By Stuart Mauger – The past five years have certainly been eventful for custodians, as they and the financial centres in which they are based have needed to evolve constantly or risk being left behind. Regulatory developments such as the European Union’s Ucits IV and the impending Alternative Investment Fund Managers Directive, as well as the changing geography and demographic of wealth, have had a significant impact on the market. Nevertheless, Guernsey has withstood all this and continues to thrive as the industry has transformed itself.
The growth in investor influence and the return of the segregated custody account in the past five years have had a particularly noteworthy impact on the island. Investor wealth has exploded in emerging regions including Latin America, South Africa and Asia, where high net worth individuals are able to create private fund structures that would be the envy of an open-ended fund.
In reaction to the increasingly complex regulatory landscape in which sophisticated investors are operating, the Guernsey Financial Services Commission has worked tirelessly to protect the island’s global reputation with a firm yet transparent approach. The jurisdiction is well positioned to meet the criteria for a well-regulated third-country jurisdiction under the AIFMD, and it is reassuring to note that several key industry players have maintained or recently established a presence in Guernsey.
RBC Wealth Management, one of the world’s 10 largest wealth managers, will be celebrating 40 years in Guernsey in 2013, and the Corporate and Institutional business division has been providing custody and fund administration services through subsidiaries licensed on the island for more than 25 years.
The business unit has more than USD35bn in assets under custody for third-party institutional and high net worth clients. They benefit from the continuing strength and stability of the RBC group, whose disciplined approach, risk-focused strategy, strong balance sheet and diversified business mix have helped it to withstand the recent market turmoil.
Three key factors position RBC Wealth Management favourably in Guernsey in the light of these trends. First, global reach is important in discovering opportunities and providing clients with a highly personalised service and access to the full suite of banking, credit, foreign exchange, escrow, fiduciary and if need be capital markets services.
Second is a talented team that can identify and implement bespoke solutions in response to specific requirements. RBC Wealth Management is often asked to act as fiduciary custodian to more esoteric investments such as litigation funds, ground rent funds, wine funds and farmland funds, which we are capable of providing, ensuring suitable due diligence is performed at every stage.
Finally, the full acquisition of RBC Dexia Investor Services, due to close in mid-2012, will provide considerable complementary capabilities to the rest of RBC. As a top 10 global custodian that serves a diverse base of institutional investors, RBC Wealth Management will be able to leverage both RBC Dexia’s access to the European market and its range of advice and services, including global custody, fund and pension plan administration, shareholder services and treasury services.
Faced with the various challenges and threats, Guernsey has consistently had to evolve and react, just as the island’s leading custody practitioners have had to reassess their approach to ensure they remain competitive. The jurisdiction is well placed to capitalise on long-term growth opportunities in the custody sector, and we are proud to be a member of its custodian community.
Stuart Mauger is head of business development for RBC Wealth Management’s Corporate and Institutional business