CRISIS BOOSTS ROCK'S FUND INDUSTRY

Our funds industry rides out the storm... and continues to grow

In a week which saw Britain's finances come under renewed attack and Prime Minister Gordon Brown's economic policies shredded by the Bank of England Governor, Brown's German counterpart Angela Merkel, and the global financial community - which for the first time in decades failed to take up the full offer of Treasury bonds - there was a bright promise of better days for at least one sector of the Rock's finance centre. Our funds market - pioneered by Hassans partner James Lasry - is not only surviving the global credit crunch, but is thriving.

Unscathed by collapse?

What is more, unlike many of our competitor financial jurisdictions such as the Cayman's and Channel islands, Gibraltar has been relatively unscathed by the collapse of the Makoff empire which hit global financial institutions with staggering losses of $50 billion. Only one Gibraltar firm had its fingers badly burned by investments with the US fraudster. However, there is little room of for complacency and Chief Minister Peter Caruana's reluctance to admit that we are under threat from the global economic fall-out continues to concern major players in our finance industry.

In fact, Gibraltar faces the likelihood of an attack by Brown and other leaders at next week's G20 Summit of the world's leading industrial nations. The British premier has set his sights on what he perceives as "tax havens" and - in spite of Gibraltar's clean record and willingness to cooperate with the World Bank, OECD and the EU on the release of financial information - there ius a real risk that the Rock could be unintentionally pitch-forked onto the "tax haven black list" that Brown and US President Barak Obama have agreed to press for. 

"It is a situation to which the Chief Minister should pay much more attention than he appears prepared to do," a local financier told VOX. "He should be over there [in Britain] putting our case for exclusion from any black list."

Lasry declined to comment on this aspect of the financial situation, stressing instead that because the Rock's funds industry has largely avoided involvement in hedge funds - regarded by many as one of the causes of the global crisis - it has come out relatively well.

"Because the whole [funds]sector is undergoing upheaval, people have been forced to analyse the fundamentals, and they are now thinking carefully about where to invest and what types of fund they should invest in.," Lasry says. Investors and their advisors, particularly those based in London or Switzerland, have realised the advantages offered by the Gibraltar funds industry. These range from tax benefits and the absence death duties or capital gains tax to a sound but swift regulatory system and the fact that through its relationship with Britain, the Rock is a member of the EU".

Funds established swiftly

"The introduction of the Experienced Investor Fund regime (EIF) a couple of years ago allows funds to be established within a matter of days and with Gibraltar based in Europe the fund has unique fiscal and regulatory advantages over a number of other offshore jurisdictions, not least being able to take advantage of the Parent Subsidiary directive," he added.

Following the introduction of the EIF there had been a substantial growth in the Gibraltar funds industry. The number of funds established has grown at a compound rate and funds now range from $1million to over $1billion. They invest in all areas of the world including America, Europe, Eastern Europe and the Middle East with investors in a number of different jurisdictions.