Annual Review 2012
P3 | JERSEY FINANCE ANNUAL REVIEW 2012
Contents CHAIRMAN’S STATEMENT
1
CEO’s STATEMENT
2
2012
4
BANKING REVIEW
6
FUNDS REVIEW
8
By Jonathan White
By Geoff Cook
A year of progress
PRIVATE WEALTH
10
CAPITAL MARKETS
12
INTERNATIONAL MARKETS
14
Supporting Jersey
18
KEY PERFORMANCE INDICATORS
20
CONTACTS
24
JERSEY FINANCE ANNUAL REVIEW 2012 | P1
2012 Chairman’s Statement
Welcome to Jersey Finance’s first ever Annual Review, a progress report on our achievements during 2012 in support of the continuing development of the Island’s financial services industry.
In the pages that follow, we describe what was done in order to achieve the strategic goals which we set for ourselves and outline some promising areas of work for the future. We also highlight the contribution made by Finance to Jersey’s economy and to our society as a whole. One important thread running through all Jersey Finance activities is the consistent message to the world that Jersey is a modern, well-regulated international financial centre. The financial crisis has raised many questions about different aspects of the global finance industry and it is more necessary than ever to communicate that the Island serves the international financial community and that, in turn, enhances global prosperity. I am pleased to say that Jersey Finance raised its game in 2012 to ensure that it has the resources necessary to do this and to meet all of its other goals.
“I am pleased to say that Jersey Finance raised its game in 2012”
We benefit enormously from the constructive partnership that we have built with both the Government of Jersey and the Island’s Financial Regulator. These partnerships have, unquestionably, supported the growth in scope and reputation of the finance industry and I am most grateful for the contribution made by both Government and the Regulator.
By Jonathan White Chairman, Jersey Finance
Jersey Finance could not, however, achieve as much as it has without the expertise and enthusiasm of those working in the industry which we represent. We are here to provide a solid platform for them to develop their business and it is deeply rewarding to see so many Members leveraging off the work that we do in order to develop their own businesses in a meaningful way. I thank all our Members for the support they give to our endeavours. Many Members provide us with considerable time and expertise on a pro bono basis and this is hugely valuable. Finally, I must also thank Geoff Cook, Heather Bestwick and the team that they lead at Jersey Finance for their unsparing efforts on behalf of the Island’s finance industry.
P2 | JERSEY FINANCE ANNUAL REVIEW 2012
2012 Chief Executive’s Statement
It is now more than five years since we commissioned, in conjunction with the Island’s Government, a strategic review of Jersey’s finance industry in partnership with the London Business School (LBS).
The result, delivered in 2008, was The Future of Finance 2015, whose conclusions on the evolution of financial services have provided a roadmap over the last five years for increasing Jersey’s leadership as an international financial centre. Today, more than half way to 2015, the benefits of that strategy are clear, and reflected in this review of Jersey Finance’s achievements in 2012. I am particularly proud of what has been achieved in expanding the reach of Jersey Finance’s activities through our representation in key markets such as China, India and the Gulf. The UK is still Jersey’s most important partner, and one to which I and my team devote the greatest share of our time and resources. However, as the LBS report pointed out, the growth of the world’s emerging markets will outpace that of the developed countries for many years to come. There is more to be done in winning a slice of that growth for Jersey, a challenge that we continue to focus on. We have also supported moves to further diversify the finance industry’s offering. Banking, Private Wealth and Funds account for most of the Island’s financial industry, but we are now developing Capital Markets business as a ‘fourth pillar’. We have also begun to promote Jersey as a base for the Insurance industry—we already have some interesting products to offer insurers.
“The growth of the world’s emerging markets will outpace that of the developed countries for many years to come. There is more to be done in winning a slice of that growth for Jersey, a challenge that we continue to focus on”
By Geoff Cook Chief Executive, Jersey Finance
JERSEY FINANCE ANNUAL REVIEW 2012 | P3
However, at a time when the financial crisis continues to weigh heavily on Jersey’s finance industry, we need to go further. We have already asked a leading international consultancy to review our progress since 2008 and recommend new initiatives for the industry. And we have commissioned a London-based economics consultancy to carry out a study into the impact of Jersey’s finance industry on the UK, which we believe will demonstrate the value of the relationship to Britain’s financial services industry. These two initiatives will allow us to build on the achievements of the last five years to maintain Jersey’s competitiveness against other international financial centres and to protect our partnership with the UK. I will be very surprised if a consequence of these two projects is not to emphasise the importance of innovation for Jersey’s finance industry. As you will read in the rest of this review, Jersey Finance focuses strongly on innovation, not only working with Members to consider how the Island can increase its range of services, but also helping to bring new ideas to fruition through our partnership with the Government and the Regulator. But our Members are busy and we are now considering how we could accelerate the process of innovation. One possibility would be to create a ‘J-Lab’ structure under our auspices which could be even more proactive—I hope that we will have more to say on this in 2013.
All of these objectives must be pursued in the face of some challenging headwinds. In addition to the slow recovery from the financial crisis, Jersey must fend off attacks on the Island’s role as an international financial centre that grow in intensity as other countries struggle to balance their budgets. A significant part of Jersey Finance’s work is to rebut illinformed attacks on the Island that fail to understand our essential role in a globalised world. But I am confident that this need not distract us unduly from our main objective of promoting further growth in Jersey’s finance industry. I hope you find this review of Jersey Finance’s work in 2012 informative and interesting, and I look forward to continuing to work with everyone on the Island for the benefit of Jersey.
“We are now considering how we could accelerate the process of innovation. One possibility would be to create a ‘J-Lab’ structure under our auspices”
P4 | JERSEY FINANCE ANNUAL REVIEW 2012
2012
After four years in which the impact of the global financial crisis has inevitably taken its toll on Jersey’s finance industry, there were signs in 2012 of a corner being turned. Inward investment by a swathe of new arrivals on the Island was matched by encouraging figures on the amount of business done by firms in our market-leading sectors. Other significant progress made on Jersey Finance’s priority targets included:
UK Marketing campaigns
A year of progress...
