A consortium of high-ranking bankers and lawyers are eagerly pitching the tax and legal benefits offered by doing business in the nation of Bermuda. Coordinated by the Bermuda International Business Bureau (BIBA), representatives from some of the largest Bermudan law firms and banks are essentially roadshowing the former British colony just off the coast of South Carolina as a future hotbed of securitization activity. And they are not wearing Bermuda shorts.
According to Ken Robinson, partner at law firm Appelby, Spurling & Kempe, because Bermuda's legal system is based primarily on U.K. common law, the framework is more creditor-friendly, offering the possibility of securitizing a wider array of assets.
Buttressing securitization's development in Bermuda is its firmly established insurance and reinsurance businesses, and these firms' use of hedging instruments such as credit default and total return swaps. Additionally, Bermuda has existing precedents for practices that have given U.S. market players headaches of late - namely, collateral perfection and SPV credit enhancement issues.
Robinson, presenting on behalf of BIBA, noted that the recent banking consolidation trend has swept into Bermuda, meaning other large global entities may follow suit. Specifically, Robinson cited HSBC's proposed acquisition of the Bank of Bermuda - which is pending both shareholder and regulatory approval - currently Bermuda's fourth largest domestic bank.
HSBC, already a global banking presence, recently hired Michael Normile to run its term securitization team and is actively ramping up its U.S. underwriting activity following the completion of its Household Finance acquisition.
BIBA is an organization of Bermuda-based companies involved in the accounting, banking and legal industries, and is working with the Bermudan government to promote international offshore jurisdiction for the financial services industry. The group's Chief Executive Officer, Deborah Middelton, can be seen throughout the conference at BIBA's booth in the main exhibition center.