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Guernsey – a financial gateway to Europe

04 May 2016

Written by Dominic Wheatley

Dominic Wheatley explains how Guernsey Finance’s new Hong Kong office prepares will show the island’s expertise in servicing global clients aiming to invest into Europe and the UK.

As a leading international finance centre, Guernsey is a popular location for doing business. The island, which is a British Crown Dependency, has close ties to the UK but retains its own legislative and fiscal independence – one of its greatest strengths. It means the island’s financial services sector has been able to grow substantially over more than 50 years and offer a wide range of services, including banking, investment funds, corporate listings, wealth management and insurance risk solutions.

With several hundred service providers, supported by a network of professional services, including global accountancy practices and multi-jurisdictional law firms, Guernsey possesses significant infrastructure and expertise to service global clients.

This is particularly the case across our wealth management and investment fund sectors, which are respected across the globe for their ability to preserve and enhance individual and family wealth, and to facilitate outbound investment opportunities across Europe and the UK.

For wealth management purposes, Guernsey provides a third-country location from which individuals and families can protect and manage their wealth and assets in a tax-efficient manner for the benefit of future generations. This wealth planning may be provided through a variety of sophisticated structures including trusts, companies or foundations.

Unlike some jurisdictions which promote the use of “off the shelf companies”, Guernsey’s use of structures such as the Private Trust Company (PTC) ensures that trusts can be built bespoke to client requirements – recognising that each individual’s or family’s needs are different. Similarly, a Guernsey foundation offers many of the benefits of a reserved powers trusts found in the Caribbean but in terms better understood by those in civil law jurisdictions.

Investment funds

At the same time, global corporate entities seeking to invest across Europe and the UK can use Guernsey in two principal ways:

  • By establishing a Guernsey domiciled investment fund, which has the ability to make the necessary investments; or
  • By establishing a Guernsey-based entity to access UK or European capital markets.

Guernsey has an investment sector with more than US$350 billion worth of funds under management and administration. The Island has a proven operating model where global investment houses use legally robust and fiscally neutral structures, such as companies and partnerships, to hold a wide range of assets spread around the world.

Guernsey specialises in domiciling and servicing closed-ended funds investing into alternative asset classes, such as private equity, real estate, (renewable) energy and infrastructure; making the island an ideal gateway for capital to be deployed into the UK and Europe.

Indeed, a report published by KPMG in May 2015, ‘International Capital Flows’, revealed the extent to which Guernsey facilitated the flow of capital globally, including £105 billion (US$151 billion) of investment in Europe – 49% of which originates from investors located outside Europe itself.

Corporate listings

The advantage of Guernsey incorporated entities is that they can be used to access global capital markets. Vehicles can list on a range of different stock exchanges around the world, such as Australia, Frankfurt, Paris and Toronto as well as Hong Kong, the local Channel Islands Securities Exchange (CISE) and the London Stock Exchange (LSE). Indeed, Guernsey has more non-UK entities listed on the LSE than any other jurisdiction globally.

Hong Kong office

The opening of a Guernsey representative office in Hong Kong this year will allow us to build greater awareness of these capabilities. It will also allow us to promote the wider financial services sectors that Guernsey specialises in and reaffirms our interest in the South East Asia region. The office is Guernsey Finance’s second overseas outpost, following our Shanghai office, which opened in 2007. Our Shanghai-based China Representative, Wendy Weng, continue to use that office to promote activities, but it will now also be shared by the Guernsey Financial Services Commission (GFSC) to provide regulatory advice to those in the region who might be considering Guernsey-specific ventures.

Conclusion

Guernsey’s pragmatic regulatory environment adds to the island’s infrastructure and expertise for investment funds and corporate listings. Moreover, it’s position within Europe, yet outside of the EU, means it is uniquely placed to service global clients seeking outbound investment opportunities into Europe and the UK.

An original version of this article was first published by the British Chamber of Commerce in Hong Kong, April 2016.

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