Marketing campaigns and a programme of events in the UK bolstered our profile in what is still the Island’s most important market, as did conferences in London to promote Jersey’s Funds and Private Wealth sectors.
Target growth markets
2012 Business Aims
Our activities in the target growth markets of China, India and the Gulf continued to expand, with growing interest among financial institutions in those markets of what Jersey has to offer. Jersey Finance’s BRICs conference in September brought together industry leaders, financial regulators and emerging markets experts to discuss opportunities for new business in the four leading emerging markets.
Grow
Jersey’s share of UK/European mature markets
Capture
upside opportunity in developing growth markets
Develop Capital Markets
Further develop
We pushed ahead with our plan to develop Capital Markets as a ‘fourth pillar’ of Jersey’s financial industry by presenting the Island’s offering to intermediaries and gatekeepers in the UK and further afield. Preliminary steps were taken to raise Jersey’s profile as a place to do business for the Insurance industry.
and embed overseas representation
Improve
existing and develop new offerings
Drive
inward investment
JAN
DTA signed with Hong Kong
APR
SEPT
Jersey Finance London Funds Conference THE ROAD AHEAD LONDON FUNDS
CONFERENCE
2012
W E D N E S D AY, 1 8 A P R I L 2 01 2 - B R I T I S H M U S E U M - 1 2 . 3 0 -7. 0 0 p m
KEYNOTE
David Smith Economics Editor, The Sunday Times
Conference Highlights... INSIGHT Rebalancing the global economy REGULATION AIFMD Level 2 & Beyond MARKETS The IFC Perspective JERSEY Committed to Funds
Who should attend? Fund Managers Investment Managers Corporate Finance Advisors Tax Advisors Fund Auditors
KEYNOTE
Senator Philip Ozouf Treasury & Resources Minister, States of Jersey
CONFERENCE MODERATOR
Anthony Hilton City Editor, Evening Standard
The leading IFC Event for Global Fund Practitioners Against a backdrop of market volatility, economic uncertainty and regulatory burden, this year’s conference brings together an exceptional group of industry experts to explore these challenges and look to opportunities ahead.
Event sponsors
FUND SERVICES
Book your place NOW! www.jerseyfinance.je/londonfundconference
4hrs CPD
For more information, contact Claire Wilby
Call: +44(0)1534 836000 Email: events@jerseyfinance.je
Jersey entered the Top 20 of the GFCI
JERSEY FINANCE ANNUAL REVIEW 2012 | P5
A well-regulated financial centre In the years since the terrorist attack on America in 2001, increasing attention has focused on international financial flows, with renewed interest in the aftermath of the financial crisis. Jersey has been quick to implement regulatory changes agreed by global regulators. But it has also been vital to defend Jersey’s finance industry against some of the wilder allegations, which often reflect campaigns to restrict the use of offshore financial centres by countries with severe fiscal problems. Jersey Finance has strongly rebutted negative stories, particularly in the UK press, that speak more to the weakness of overseas tax systems than any wrongdoing by Jersey. We have also engaged with journalists from relevant trade, national and international media, as well as promoting the Island through our press relations activities which generated coverage in 2012 equivalent to more than £1 million of advertising.
International recognition So it is gratifying that these efforts have again been recognised in 2012 by the Global Financial Centres Index which has tracked the competitiveness of financial centres around the world since 2007. The index, published every six months, is based on objective criteria and the responses of an online survey of financial institutions. The two editions published last year rated Jersey highly again:
Jersey entered the top 20 for the first time in the September 2012 index—the only newcomer to this premier league, and again well ahead of our offshore competitors. The Island also remained the only offshore jurisdiction in the top ten Private Banking and Wealth Management centres. Details of other awards can be seen below.
Finance for Jersey Finance One big change implemented during 2012 was the switch from one-year budgeting to a three-year cycle which begins in 2013 by taking us through to 2015. Introduced in response to the Government’s similar move, it will permit medium-term financial planning that should provide greater stability for our activities. The increase in Government support is also most welcome, and will allow Jersey Finance to focus on targets that previously fell victim to inadequate resources. The flow of finance is not all in one direction, however. The industry makes a very substantial contribution to the development of financial services legislation. Combining the value of the pro bono work given and membership fees contributed, we calculate a contribution of around £4.5 million a year. The rest of this review will look in detail at what has been achieved in the four main sectors of Jersey’s finance industry, and in Jersey Finance’s overseas activities.
Jersey retained its 21st spot in the March 2012 index, the highest among offshore financial centres—ahead of Guernsey (31st), Cayman Islands (40th), Isle of Man (44th) and British Virgin Islands (45th). The Island was also rated 8th in the global top ten for Private Banking and Wealth Management.
1 JUN
1 JUL
Best International Finance Centre
Best Offshore Centre
International Fund and Product Awards 2012
Global Investor/ISF Annual Investment Management 2012 Awards
“Jersey’s entry highlights the effectiveness of a close working partnership with regulators and practitioners alike in terms of ensuring that initiatives introduced have the best chance of success. In particular, the judges felt that Jersey conducts business in an open and transparent manner in line with its reputation as a leading offshore jurisdiction.”
“Achievements in 2012 include the launch of a private placement regime to widen the choice for fund promoters seeking a swift approval process for certain specialist funds. Abu Dhabi Commercial Bank and State Street attained banking licences in Jersey, and 18 financial firms set up operations on the island, many of them hedge funds.”
1 OCT
Outstanding International Wealth Financial Centre Private Banker International Awards 2012 “In just over a year since the opening of an office by Jersey Finance in Abu Dhabi, as part of its drive to secure business in new markets, Jersey has seen an 11 per cent increase in the amount of bank deposits from the Gulf with a total of £21.2 billion at March 2012. It is the highest rated offshore jurisdiction in the latest Global Financial Centres Index and makes it into the world’s top twenty global finance centres.”
