Reading Time: 3.8 minutes It’s ten years now since the start of the global financial crisis. Over-stretched lending policies, debt being packaged off to be sold and re-sold, misguided beliefs that it would all work out fine. Bankers chasing their bonuses and taking ever greater risks to achieve them. Egos everywhere, auditors and regulators snoozing on the job. And we all know what happened. The UK tax payer bailed out HBOS, RBS and Lloyds. They’re still on the hook for RBS. Whilst there may have been some eye-watering fines handed out, no-one in the RBS executive team personally paid the price for their flawed strategies. Barclays successfully found a way to stand on its own two feet with a little help from the Qataris. Whilst they didn’t take a penny of taxpayers’ money, the future’s not looking great for John Varley and three of his colleagues who now face criminal charges over the Qatari fund raise in 2008. In amongst the chaos as it was unfolding, the offshore centres were thrust front and centre into the limelight by the politicians and the media, which skilfully shifted the cause of the banking crisis from sub-prime mortgages in North America and whatever failings may have existed in the governing bodies, to offshore jurisdictions and their respective business models. So ‘offshore’ in many parts of the media and the public psyche now equals ‘tax avoidance’ which now equals ‘tax evasion’ and all the hospitals, schools and roads that any major onshore country could ever dream of would be readily available if it weren’t for these shady organisations in sunny islands. Let’s start to enlighten the debate. No-one could ever credibly accuse the Isle of Man of being a sunny island. But as someone that lives on the Isle of Man, I have a number of charges that I could level against it. Here goes: 1) It’s innovative – for an island with no significant natural resources, it has various surprisingly successful sectors. It has a world class aircraft register; it has an engineering sector which exports all over the world including parts for the Boeing A380; it is a global centre for eCommerce and eGaming, being home to the likes of Microgaming and Pokerstars; and on the back of this innovation its economy has grown every single quarter for over 30 years – can you name another country in the world that can make that claim? 2) It’s wise – with our own parliament, Tynwald, and therefore our own legal system, the island has a constitutional obligation to budget for a surplus every year. So we were fixing the roof whilst the sun was metaphorically shining. This means the island has modest reserves and can support new public / private sector innovation and evolving business models. This has under-pinned the growth that we’ve enjoyed in recent years and has given the island a GDP per capita some 47% higher than the UK. 3) It’s evolving – as the island moved from an economy based on fishing and tourism in the post war years and then shaped up for financial services in the 80s, it opened its arms to eCommerce and eGaming in the early 2000s and continues to evolve today. In the past month the island has hosted the world famous TT motorbike races, the 85 mile Parish Walk and this weekend the National Cycling Championships featuring our very own Mark Cavendish and Peter Kennaugh. The ice cream and deck chair economy of the 50s is being replaced by an adrenaline island, where visitors come to take part in gruelling events that draw on the natural features of our ‘sunny island’. And the next breakthrough is around the corner. The island introduced the Alternative Banking Regime in August 2016. The ABR allows non banking entities to apply for a banking license to support corporate clients and high net worth individuals with liquid assets of £500,000 and above. It precludes retail customers so there’s no depositors’ compensation scheme. Why has it done this? Well, there are several reasons: 1) Clients are under-served. On the back of the fines suffered by the big banks, their risk appetites appear to have dwindled. This has tightened the focus of many of them leaving large swathes of their client base without access to core banking. 2) Big banks are re-structuring away from offshore centres. The regulatory backlash in response to the financial crisis has resulted in tough capital requirements and ring-fencing to isolate ‘retail’ banks from their other more speculative departments. This has killed off their ‘upstreaming’ models which has greatly increased their cost of capital. 3) To create competition. The technology infrastructures of the big banks are old and complex. Whizzy front ends hide a legacy of under-investment in IT systems which makes the monitoring and supervision of risk labour intensive. To compete and make money, the banks are focusing on core markets and turning their backs on sectors of the economy that are anything but vanilla. And why am I writing about this? As CEO of Capital International Group, and former Managing Director of Barclays in the Isle of Man, Jersey and Guernsey, I can see what’s going on and it’s time to do something about it. Capital Treasury Services Limited, part of the Group, is in the process of applying for a new 1(2) banking license under the ABR. As an international company, serving clients all over the world from our bases in the Isle of Man and South Africa, we are determined to bring core banking back to business. We’re in the final stages of selecting a world-class digital banking platform, we’re negotiating access to Bank of England clearing and we’re working with the Isle of Man FSA towards opening the doors in 2018, all being well, to serve local and international SMEs, fiduciary companies, eCommerce, eGaming, HNWIs and family offices. We’re going to charge fair, transparent fees for banking, and we’re aiming to have the best onboarding processes so that as long as we have all the information we need and we’re happy with the client, accounts can be opened in days rather than months. It’s a big decision and not for the faint-hearted. There hasn’t been a new banking license granted in the Isle of Man in over twenty years. To ensure our planned new bank is a success, we want to build a community of support as we move through the licensing process, to test our pricing, our product design and our leading-edge technology. So please get in touch if you’d like to hear more about it or to share your thoughts with us, and follow our company page on LinkedIn so you can keep up to date with our progress. Greg Ellison, CEO, Capital International Group.