Corporate Service Providers are a dynamic and rapidly growing sector providing a wide range of administration and fiduciary sevices to investors and managers of funds, corporates and private wealth throughout the world. The sector is rapidly consolidating with multi-jurisdictional businesses operating across established and emerging finance centres both onshore and offshore.
There are large public players, but private capital has been the driving force in the development of the sector, attracted by the long-term customer relationships, increasing demand for outsourcing, opportunities for economies of scale and potential benefits of automation and digitisation.
The pace of consolidation is accelerating with the emergence of a small group of very large players. There are also public to private transactions and IPO activity.
However, realising the potential benefits of consolidation has been more challenging than expected for some firms. The investment required in technology and integration needs to be matched with suitable skills and capability that are not readily available.
In addition, the regulatory environment for these firms is complex. With a significant number of regulated activities in multiple regulated jurisdictions across the world, regulators have yet to formalise the lead regulator concept for the sector. Effectively managing risk, reputation and local responsiveness requires increasing sophistication from firms especially when they are responsible for very substantial assets under administration throughout the world.
Key challenges faced by the sector include:
Meeting and exceeding rapidly evolving customer demand for responsive, customised service which is digitally enabled.
Demonstrating to regulators that increasingly stringent AML/CFT, ABC and sanctions requirements are met around the world, particularly when serving a highly international and privacy focussed clientele.
Obtaining sufficient scale and breadth to service the most complex client needs whilst keeping costs down against a backdrop of fee pressure for clients.
Managing risk and complexity across the business when a contentious matter in a single client structure can incur significant liability and consume management time.
Creating a unifying culture across organisations rapidly assembled through acquisition where competition for talent is fierce.
Delivering the scale of technology investment and implementation to enable leading edge performance and reduced cost to serve.
Achieving the growth in revenue and particularly EBITDA to support the historically high multiple valuations paid by investors.
We supported a tier 1 bank in the remediation of its related trust company client base under intense regulatory scrutiny.
Following a decision to exit the jurisdiction and certain client regulatory issues, the trust company was required to undertake a full remediation programme with limited management and team capacity.
We established and ran the PMO reporting to the responsible country executive, line of business and regional leadership stakeholders. We resourced and delivered the review and remediation activity across the business under a high level of regulatory oversight. We developed the business’ wind down and liquidation plan.
We provided support to the client throughout the remediation, wind down and closure process. We are currently liquidating the residual business under court supervision with a number of litigation matters and are continuing to engage with regulators and bank leadership.
Project management
A regulated fund management company with a large number of corporate and unit trust fund structures which had reached the end of their lives. There was also a shortage of management resources and expertise to conclude the wind downs.
We were approached to act as retained liquidators and restructuring advisors to project manage the wind down and liquidation of the portfolio.
We reviewed the specific issues relating to each entity or structure and advised the client at each stage of the process on the most efficient means of winding it down. This included advice on a range of scenarios involving both solvent and insolvent entities, both with the local management team and with individuals in other parts of the group where necessary. We acted as liquidators to numerous Guernsey companies, coordinated liquidation of companies in the BVI and advised the directors on the steps required to terminate the trusts.
Investigations
Following a change of management, a trustee identified certain concerns with historical record keeping and activities within administered trusts.
We were appointed to support the trustee in investigating a number of trust structures spanning a number of decades.
By forensically reconstructing the transaction history, we supported the trustee’s consideration of who should be considered the settlors of the trusts with related implications for tax status, reporting and liabilities, market manipulation and other potential financial crimes in multiple locales.
Our work enabled the continuation of the business and for new management to maintain the confidence of the regulator while dealing with the multiple challenges arising from such issues.
There are a number of continuing and potential regulatory and law enforcement activities drawing on the output of our work.