P6 | JERSEY FINANCE ANNUAL REVIEW 2012
“The number of banking licences ended at 42, one up on the previous year”
State Street opened a banking operation in March 2012 as a complementary service for clients of its large fund administration business on the Island. This followed the arrival on Jersey of Abu Dhabi Commercial Bank (ADCB), the third largest bank in the United Arab Emirates which had been granted a banking licence four months earlier. ADCB, which has established itself in St Helier during 2012 through a managed bank arrangement, is the third banking institution from the Middle East to open for business on the Island. We were also pleased to see BNP Paribas confirming their commitment to the jurisdiction by taking out an additional banking licence. On the debit side, HSBC Private Bank decided to consolidate its offshore private banking on Guernsey, though its other Jersey operations—including its global expatriate banking centre—remain here. So the number of banking licences ended 2012 at 42, one up on the previous year. There is one more departure in the pipeline following AIB’s announcement that it will close its offshore operations on Jersey in 2013. However, we continue in discussions with potential arrivals and hope for more good news in the coming year. The decline in bank deposits appears to have bottomed out during 2012 at just under £150 billion, though the fragility of the global economy remains a threat. Of particular note is the growth in deposits from the Middle East to a record level of more than £20 billion. The region now contributes 13 per cent of deposits from overseas—more than that from the European Union excluding the UK. During 2012, Jersey Finance participated in more marketing events to support the Island’s Banking sector than ever before, attending four major conferences in London including City Week 2012 in March and the BBA International Banking Conference in October. The appointment of a dedicated Business Development Manager based in the UK, with a background in banking, is proving to be a valuable additional resource. We plan to further step up marketing activity targeted on banks in 2013.
Banking Jersey banking in numbers
BANKING LICENcES
42
5,120 employees
£149bn
in deposits
JERSEY FINANCE ANNUAL REVIEW 2012 | P7
conducted through EEA countries is that Brussels legislation creates an effective framework for cross-border resolution within the EEA.
The continuing development of our international representation has contributed to the renewed vigour of the Jersey Banking sector. Jersey Finance’s office in Abu Dhabi has made an impact in the Gulf, which undoubtedly contributed to the arrival of ADCB on the Island. Our representatives in Asia and the Middle East are in continuing discussions with large banking institutions that we hope will bear fruit in 2013.
However, the white paper raised the prospect that ring-fenced banks should be able to maintain subsidiaries and branches in non-EEA jurisdictions if bilateral arrangements could provide sufficient guarantees on cross-border issues. The Treasury acknowledged the value to the UK banking system of upstreaming deposits from Jersey, Guernsey and the Isle of Man, and said that the UK government was working with all three to establish conditions that would allow this to continue in a manner consistent with the objectives of ring-fencing.
Protecting the role of Jersey A key challenge is to protect Jersey’s role of providing a mechanism by which branches and subsidiaries of large overseas banks take deposits from international clients, at a time when the Banking industry around the world is being restructured following the financial crisis.
Such arrangements would clearly very much be in the interests of Jersey’s banking sector, and indeed those of the other two jurisdictions. Jersey Finance has therefore commissioned KPMG, with support from Mourant Ozannes and Appleby, to undertake a project identifying how the Crown Dependencies can best address the challenges posed by the ring-fencing regime. We have also been working intensively with the Jersey Bankers Association, the Isle of Man Bankers Association and the Association of Guernsey Banks on the issues with the hope of achieving greater success on meeting this key challenge.
Of particular importance to Jersey are the proposals of the UK’s Independent Commission on Banking chaired by Sir John Vickers to ring-fence retail banking operations in order to insulate them from riskier wholesale banking activities. The largest ring-fenced institutions would be required to hold additional capital buffers and take steps to ensure that problems inside the ring-fence can be resolved quickly and effectively. In a white paper on implementing the proposals, the UK Treasury suggested that banking activities through subsidiaries or branches outside the European Economic Area should not be conducted inside the ring-fence. The rationale for allowing such activities to be inside the ring-fence when
“We plan to further step up marketing activity targeted on banks in 2013”
Geographic analysis of bank licences
3% 4%
18
8%
Number
16
North America
Far East
Other
12
10 %
8
44%
Europe (EU Members)
4
UK, Jersey & Guernsey
IA AS
IC A AF R
AM NO ER RTH IC A M ID D LE EA ST SW IT ZE RL AN D
O TH ER
EU
UK
0
13% Middle East
MIDDLE EAST DEPOSITS IN JERSEY Value (£ billions)
21
18%
20
Europe (Non-EU Members)
19 18
UK, Jersey & Guernsey
Europe (Non-EU Members)
17 0
Middle East
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Europe (EU Members)
£65 billion
£26.5 billion £19.3 billion £15.2 billion
Other
North America
Far East
£12 billion
£5.3 billion £5.5 billion
P8 | JERSEY FINANCE ANNUAL REVIEW 2012
The Funds sector of the financial services industry has undoubtedly been hit by the global financial crisis, with a slowdown in activity and a ‘flight to quality’ by both investors and managers. It is therefore highly gratifying that Jersey funds have continued to grow in both number and net asset value. The Island’s strong reputation in Funds has seen it weather the storms better than most jurisdictions, not least because of the expertise developed in the alternative asset classes of real estate, private equity and hedge funds. Jersey Finance has focused on attracting new funds and fund managers to the Island, marketing it as an attractive relocation destination. Five new businesses in the Funds sector set up on the Island during 2012: ACPI, Oppenheimer, ETP Management, Kinetic Partners and International Asset Management. We have a particular focus on hedge funds, and there are four in the pipeline which have said they intend to establish a presence on Jersey. We are not complacent however—there is strong competition from rival centres such as Guernsey and Luxembourg. We have therefore invested substantial sums to raise the Island’s profile in the sector through a variety of events in 2012, including:
■ Our own high-profile Annual Funds Conference in London, which attracted more than 250 delegates ■ Sponsorship of other conferences, including SuperReturn Berlin in February/March, EuroHedge Summit in Paris in April and IMN European Real Estate Opportunity and Private Fund Investing Conference in London in October ■ Sponsorship of British Private Equity & Venture Capital Association (BVCA) Women’s Forum and regional dinners, and also attendance at the BVCA Summit in October ■ A series of highly targeted events in London and Switzerland to promote Jersey as a place to where hedge fund managers can relocate ■ Working with the Jersey Funds Association on joint campaigns to communicate Jersey’s competitive advantages for funds and fund managers, particularly on alternative investment funds where the Island will offer a regulatory regime fully compliant with the new European Union directive (see below), as well as an option to continue with the existing regime. Our overseas representatives in target regions have a strong focus on Funds. In the Middle East, it is Jersey’s expertise in Islamic finance and Shariah compliant Funds that is attractive, for example.
