With an economic and fiscal regime that has been sustained for nearly 50 years, Jersey has succeeded in developing an ideal financial services environment to meet the changing needs of international investors.
In particular, as Jersey has sought to build links with markets in Greater China, an increasing number of investors have found that Jersey has in place the essential elements to support international business expansion and overseas investment, financial planning strategies and asset protection on behalf of corporate and institutional business and investors.
A range of leading financial service providers from the UK, US, mainland Europe and worldwide, together with a pool of experienced law firms, specialist administrators and wealth managers, all have a presence in Jersey and this has really helped to propel Jersey into the forefront of global finance.
Forty six international banks have an operational presence in Jersey, making it a major banking centre. Indeed, this was recently highlighted in the UK HM Treasury’s Review into the Crown Dependencies, which specifically emphasised the value in terms of liquidity that Jersey had provided to the UK throughout the banking crisis.
With this first rate infrastructure, an excellent track record as an international finance centre, a highly skilled workforce, long established tax neutrality and high standards of corporate governance, Jersey has succeeded in gaining an edge over its competitors – something that has really come to the fore since the financial crisis hit about 18 months ago.
Respected bodies including the IMF, OECD and the UK Government have consistently recognised Jersey as a mature and well regulated jurisdiction, with all the reports and reviews that have come Jersey’s way in recent months proving that it meets or exceeds all of the relevant international financial standards for financial stability and transparency. Moreover, Jersey is currently the highest rated of the ‘offshore jurisdictions’ in the Global Financial Centres Index and has been awarded top jurisdiction status this year by the Society of Trust & Estate Practitioners and leading international trade magazines.
Focus on Key Markets
In recent years, backed up by this impressive track record, Jersey has focused its efforts on building business links with key international markets, including those in Asia.
Whilst China and India, two of the BRIC economies, might no longer strictly be ‘emerging’ markets, having truly arrived on a global scale, they nevertheless provide excellent opportunities for growth. Only recently China was confirmed as having the second largest economy in the world behind the US, having overtaken Japan, and one study has predicted that India, Brazil and Russia are all expected to move into the top six world economies by 2020.
For the powerful new Asian economies, high standards of regulation and corporate governance issues are top of the agenda when considering investment opportunities internationally. Jersey’s proven high standards in this regard have been a central message and constantly highlighted through our regular visits to the region over recent years, which has provided Asian investors with a large degree of comfort and played a significant part in Jersey’s success in these markets to date.
Providing financial services for corporate business has been a key part of Jersey’s strategy in building links with the Asian markets. In particular, Jersey’s experience and track record in providing corporate listings and debt issuance business has been a crucial area of growth. At last count there were 86 firms using Jersey companies to list on worldwide stock exchanges, involving a combined market capitalisation of over £16 billion. To date, more than 25 per cent of the 60 Chinese companies listed on the Alternative Investment Market (AIM) in London are incorporated in Jersey.
Meanwhile, in a further development, last year Jersey companies were approved for listing on the Hong Kong Stock Exchange, with West China Cement Limited recently becoming the first Chinese business held through a Jersey company to be listed on the Exchange. This was a major development, and a move that reflects how the market in Asia views the quality and robustness of Jersey Company Law and that adds weight to Jersey’s reputation as a rigorously supervised, internationally recognised jurisdiction.
These developments in Hong Kong and Greater China have been supported by the opening last year of a Jersey Finance office in Hong Kong. A natural extension of the growing commercial links with the region, the office is manned by Zhaoan Li, Head of Business Development for Greater China, who is responsible for co-ordinating Jersey’s growing business activity in mainland China and Hong Kong.
Tailored Services for Foreign Markets
Amongst Chinese institutions and individuals, the trust as a wealth management tool is increasingly being used for succession planning and asset protection rather than for tax purposes, particularly since the abolition of estate duty in Hong Kong in 2006.
However, the launch of the Jersey Foundation vehicle last year has increased the options even further. Key features of the Foundation include its separate legal personality, its shareless corporate status, its recognition by civil law jurisdictions, its infinite duration and its adaptable level of founder and guardian control depending on the private or commercial objectives of the founder.
In mainland China, we believe there are many opportunities for wealth management professionals. With wealth accumulating at record speed in China and with waves of emigration from China to the UK, there is a steady growth in Private Discretionary Trusts. The ‘PTC’ has become increasingly popular in particular amongst high net worth individuals looking to establish a form of family office structure involving the administration of trusts, of which the PTC will be trustee.
Typically a PTC will be a limited liability company in Jersey with the shares owned by the family concerned or more commonly by a purpose trust. Either way the family can control the composition of the board of directors and in this way can obtain a degree of certainty that the assets of the underlying trusts will be managed in a manner that meets their approval.
On the banking front, 15 per cent of Jersey’s banking deposits currently originate from the Middle East, with nearly nine per cent coming from the Far East. In fact, the figure from the Far East has shown a three-fold increase over a recent three month period, a further indication that business with the region is really gaining momentum.
Jersey is affirming itself as a centre for specialist funds business in Europe too. Alongside the use of its investment vehicles for listing purposes, Jersey is also a leading location within Europe for private equity, hedge and infrastructure investment opportunities. Despite the challenges of the past ei18ghteen months, the most recently published figures for Jersey showed that the value of funds under administration had increased during the first quarter of 2010 by 8.6 per cent.
Looking to the Future
Not wanting to be complacent, Jersey is continuing to forge links with leading representatives and significant business providers in key markets. In India, for example, we have a list of more than 50 important business introducers who we engage with on our visits to Mumbai and Delhi, whilst Jersey firms are visiting the country more regularly and there are signs of new business emerging.
In recent times, we have also been delighted to have welcomed government officials, regulatory representatives and business leaders from China and India on formal visits to Jersey. We hope these visits will continue, as these contacts strengthen Jersey’s relationship with key markets.
With an eye firmly on the future, it is Jersey’s intention to build on its global recognition as a compliant and well regulated jurisdiction and to continue to develop its services in the new financial services environment which has emerged since the crisis. We plan to ensure that the powerful economies in Asia are kept abreast of the breadth of banking, funds and wealth management services that Jersey’s finance industry provides.
Undoubtedly, Jersey is an effective gateway for professionals in the Greater China markets seeking access to the markets in the West but it is important that we continue to explain and promote those benefits during our ongoing marketing campaign in our key markets.
International Board Director and Consultant - Formerly Chief Executive Officer at Jersey Finance. Geoff Cook is a regular speaker and contributor to conferences and seminars around the world and writes frequently on the issues affecting Jersey and other finance centres. Prior to his role at Jersey Finance, he was Head of Wealth Management for HSBC Bank Plc, based in London, responsible for the delivery of Financial Planning Services to the 10 million HSBC customers in the UK.