resulted in recognition in the UK’s White Paper of the special case of the Crown Dependencies.
He also confirmed that a discussion paper was under development by the FSC and due for release in early September.
More than than 70 banking professionals attended the seminar run by Audit, Tax and Advisory firm KPMG Isle of Man.
The event was also attended by key representatives of Government and the Isle of Man Financial Supervision Commission (FSC).
Mr Williams and Mr Kermode were introduced by Nick Quayle, associate director at KPMG Isle of Man, who provided a broad summary of issues impacting on the sector, focusing on the UK White Paper on Banking Reform but also touching on other international pressures from the US and EU. Mr Quayle discussed some of the potential implications for the Isle of Man’s banking sector arising from the proposals, particularly in respect of the ‘ring-fencing’ proposals for retail banking. Whilst noting that there is limited detail within the White Paper, Mr Quayle stated that the specific recognition of the Crown Dependencies within it is a positive development.
In addition, Mr Quayle also spoke on the latest IFRS developments and briefly touched upon the potential importance of mobile banking in years to come. Additional content was also provided by KPMG’s Dave Parsons and Claire Franklin, who spoke on developments with FATCA, particularly the possibilities for government to government reporting, and the details of the new IOM Bribery Bill respectively.
Mr Quayle reiterated the need for the Island to continue to monitor the evolving regulatory landscape: ‘Many of the proposals for reform are outline in nature at this stage and will continue to develop, however in the meantime it is important for all relevant parties in the Isle of Man to work together in order to review the Island’s position and ensure that the local banking industry is well placed to meet the challenges ahead.’
Treasury Minister Eddie Teare MHK, commented on the importance of the topics being discussed: ‘This morning’s seminar was very topical because of the changes under way in response to the banking crisis. Some financial institutions have grown to a size that is disproportionate to that of their host economies - the UK banking industry had mushroomed to just over four and a half times the UK’s GNP. By restructuring and stripping out the ancillary operations from the retail operations, this is being addressed. From the point of view of the Isle of Man and other Crown Dependencies, acting as collecting agents for global funds and upstreaming to the city of London, we need to know how funds will be treated when they arrive in the UK. We are speaking to HM Treasury, the British Banker’s Association and individual banks to find out what they want, and as ever this Government will strive to provide an environment for businesses to operate successfully from the island.’