Funds Jersey FUNDS in numbers
1,392 175 REGULATED FUNDS
UNREGULATED FUNDS
£190billion
net asset value
JERSEY FINANCE ANNUAL REVIEW 2012 | P9
Technical developments
AIFMD
Jersey Finance continues to work closely with Member firms and the Jersey Funds Association to identify opportunities which could attract more funds to the Island, paying close attention to the offerings of competitor jurisdictions. In addition, we act as a facilitator by liaising with the Government and the Jersey Financial Services Commission to represent the sector’s views on such opportunities.
The Alternative Investment Fund Managers Directive (AIFMD) creates a new regulatory framework for alternative investment fund managers in the European Union, with enhanced oversight. It will introduce an EU-wide passport to allow managers to market alternative investment funds to professional investors across the EU, initially only for EU firms from July 2013. Passports are expected to be introduced for non-EU firms which comply with the Directive’s requirements from 2015. However, non-EU firms will, subject to certain cooperation agreements, be able to market alternative investment funds in individual EU states until at least 2018.
One such gap was filled in January with the introduction of the Private Placement Fund (PPF) to widen choice for investors. PPFs are closed-ended funds offered privately to ‘sophisticated’ or ‘professional’ investors (as defined in the PPF guide). Similar in scope to existing Control of Borrowing Order (COBO) funds, PPFs can qualify for fast-track approval in as little as three business days by using specified content rules for the offer documents and meeting certain other requirements. They are expected to prove attractive across the alternative asset classes, including real estate, private equity, mezzanine, cleantech and emerging market funds. We have also been working with the Regulator and the Director of Tax Policy to resolve issues faced by fund managers with managed accounts. Appropriate regulatory changes to avoid the need for ‘double licensing’ have been largely agreed and law drafting instructions prepared.
Jersey Finance set up an AIFMD Working Party to deal with the implications of the Directive for a ‘third country’ which is a centre for international funds. During 2012, the working party agreed the way forward, working closely and constructively with the Jersey Financial Services Commission. This will maintain the existing bilateral ‘business as usual’ arrangements until at least 2018, while introducing an optional fully compliant AIFMD regime by 2015—the earliest date possible for non-EU countries. This approach ensures that existing Jersey alternative investment fund managers can continue their current arrangements. When it is possible to move into a fully compliant AIFMD regime, they will have the option of switching to it. But they will also be able to continue under the existing regime outside the scope of the AIFMD if they do not want access to EU capital or do not operate in the EU. We are confident that Jersey will be able to satisfy any criteria needed to comply with the AIFMD as soon as possible. Nor do we anticipate any migration away from offshore financial centres under the new AIFMD regime: some managers may decide to move onshore, but are likely to maintain a parallel offshore operation for non-European investors such as those from Asia and the Middle East.
SEPT 2011
SEPT 2012
SEPT 2012
£190
SEPT 2011
SEPT 2010
£175
SEPT 2009
SEPT 2009
SEPT 2010
1,300
SEPT 2009
£160
TOTAL NAV
1,400
(£ BILLIONS)
1,200
NUMBER OF FUNDS
P10 | JERSEY FINANCE ANNUAL REVIEW 2012
“In recent years, Jersey’s Private Wealth sector has seen continuing consolidation among local private wealth and trust firms in search of greater scale and growth”
The management of Private Wealth remains at the heart of Jersey’s finance industry and a source of work for other sectors such as Banking and Funds. Jersey’s 1984 Trust Law, the basis for the Hague Trust Convention and a model used in several other jurisdictions, is regularly updated and its fifth amended version successfully reached the statute book in 2012. Jersey Finance has a standing Trust Law amendment working group that is constantly reviewing the current version to innovate and enhance the legislation. In recent years, Jersey’s Private Wealth sector has seen continuing consolidation among local private wealth and trust firms in search of greater scale and growth. As a result, many are exploring market opportunities in Jersey’s core markets of the UK and Europe and also in newer markets further afield. Jersey Finance has promoted such expansion through several events in 2012, including: ■ Partnering conference organisers such as IBC, whose International Trusts and Private Client Forum was held in Jersey in March ■ Exhibiting at and sponsoring events such as the Adam Smith Conferences’ Wealth Management & Private Banking: Russia & CIS conference in Moscow in April ■ Our own London Private Client Conference in the British Museum in May ■ Sponsorship of events such as Legal Week’s Private Client Forum at Lake Como in November. We also work with the Society of Trust and Estate Practitioners, the global professional body which has more than 1,100 members on Jersey—its largest branch. Jersey Finance sponsored STEP’s 2012 Arabia Branch Conference in Dubai at the end of March and its Asia Conference in Hong Kong in mid-October where we were also an exhibitor.
Private Wealth PRIVATE WEALTH in numbers
196 892 JERSEY FOUNDATIONS
1,184
REGULATED TRUST COMPANY BUSINESS
MEMBERS OF THE SOCIETY OF TRUST AND ESTATE PRACTITIONERS
JERSEY FINANCE ANNUAL REVIEW 2012 | P11
The sector focus of the Jersey Finance representation in India, China and the Middle East is very much on Private Wealth, with an emphasis on the Island’s competence and stability. Our Head of Business Development for the Middle East and India attended relevant conferences and accompanied the Lord Mayor of London’s delegation to Mumbai in October. And our Chief Executive took advantage of a similar opportunity to visit Brazil and Argentina with the Lord Mayor’s delegation in November. Jersey’s attractions as a jurisdiction for property structuring and other Private Wealth activities was an integral part of our contact programme with the intermediaries who are the key gatekeepers in those countries.
