Internaxx’ client location, allocation shifting

Annemarie Jung, chief executive of Internaxx, the Luxembourg based provider of offshore banking and broking services, has said that the company is noticing a shift in the source of new clients away from its original core European markets of Belgium, France, Netherlands, Germany and Luxembourg.

With clients in some 150 countries, Internaxx is no stranger to a broad geographical spread to its business. However, Jung said that clients increasingly are likely to come from further afield, including the Asia Pacific, Middle East and South Africa.

Alongside a change in the overall client base, there has also been a noticeable trend in asset allocation.

Currently this is felt in terms of a move toward more liquid assets. Cash holdings on average are up, despite the still high levels of exposure to equity. Overall, equity holdings have been turning toward, for example, Asia rather than Europe.

Also on the point of liquidity, there has been some capital flight seen out of peripheral Europe, Jung said.

What has not occurred as yet is any noticeable change in the ratio of currency holdings. Internaxx allows clients to hold multiple currencies in their portfolios.

Education

Internaxx remains committed to a programme of client education, Jung added, because it serves clients in multiple jurisdictions, it is important to ensure that they are up to speed on issues that affect them.

One of these is RDR, the UK’s Retail Distribution Review. While Internaxx may be operationally prepared for this – it is part of Canadian TD Bank Group’s European businesses, along with TD Direct Investing in the UK – the actual impact of such a regulatory shift may not actually be felt by the client, for example, living in Luxembourg.

Others, such as FATCA are being tackled by a working group within TD at a global level.

Fiscal differences between jurisdictions create an information arbitrage opportunity. Internaxx wants to take advantage of that, and is working on developing additional client solutions.

The much discussed Financial Transaction Tax as well as pending new wealth taxes create particular challenges regarding the French market. What is not yet clear, she suggests, is whether the location of a trade will be the crucial deciding piece of information in deciding whether to apply the FTT. An estimated 60% of trades take place in North America, Jung said, versus a much smaller proportion in France. Therefore the overall impact is yet to be determined, but is likely to be smaller.

 

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