Guernsey attracting more Russians, Guernsey Finance says
Guernsey is attracting an increasing number of Russian asset owners as initiatives to build a relationship with the country begin to bear fruit, says Guernsey Finance (GF).
Chief executive Fiona Le Poidevin says the Russian market has been opening up over the past couple of years and many investment funds managed by large Russian players such as VTB, Renaissance and Baring Vostok have now established their own operations on the island or work with local service providers.
Guernsey is also attractive for Russian high net worth individuals and family offices, many of which use offshore trusts, foundations and other structures to protect their assets.
“Guernsey is particularly attractive for some Russian businesses looking to access the London and European markets because of its listing capability, as it has the largest number of non-UK companies compared to any other non-London market,” she explained.
It is true that much Russian wealth still remains in the country, partly due to the ‘spend now’ mentality and the underdeveloped structure of the institutional investment market. But this market immaturity offers “much more potential for the future,” Le Poidevin thinks.
She hopes that the new foundations law expected to be introduced in Guernsey in the coming months the fund centre will become even more attractive to Russians. Russia is a civil law jurisdiction, and is therefore likely to find the foundation structure more appealing.
A foundation allows the asset owner to have more control over his assets, which in a trust are held in the hands of a trustee. Instead of a settler to settle the funds into the trust, a foundation uses a founder.
Additionally, a foundation structure would be more appealing for Russian asset owners for tax reasons, since income generated from a foundation is treated in the same way as corporate earnings.
Le Poidevin and her team visited Moscow back in March, where they met with investment managers, private banks, accounting firms and law firms to raise the profile of the Island as an international funds centre. Communication has also been increasing between the regulators in Russia and Guernsey.
The overall value of funds under management and administration in Guernsey was above £270bn at end of March, which marks a 2.4% increase year on year.