International Pensions Work continues into the possibility of Jersey putting in place an international pensions offering. Industry and government worked together in 2012 to propose legislation aimed at facilitating the transfer of pensions from UK schemes where members had become non-resident in the UK for tax purposes. Following new rules outlined in the UK’s 2012 Budget, however, it was clear that further consideration was needed. Jersey Finance are continuing to work actively with industry and the government’s Tax Policy Unit. Investigating legislative changes which could embrace not only qualifying UK pension transfers (QROPs) but provide for a more comprehensive international pension offering including pension schemes which meet the Inheritance Tax (Qualifying Non-UK Pension Schemes) Regulations 2010 (so-called ‘QNUPs’).
The Jersey Foundation success story Jersey’s reputation for quality, stability and security has proved attractive in an era of economic and financial turmoil, helping individuals and families protect and grow their assets. The Island’s trusts provide suitable structures for such activities, as well as succession planning and philanthropic activities. However, the new Jersey Foundation introduced in 2009 at the instigation of Jersey Finance Members is also proving attractive to clients, particularly in regions such as Russia, Asia and the Middle East where trust structures are less familiar to advisors and clients. As incorporated bodies, Foundations are registered by the Jersey Financial Services Commission with around 200 on the register at the end of 2012.
“The sector focus of the Jersey Finance representation in India, China and the Middle East is very much on Private Wealth, with an emphasis on the Island’s competence and stability”
Jersey Finance promotes expansion throughout 2012...
MAR
Partnering conference organisers such as IBC, whose International Trusts and Private Client Forum was held in Jersey
BRAVE WEALTH IN A NEW WORLD LO N D O N P R I VAT E CL I E N T CO N F E R E N CE 2012
MAY
Our own London Private Client Conference held at the British Museum
W E D N E S D A Y, 1 6 M A Y 2 0 1 2 - B R I T I S H M U S E U M - 1 2 . 3 0 - 7. 0 0 p m Event sponsors
Media partners
Достижения 2011 года Журнал “Global Investor” – Лучший офшорный центр
Лучший международный финансовый центр, приз конкурса Международных фондов и продуктов 2011 года
Лучшая оффшорная юрисдикция по новейшим данным Индекса глобальных финансовых центров (GFCI11)
За более подробной информацией о Джерси просим обращаться на сайт
Джерси: ведущий международный финансовый центр
Прогрессивное финансовое мышление Джерси поощряет непрерывное введение новшеств в условиях режима прозрачности, сосуществующего с полной конфиденциальностью клиентской информации.
Наши элитные профессионалы разумно и поделовому управляют финансовыми учреждениями мирового класса, в то время как уникальное наследие и вековая мудрость Джерси используются для построения нового финансового мира.
www.jerseyfinance.je
2011 Achievements Global Investor – Best Offshore Centre Best International Finance Centre, International Fund & Product Awards 2011 Top offshore jurisdiction in the most recent Global Financial Centres Index (GFCI11)
To learn more about Jersey, please visit www.jerseyfinance.je
Jersey: a leading International Finance Centre Jersey’s enlightened financial thinking stimulates continuous innovation within a transparent regime that coexists with complete client confidentiality. Our elite professionals drive world-class institutions with intelligence and acumen whilst Jersey’s unique heritage and centuries of wisdom are being used to build a new financial world.
APR
Exhibiting at and sponsoring events such as the Adam Smith Conferences’ Wealth Management & Private Banking: Russia & CIS conference in Moscow
Jersey for Private Wealth Since the 1960s, Jersey has been a prominent player in delivering private client services, with the emphasis today shifting away from the very simple trust and underlying company structures for UK families, to high value and more complex structures involving trusts, companies, limited partnerships and now foundations for international families. Jersey has led the way in terms of the range of trust business undertaken, in addition to the establishment of ‘virtual’ family offices for ultra high net worth families and the establishment of structures for corporates looking to put in place suitable and innovative arrangements for the rewarding of staff and providing for their retirement. Clients and trustees have access to a variety of service providers from large banks and independently owned trust companies to smaller, less expensive niche providers, as well as legal support from experienced law firms that can advise on Jersey structures To find out more, please visit the Jersey Finance stand or visit www.jerseyfinance.je
Awards Global Investor - Best Offshore Centre 2010, 2011 & 2012
International Fund & Product - Best International Finance Centre 2010, 2011 & 2012
Private Banker International - Outstanding International Wealth Centre 2012
To learn more about Jersey, please visit the Jersey Finance stand or www.jerseyfinance.je
NOV
Sponsoring events such as Legal Week’s Private Client Forum at Lake Como
P12 | JERSEY FINANCE ANNUAL REVIEW 2012
“Jersey provides the greatest number of companies in the FTSE 100 which are registered outside the UK”
Jersey Finance has been developing Capital Markets business as a ‘fourth pillar’ of the Island’s finance industry. Already a leading financial centre for listing vehicles, Jersey has close to 100 registered companies listed on global stock exchanges with a total market capitalisation of more than £141 billion. Many of the world’s leading offshore legal practices have offices on Jersey—in some cases, their global headquarters. One of Jersey’s strengths is its role in providing global companies with a gateway to the City of London capital markets. An increasing number of international companies are choosing to list in London through an external domicile of incorporation, and subject to meeting certain criteria, larger Jersey companies are eligible to enter the elite FTSE 100 group. As a result, Jersey provides the greatest number of companies in the FTSE 100 which are registered outside the UK. Jersey-registered companies are in second place for FTSE 250 companies and those on AIM.
Listing in London through Jersey seen as attractive Other global stock exchanges with Jersey companies listed include Hong Kong, NASDAQ and the New York Stock Exchange. Companies choosing to incorporate on Jersey come from countries such as Russia, where companies admire the strong rule of law on the Island, and India, where listing in London through Jersey is seen as attractive for sectors such as Cleantech and Renewable Energy.
