Brendan Dowling (pictured right), Managing Director, Estera Jersey, and Ethan Levner (pictured below), Managing Director, Estera Guernsey, discuss how the Channel Islands’ strong background in finance provides the foundation for continuous innovation breaking new ground
Both Guernsey and Jersey have strengths across a number of finance sectors – what would you say they are best known for?
Brendan Dowling (BD): Political and economic stability, a skilled labour market and a commitment to high standards of regulation and transparency are the islands’ key strengths, ensuring that they maintain their position as leading international financial centres. Jersey continues to meet the rapidly evolving demands of a more sophisticated private wealth and investment funds industry.
Ethan Levner (EL): Both islands are leaders in funds, trusts and private client work, and they have a strong history in capital markets and banking. I’d probably highlight private equity as an area of excellence for Guernsey and add insurance to the mix as well, as the island has an outstanding international reputation in that sector. The islands are also well regarded for listings – Guernsey is the number one jurisdiction for offshore companies listed on London Stock Exchange (LSE), having the largest number both overall and in the Specialist Fund Segment. Meanwhile, Jersey leads the way by market cap for offshore LSE listings.
Do you think that the islands are sometimes perceived as rather traditional and staid?
EL: I can understand why people might make that assumption. With 50 years of experience and expertise under their belt, the islands are solid, tried and tested. But I don’t think that makes them traditional and staid. That implies that they are just doing the same thing over and over, and that’s certainly not the case.
BD: Quite the contrary. In my opinion, the industry that exists today in Jersey is very different and much more sophisticated than when I first arrived on the island 22 years ago. Jersey now offers a full spectrum of fund solutions and corporate administration services to international investors and clients, as well as world-class private wealth solutions. I think the islands have shown themselves to be proactive in growing their reputation for service excellence, stability, transparency and successfully promoting new and innovative services in a rapidly evolving financial market.
So, if you’re not just ‘doing the same thing’, how have the islands developed their offering over the years?
BD: Innovation is key to the future success of the finance industry and Jersey continues to introduce a range of new legislation and regulation to enhance its service platform. Meanwhile, Jersey Finance continues to successfully promote our finance industry around the world. Many businesses based on the island conduct fiduciary activities in jurisdictions all over the globe, which enables them to offer multijurisdictional structuring solutions to international clients.
Jersey has become a centre of excellence for funds and continues to be the fund domicile of choice for many of Europe’s leading alternative asset managers. Only a matter of years ago, Jersey launched the first-ever Bitcoin fund and more recently the Jersey Private Fund regime. In the private client space, it introduced foundations as an alternative or complementary offering to trusts, and Jersey is often the jurisdiction of choice for family office solutions for the world’s wealthiest families.
EL: Guernsey has followed a similar route, growing its offering and spreading the word around the globe. As well as launching its own foundations and a Private Investment Fund (PIF) regime – we were the first administrator to establish a PIF in Guernsey – the island has continued to develop its strength in insurance and has become a recognised centre for insurance-linked securities (ILS).
Guernsey is also renowned for introducing the protected cell company (PCC) concept 22 years ago. While this type of company was primarily aimed at the captive insurance market, it was quickly and successfully adopted by the funds industry, and the concept was subsequently introduced in numerous offshore jurisdictions.
It’s often believed that PCCs – and indeed, incorporated cell companies – are only found in jurisdictions such as Luxembourg, whereas Guernsey can often be a more cost-effective and experienced option.
More recently, the islands have continued to innovate – indeed, they’ve been world leaders in some areas. What would you say has been most notable?
EL: The fact that the islands are world leaders is absolutely true – you only need to look at the innovative strides they have taken. In the funds arena, Guernsey has had a stand-out year. It recently introduced the Guernsey Green Fund, the world’s first regulated green investment fund product. In creating a green ‘kitemark’, this essentially assures investors that specific green criteria have been met and that their investments are having the desired, positive environmental impact.
The Green Fund has attracted a lot of attention since it launched and has been supported by The International Stock Exchange introducing TISE GREEN, a specialist market segment for green investments.
We were thrilled in April this year to support the Bluefield Solar Income Fund, which gained accreditation as a Guernsey Green Fund and became the first fund listed on LSE to do so. Likewise, last year, the Guernsey-registered Hipgnosis Songs Fund, which we administer, became the first fund investing in songs and musical intellectual property rights to list on London Stock Exchange. It also had a very successful second fund raise earlier this year.
Another exciting innovation has been the introduction of the new ILS-hybrid vehicle, an all-in-one protected or incorporated cell company that is both a licensed insurance company and a regulated investment fund.
BD: As far as Jersey is concerned, one of the most significant recent developments has been the International Savings Plan, which allows large multinational companies and family offices to set up savings plans in Jersey for their employees. This looks set to become a key employee benefit offering.
Is it this marriage of innovation and a proven track record that sets the islands above other IFCs?
BD: I would say that it’s definitely something that holds Guernsey and Jersey in very good stead. Clients can be sure that the legislative regimes are robust, stable and reliable, the regulator is supportive while making sure that the highest standards are adhered to, and that the finance practitioners are specialist experts, while at the same time knowing that the islands are always looking to deliver new and innovative products to meet client demand.
Offshore centres increasingly have to meet the highest of international standards. Is that both a challenge and an opportunity for the islands?
EL: I’d certainly say so. We have to make sure we meet standards that are constantly being introduced or are evolving – you only need to look at the recent challenges posed by issues around beneficial ownership and economic substance. However, this not only allows us the opportunity to restate the islands’ reputations, it also means we can develop new offerings to help our clients navigate the regulatory and legislative minefield.
Is there anything the islands are working on right now that we should look out for?
BD: Jersey has built one of the most connected data locations in the world and technological developments are key to ensuring we meet the expectations of the next generation of high-net-worth individuals and companies, as well as maintaining Jersey’s reputation as a jurisdiction where conducting business is convenient and straightforward. Our trust industry will need to continue to develop technologies such as apps and online portals, which enable our existing and future clients to seamlessly interact with our business.
EL: Guernsey is always looking to continue to innovate and introduce new products, notably in funds. Credit for this goes to the forward-thinking nature of the Guernsey financial services industry in coming up with and developing ideas. The regulator should also be praised for being open to these ideas and willing to work with industry. At Estera, we embrace these developments and new products within industry, and will continue to lead the way in adopting them.
FIND OUT MORE
Estera is a world-leading, global provider of fund and fiduciary administration services. We pride ourselves on finding innovative solutions to our clients’ dilemmas. Please contact Ethan Levner in Guernsey or Brendan Dowling in Jersey to discuss how we can help you.
Brendan Dowling, Managing Director, Estera Jersey
Tel: +44 1534 844 844
Email: brendan.dowling@estera.com
Ethan Levner, Managing Director, Estera Guernsey, Group Head of Corporate Development, Group Head of Funds
Tel: +44 1481 742 742
Email: ethan.levner@estera.com
• This advertising feature was first published in the 2019 City Edition of Businesslife magazine