Established in 1974, Cayman National Corporation Ltd. is the largest financial services company based in the Cayman Islands, providing banking, company management, fund administration and wealth management services to clients locally and around the world, from the Cayman Islands and the Isle of Man, with a representative office in Dubai. Cayman National is publicly traded on the Cayman Islands Stock Exchange. Cayman National is part of the Republic Group which was established in the Caribbean in 1837 as the Colonial Bank and becoming Barclays Bank of Trinidad and Tobago. The Republic Group is one of the region’s largest and most successful financial institutions. Cayman National group of companies comprises of: Cayman Islands Cayman National Bank Ltd., Cayman National Fund Services Ltd., Cayman National Securities Ltd.; Isle of Man Cayman National Bank (Isle of Man) Ltd. and Cayman National Trust Company (Isle of Man) Ltd.; Dubai Cayman National (Dubai) Ltd.

29 August 2022: Cayman National Corporation announces plans for merger with Republic Bank (Cayman) Limited George Town, Cayman Islands, August 29, 2022: Cayman National Corporation Ltd. ((CSX: CNC) KY) (“CNC”) has announced that, subject to all regulatory approvals, Cayman National Bank Ltd. (“CNB”) will acquire by way of merger, the banking operations of Republic Bank (Cayman) Limited (“RBKY”). In addition, the securities operations of RBKY will also be merged into the operations of Cayman National Securities Ltd. (“CNS”). CNB and CNS will be the remaining entities following the mergers.

CNB, CNS, and RBKY are all indirectly owned by Republic Financial Holdings Limited (“RFHL”). The merger of these entities rationalizes operations in the Cayman Islands and creates efficiencies, with no loss of service to clients or displacement of staff. All Caymanians at RBKY will continue to be employed within the Cayman National Group following the completion of the mergers.

According to Nigel Baptiste, President and Chief Executive Officer of Republic Financial Holdings Limited, “The merger of Republic Bank (Cayman) Limited into the Cayman National Corporation Group, brings the RFHL Group one step closer to streamlining our operations in the Cayman Islands. This move will enable the RFHL Group to enhance the experience of the existing clients of Republic Bank (Cayman) Limited by providing access to a wider array of products and services, and eliminating some of the duplication that currently exists across both entities.”

Stuart Dack, CEO of CNC, said, “We believe this transaction will add great value to the Cayman National Corporation Group and look forward to welcoming both the RBKY clients and staff of RBKY.”

RBKY will communicate further information about the proposed transition directly to its clients in the coming weeks. Subject to regulatory approvals, once the merger is completed an announcement will be provided.

About Cayman National: Established in 1974, Cayman National is the largest financial services company based in the Cayman Islands, providing banking, company management, fund administration, and wealth management services to clients locally and around the world, from the Cayman Islands, and the Isle of Man, with an office also in Dubai. Cayman National is publicly traded on the Cayman Islands Stock Exchange. Cayman National comprises: Cayman National Bank Ltd., Cayman National Fund Services Ltd., Cayman National Securities Ltd., Cayman National Bank (Isle of Man) Limited and Cayman National Trust Company (Isle of Man) Limited, and Cayman National (Dubai) Ltd.

About Republic Bank (Cayman) Limited: Republic Bank (Cayman) Limited was established in 1992 and currently holds a Trust License and an Unrestricted Class B Banking License under the Banks and Trust Companies Law of the Cayman Islands, as amended. Republic Bank (Cayman) Limited also holds a Mutual Funds License and is a registered Excluded Person for purposes of the Securities Investment Business Law of the Cayman Islands (SIBL[1]EP).

About RFHL: RFHL is a publicly quoted financial holding company listed on the Trinidad and Tobago Stock Exchange, licensed under the Financial Institutions Act, Chap 79:09 of the Laws of Trinidad and Tobago and has over US$16 billion of total assets. RFHL, along with its twenty four (24) subsidiaries, provides a complete range of commercial banking and related services. These include investment banking, mortgage financing, securities trading and related activities, trustee services, credit card operations, foreign exchange and trade finance services as well as deposit taking and lending operations. Through its subsidiaries and associated companies, RFHL has operations domiciled in Anguilla, Barbados, British Virgin Islands, Cayman Islands, Dominica, Ghana, Grenada, Guyana, St. Lucia, St Kitts and Nevis, St. Maarten, St Vincent and the Grenadines and Suriname in addition to Trinidad and Tobago.

Recent Administration Policy Changes Background And Issue With Payments

The Biden-Harris Administration (2021- ) policies and regulations have, thus far, focused upon providing connective and re-connective opportunities to the re-emerging private sector in the Republic of Cuba.

The remaining challenge to transition Biden-Harris Administration policies from aspirational to operational is recreating a cost-efficient, timely, transparent, and secure mechanism to move funds from the United States to the Republic of Cuba and from the Republic of Cuba to the United States through the authorization of direct correspondent banking.

On 10 May 2022, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury issued a license authorizing direct investment in and direct financing to a privately-owned company located in the Republic of Cuba owned by a Republic of Cuba national. Investment funds and dividends, and financing funds and interest/interest/principal payments must currently be transferred through financial institutions located in third countries.

The issuance of the licenses in May 2022, September 2022, and November 2022 by the OFAC and BIS will result in two-way transfers that are small in value but consistent. Privately-owned companies located in the Republic of Cuba sending dividend (profit sharing) payments to the source (s) of direct investment and sending interest and principal payments for direct financing. Republic of Cuba nationals and privately-owned companies located in the Republic of Cuba sending payment(s) for the purchase of an electric vehicle.

From Mr. John Felder, Founder and Chief Executive Officer of PAE, “Essential for the OFAC to authorize direct correspondent banking so payments for electric vehicles may be transferred by citizens of Cuba with the least amount of cost, least amount of effort, least amount of time, most amount of security, and most amount of transparency. Payments should not need to move through third-country banks. Support two-way transactions rather than three-way transactions.”

A significant transaction hurdle remains receiving payments in the United States from Republic of Cuba nationals residing in the Republic of Cuba who are restricted in the amount of Cuban Pesos they may exchange for convertible currencies, including United States Dollars and Euros.

The OFAC authorizes United States financial institutions to have correspondent accounts with Cuba-based financial institutions.

The decision by the Obama-Biden Administration (2009-2017) not to authorize Republic of Cuba-based financial institutions to have correspondent accounts with United States-based financial institutions never made sense- the marketplace, meaning United States-based financial institutions and their customers should determine if they want to engage in direct correspondent banking. As written, the OFAC regulations today do not provide United States companies with a viable mechanism to avoid the use (and delay and expense) of third-country financial institutions to send or receive authorized payments. Why one way, but not both ways?

The use of correspondent accounts is particularly critical to the re-emerging private sectors in Cuba as represented by MSMEs.

The current requirement to move funds from the Republic of Cuba and to the Republic of Cuba through third-country financial institutions is inefficient, not transparent, and expensive- especially when considering that MSME transactions are often small which makes the fees far more onerous as a percentage of the total transaction. And, now another third-country financial institution has reportedly ceased providing a service of value to United States exporters, importers, and service providers.

There are discussions within the Bureau of Industry and Security (BIS) of the United States Department of Commerce, OFAC, and United States Department of State to authorize Republic of Cuba-based financial institutions to have correspondent accounts with United States-based financial institutions which would then permit the efficient, transparent, and cost-effective movement of funds for authorized transactions.