Capital Markets Jersey CAPITAL MARKETS in numbers
100 LISTED COMPANIES WORLDWIDE
No.1 IN NON-UK COMPANIES IN THE FTSE 100
£141 billion MARKET CAPITALISATION
JERSEY FINANCE ANNUAL REVIEW 2012 | P13
A key aim during 2012 was to establish Jersey as the ‘jurisdiction of choice’ for corporate entities seeking listings. We advanced this ambition in several ways... ■ A series of events in India to promote the use of Jersey vehicles for stock exchange listings and the use of Jersey’s cross-border merger legislation in business reorganisations ■ Technical briefing papers to promote the strength of Jersey’s knowledge and expertise in securities and debt listings work on major exchanges, as well as other corporate transactions such as cross-border mergers ■ Seeking recognition on stock exchanges such as Singapore which would help Jersey attract more business from overseas markets ■ Developing stronger relationships with NOMADS, the nominated advisers who manage admissions to the London Stock Exchange AIM market
Insurance In a related area, and to make use of the Island’s capabilities in other sectors, particularly in Capital Markets, we have been reviewing innovative ideas for specialist insurance services which could be established within Jersey’s existing legislative and regulatory framework. Existing advantages for the insurance industry include Jersey’s record as the first international finance centre which passed legislation to introduce in 2006 the concept of an incorporated cell company alongside an enhanced version of the traditional protected cell company. As well as cell companies, Jersey can also offer ‘pure’ captive insurance companies for more traditional self-insurance arrangements for larger entities. Potential areas for innovation are Jersey’s abilities and expertise in structured finance products: as the Insurance sector develops, opportunities will exist for Insurance Linked Securities (ILS) business to be transacted locally. The global convergence of the capital markets with the insurance and reinsurance markets and insurance securitisation is a further area where Jersey could provide innovative solutions. The wide range of legal structures in Jersey law and the expertise of professional advisers on the Island could facilitate ILS business by creating ‘insurer transformers’. To start the ball rolling in 2012, we created an Insurance section of the Jersey Finance website and produced a “Jersey: for Insurance” brochure. This was subsequently distributed at the Captives Live conference in Luxembourg in November where we were exhibitors in partnership with the Jersey International Insurance Association. We intend to build on this base.
Jersey: for insurance A fresh alternative for international insurance business
HIGHEST NO. OF FTSE 100 COMPANIES Registered outside of the United Kingdom
www.jerseyfinance.je
P14 | JERSEY FINANCE ANNUAL REVIEW 2012
“The main focus of our work, and those to which we devote most resources, are the priority markets in the top tier”
1 UK
1 Brazil
International Markets For some years, Jersey Finance’s work programme has reflected the international strategy we developed after the completion in 2008 of The Future of Finance 2015, the London Business School report that we commissioned. This recommended focusing international expansion on the Gulf and the BRIC countries—Brazil, Russia, India and China. Subsequently we added to the list of target countries, drawing on the so-called Next 11 or N11 list which includes other dynamic emerging markets such as South Africa, Vietnam, Turkey and Indonesia. This has created the three-tier approach, illustrated to the right, which also has the virtue of reflecting the model adopted by TheCityUK in its international expansion planning. The main focus of our work, and those to which we devote most resources, are the priority markets in the top tier. We have already developed representation in the Gulf, India and China, and are exploring opportunities to raise Jersey’s profile further in Russia and Brazil. The Jersey Finance BRICs conference in September brought together industry leaders, financial regulators and emerging markets experts in Jersey for a one-day conference on the growth and opportunities for new business in the BRIC countries.
JERSEY FINANCE ANNUAL REVIEW 2012 | P15
Russia & CIS 1
Mature Europe 1
2
Turkey
China 1
GCC 1 Vietnam 3
Israel 2 India 1
Indonesia
3
South Africa 3
Three tier markets UK, Mature Europe, Brazil, Russia & CIS, India, China, GCC
1 Priority
Combinations of satellite offices, dedicated Jersey Finance events, attendance at third party events, fly-in visits and proactive marketing communications
Turkey, Israel
2 Tier 2
Combinations of farming London gatekeeper community, exploiting opportunities from the UK’s promotional platform and a limited number of visits and attendance at third party events
Indonesia, Vietnam, South Africa
3 Tier 3
Market access through ‘hubs’ in London, Hong Kong and Singapore and farming London/Hong Kong/Singapore gatekeeper community, as well as exploiting opportunities from the UK’s promotional platform
P16 | JERSEY FINANCE ANNUAL REVIEW 2012
The UK and Mature Europe
The Gulf Region
International cross border work generated from the UK and Mature Europe makes up more than half the market for Jersey’s finance industry, accounting for the largest share of business in the four main sectors. It is therefore natural that Jersey Finance devotes the greater part of its resources to protecting and expanding these two markets. The appointment of a UK-based Business Development Manager with significant banking experience in May has helped us increase our focus in both.
Our focus on the Gulf states grew in 2012, as the region became more important as a source of business—the region now accounts for 13 per cent of Jersey’s bank deposits. The United Arab Emirates is our main priority in the Gulf, so we were delighted to welcome the UAE Ambassador on a visit to Jersey in November. Jersey Finance’s Abu Dhabi office is making a real impact in the region, assisted by our Jersey Advisory Group and Community of Interest Group on the ground. We are on track to meet our ambitious targets for meetings with intermediaries, gatekeepers, business networks such as STEP and local media.
During 2012, we worked with UK trade associations to raise Jersey’s profile through various marketing events and sponsorship programmes (detailed in earlier pages). We also engaged with London-based intermediaries, such as the country desks of major accountancy firms and Magic Circle law firms, to ensure that they are aware of all that Jersey has to offer. And we hosted successful London conferences for both the Funds and Private Wealth sectors during the year.
We have now begun to plan initiatives in Saudi Arabia, Kuwait and Qatar that we hope to develop when resources become available. Already more of our members are visiting Qatar following the signing of a Double Taxation Agreement with the Emirate. There is also increasing interest in Saudi Arabia where we are planning a road-show early in 2013.
As the European Union looms larger on the horizon for Jersey’s finance industry, we have been working with the Government through the Channel Islands Brussels Office (CIBO) to glean intelligence on issues such as the Alternative Investment Fund Managers Directive, and to garner support for Jersey’s policy objectives. We have also sought to host visits to the Island so that officials and legislators can experience the substance of Jersey’s finance industry. In 2012, we were pleased to support visits by the London-based ambassadors of Switzerland, Sweden, Germany and Finland. And we were particularly delighted to hold two meetings in 2012 with the French Senate Finance Committee— opportunities to engage with parliamentarians from one of the EU countries most critical of international financial centres.
UK AND EUROPE
THE GULF REGION
INDIA
“The UK and Mature Europe make up more than half the market for Jersey’s finance industry, accounting for the largest share of business in the four main sectors”
“Our focus on the Gulf states grew in 2012, as the region became more important as a source of business—the region now accounts for 13 per cent of Jersey’s bank deposits”
“Our representatives in Mumbai and New Delhi completed an extensive programme of more than 300 meetings with intermediaries, gatekeepers, trade bodies and companies in 2012”
JERSEY FINANCE ANNUAL REVIEW 2012 | P17
India
Russia & CIS
Our representatives in Mumbai and New Delhi completed an extensive programme of more than 300 meetings with intermediaries, gatekeepers, trade bodies and companies in 2012. Jersey Finance was also represented at several key conference events. A highlight was our participation in the Lord Mayor of London’s delegation to Mumbai in October, which involved a series of high-level meetings with senior ministers, regulators and businesses. We also sponsored—and supplied a speaker to—the 2012 International Tax Conference in Mumbai, which brings together an impressive range of the country’s tax practitioners.
Work in Russia and the CIS was accelerated in 2012, with plans for a stronger programme of events managed by our UK-based representative. Jersey Finance already attends the annual wealth management conference organised by Adam Smith Conferences in Russia, and our new Community of Interest Group for Russia and the CIS will allow us to develop a fuller marketing programme, including sponsoring thirdparty events.
A new Jersey Advisory Group for India held an inaugural meeting in Mumbai in July, bringing together senior professionals from law firms, accountancy firms and banks. Although Jersey Finance is focused on Mumbai and New Delhi, second tier cities such as Ahmedabad, Chennai, Bangalore and Hyderabad are now promising targets as they benefit from India’s growth story.
Practical issues of distance, language and culture have previously been seen as obstacles to promotion in Brazil, but it is increasingly clear that these issues are not insuperable. Jersey Finance is therefore considering stepping up its engagement following an in-depth fact-finding mission and a review of the Island’s image in Brazil. We will be encouraging delegations to visit the country, especially Government-led ones, and seeking opportunities to meet intermediaries and gatekeepers for the Brazilian market in London.
China
Brazil
Tiers Two and Three
A Double Taxation Agreement was signed with Hong Kong in January, with ratification expected shortly. Our Hong Kong office held more than 200 meetings with intermediaries, trade associations and regulators during 2012. And during a Jersey Finance visit to Hong Kong in October, a Jersey Advisory Group for China was launched with locally based finance and legal experts, regional banking heads and wealth management experts. Opening a second office in mainland China is an ambition.
For tier two targets such as Turkey and Israel, Jersey Finance combines contacts made through London intermediaries, opportunities to piggyback on UK promotional activities and a limited number of visits and attendance at third party events. In tier three countries, such as Indonesia, Vietnam and South Africa, we look for market access through ‘hubs’ in London, Hong Kong and Singapore, taking advantage of intermediaries in such centres and exploiting opportunities through TheCityUK’s promotional activities.
CHINA
RUSSIA & CIS
BRAZIL
“A Double Taxation Agreement was signed with Hong Kong in January, with ratification expected shortly”
“Work in Russia & CIS was accelerated in 2012, with plans for a stronger programme of events managed by our UK-based representative”
“Jersey Finance is considering stepping up its engagement following an in-depth fact-finding mission and a review of the Island’s image in Brazil”
P18 | JERSEY FINANCE ANNUAL REVIEW 2012
“Jersey’s finance industry is a major contributor to the island’s economy, providing work for more than 12,000 people; expenditure on the Island of around £400 million per year and approximately two-thirds of States revenue”
Jersey’s finance industry is the largest single contributor to the Island’s economy generating 40.9% of Gross Value Added (GVA). The finance industry contributes nearly £300 million a year in taxes, more than the entire budget needed for education, health and social services put together, thus facilitating the excellent public services from which Islanders benefit. The industry also directly provides over 12,500 skilled jobs, nearly a quarter of the working population, and supports indirectly virtually every other industry: for example business visitors staying in hotels and using restaurants and taxi firms whilst on the Island. In fact spending on goods and services in the Island by the finance industry is in excess of £400 million, providing vital support to the wider economy. However, Jersey Finance Members also contribute much more to the community through their own programmes. One notable project came to fruition in 2012 when the Jersey Finance Philanthropic Foundation paid out more than £50,000 to local charities. Established by Jersey Finance in 2011 to celebrate the first 50 years of the modern finance industry on the Island, the balance of funds raised by local financial services institutions was distributed in partnership with the Association of Jersey Charities.
Supporting Jersey FACTS AND STATS
£50,000 OUT
+ PAID
BY Jersey Finance Philanthropic Foundation
GENERATING
40.9%
of GROSS VALUE ADDED
JERSEY FINANCE ANNUAL REVIEW 2012 | P19
Community programmes
Educational activities
A wide variety of fund-raising activities and other forms of support for local good causes goes on all year round, involving financial firms from all sectors of the industry. Among the beneficiaries of activities carried out in 2012 by the 47 firms mentioned in the quarterly community features published in the Jersey Evening Post and The Town Crier were:
A vital activity from the point of view of both the industry and the Island is our engagement with young people through their education and beyond. There is a natural self-interest in this work, but we see it as much more than simply a recruitment tool for the industry. While we hope that young people will consider a career in finance, we also help them to make the right career choices and to follow them through to success. Through preparing young people for the jobs market—helping them with CVs, interview technique, internships and work experience—Jersey Finance Members contribute some 16,000 hours of staff time each year.
■ Jersey Stroke Association received over £4,600 from sponsorship of a relay swim from Jersey to Guernsey by six members of staff from Mourant Ozannes ■ Jersey Women’s Refuge was one of three beneficiaries of several fund-raising activities by PwC Channel Island staff which raised more than £13,000—part of which involved 15 intrepid hikers climbing the three highest peaks in Scotland, England and Wales in 24 hours
Our Members also support Government schemes such as Advance to Work and Work Plus, as well as Jersey Finance activities such as our Schools Roadshow Programme. Other activities in 2012 included a partnership between Jersey Finance and Careers Jersey to again run the Life in Finance programme over the summer. Twenty-five Member firms hosted 35 Year 12 students, leading 34 to say that as a result they were hoping for a career in finance.
■ Macmillan Cancer Support (Jersey) netted a recordbreaking £25,000 from the third Indoor Rowathon sponsored by RBS International, with 47 teams of six people each rowing 30,000m, equivalent to the distance from Sark to Jersey ■ Ipes Jersey has partnered with Highlands College on the Foundation Degree programme, helping people wanting to pursue a career in the finance industry gain relevant experience ■ Volunteers from the Northern Trust Jersey office kick-started the refurbishment of the Orangutans and Gibbons enclosure at Durrell, improving safety for the animals and enhancing the public’s view of the area.
FACTS AND STATS
£300MILLION PROVIDES OVER
12,500
¼
SKILLED JOBS
OF THE WORKING POPULATION
A YEAR IN TAXES
SPENDING
£400m
ON GOODS AND SERVICES
P20 | JERSEY FINANCE ANNUAL REVIEW 2012
“We definitely need innovation now, as the finance industry will not just evolve by staying the same”
MEMBERS’ Q
What do you think the three main roles of Jersey Finance should be?
50%
“Promotion of Jersey as an International Finance Centre on and off-Island”
35%
“Attract new clients/business to the Island and develop the industry”
27%
“Working groups to support development of legislation and regulation”
Q
What activities do you think Jersey Finance does particularly well?
“Geoff’s responses to verbal threats from off-Island media etc in relation to “tax haven” criticism” “It does present the face of the industry internationally, capturing the right level of vibrancy, professionalism and responsibility. Its a great flagship”
KPIs
“Technical support for the various sectors/liaison with JFSC” “Very strong on international representation”
TECHNICAL FACTS AND STATS
13 19 16 18 £4m CONSULTATION RESPONSES SUBMITTED
WORKING pieces of international GROUPS legislation/ regulation being actively monitored PRO-BONO TIME GIVEN BY MEMBERS
TECHNICAL BRIEFINGS & MAILSHOTS
JERSEY FINANCE ANNUAL REVIEW 2012 | P21
FEEDBACK
“An excellent job is being done, and the industry is very impressed”
taken from our 2012 member survey
Q
What activities do you think Jersey Finance could improve, and in what way?
“Less focus on the “big firms”, more focus on the wider sphere of practitioners” “More feedback on international activities” “Improve industry involvement in JFL’s strategic activities; better link those activities to individual members (not just members with deep enough pockets to directly support JFL’s activities)”
Increases in visits to jerseyfinance.je from various sources (2011 vs 2012)
2012 Increase in Traffic
2012 Increase in Traffic
+464%
2012 Increase in Traffic
+2,202%
+642%
MARKETING FACTS AND STATS
PUBLICATION DOWNLOADS
113
EDITORIAL ITEMS
EDUCATION
16,000
HOURS DEDICATED BY MEMBER FIRMS
100 INTERVIEWS
AVE: £1,150,000
Press releases/ statements/ articles issued
82 16,000 ATTENDEES
9,435
490 events
162
JFL MEMBERS
P22 | JERSEY FINANCE ANNUAL REVIEW 2012
“We are very supportive of the excellent work done in the last few years”
Q
How well does Jersey Finance fulfil the following activities?
■ EXCELLENT
■ GOOD
■ AVERAGE
■ POOR
VERY POOR
0%
20%
40%
60%
80%
100%
0%
20%
40%
60%
80%
100%
Representation of industry issues International media relations/PR Operating technical working groups Finance Update Publication Provision of technical information Local media relations/PR Jersey Finance Website Jersey Finance Events Attendance at conferences & events New market visits Fact-sheets on topical issues “Links with” publication Market visits (existing)
KPIs Q
Overall, how would you rate value for money provided by Jersey Finance?
5%
5%
20%
EXCELLENT
■ GOOD
20%
■ AVERAGE ■ POOR ■ VERY POOR
50%
JERSEY FINANCE ANNUAL REVIEW 2012 | P23
Q
How useful are the following activities supplied by Jersey Finance?
■ VERY USEFUL
■ QUITE USEFUL
■ NOT VERY USEFUL
■ NOT AT ALL USEFUL
0%
20%
40%
60%
80%
100%
0%
20%
40%
60%
80%
100%
International media relations/PR Operating technical working groups Representation of industry issues Finance Update Publication Provision of technical information Fact-sheets on topical issues New market visits Jersey Finance Website Local media relations/PR Attendance at conferences and events Market visits (existing) Jersey Finance Events “Links with” publication
Q
Overall, how would you rate your experiences of working with Jersey Finance?
8% 33%
17%
EXCELLENT
■ GOOD ■ AVERAGE ■ POOR ■ VERY POOR
42%
“They are simply a good bunch, very approachable, decent and enthusiastic. I have always felt pleased to be associated with them and glad they are there”
P24 | JERSEY FINANCE ANNUAL REVIEW 2012
Jonathan White Chairman of Jersey Finance 01534 836000
jonathan.white@jerseyfinance.je
Richard Corrigan Global Head of Business Development 01534 836025
richard.corrigan@jerseyfinance.je
Geoff Cook Chief Executive Officer 01534 836002
geoff.cook@jerseyfinance.je
Sean Costello Head of Business Development, GCC and India +971 (0) 2 406 9722 sean.costello@jerseyfinance.je
Heather Bestwick Technical Director and Deputy CEO 01534 836004
David Vieira Head of Marketing 01534 836003
Zhaoan Li Head of Business Development, Greater China +852 2159 9652
Gary Hales Head of Business Development, UK, Europe and Russia BB 07969771088
heather.bestwick@jerseyfinance.je
zhaoan.li@jerseyfinance.je
Contacts
www.jerseyfinance.je
david.vieira@jerseyfinance.je
gary.hales@jerseyfinance.je
www.jerseyfinance.je