EU and Switzerland Sign Historic Tax Transparency Agreement

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EU and Switzerland Sign Historic Tax Transparency Agreement
Foto: hierher. La UE y Suiza firman un acuerdo histórico de transparencia

The EU and Switzerland signed a historic new tax transparency agreement, which will significantly improve the fight against tax evasion. Under the agreement, both sides will automatically exchange information on the financial accounts of each other’s residents from 2018. This spells an end to Swiss bank secrecy for EU residents and will prevent tax evaders from hiding undeclared income in Swiss accounts. The agreement was signed yesterday morning by Commissioner Pierre Moscovici and Janis Reirs, Latvian Minister of Finance on behalf of the Latvian Presidency of the Council for the EU, and by the Swiss State Secretary for International Financial Matters, Jacques de Watteville.

Pierre Moscovici, European Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “Today’s agreement heralds a new era of tax transparency and cooperation between the EU and Switzerland. It is another blow against tax evaders, and another leap towards fairer taxation in Europe. The EU led the way on the automatic exchange of information, in the hope that our international partners would follow. This agreement is proof of what EU ambition and determination can achieve.”

The automatic exchange of information is widely recognized as one of the most effective instruments for fighting tax evasion. It provides tax authorities with essential information about their residents’ foreign income, so that they can assess and collect the taxes that are due on them.

Under the new EU-Swiss agreement, Member States will receive, on an annual basis, the names, addresses, tax identification numbers and dates of birth of their residents with accounts in Switzerland, as well as other financial and account balance information. This new transparency should not only improve Member States’ ability to track down and tackle tax evaders, but it should also act as a deterrent against hiding income and assets abroad to evade taxes.

The new EU-Swiss agreement is fully in line with the strengthened transparency requirements that Member States agreed amongst themselves last year. It is also consistent with the new OECD/G20 global standard for the automatic exchange of information.

The Commission is currently concluding negotiations for similar agreements with Andorra, Liechtenstein, Monaco and San Marino, which are expected to be signed before the end of the year.

BNY Mellon Ranked as the Top Mutual Fund Service Provider in 10 Categories

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Foto cedidaJosé Ignacio Goirigolzarri, presidente de Bankia, durante la Junta General Extraordinaria de Accionistas de Bankia . Los accionistas de Bankia aprueban la fusión con CaixaBank

BNY Mellon has been ranked as the top mutual fund service provider in 10 categories in the 2015 Mutual Fund Service Guide.

This year’s guide ranked BNY Mellon as the top:

  • Subaccounting services provider in all categories;
  • Full service transfer agency provider, ranked by number of clients;
  • Hedge fund services provider, ranked by total alternative fund assets under administration;
  • Hedge fund services provider, ranked by assets under administration;
  • Custody services provider, ranked by total custody assets
  • Custody services provider, ranked by unit investment trust assets; and
  • Custody services provider, ranked by number of Exchange-traded funds (ETFs).

“These rankings underline our strong position as a leader in the fund services arena, including traditional mutual funds, alternatives, and ETFs,” said Robert Mathisen, head of U.S. Financial Institutions for BNY Mellon.  “Our focus on continuous improvement in technology, service and developing integrated solutions for our clients has been reflected in our strong rankings.  It’s important to note that our highly ranked performance has been consistent, as we have achieved these top rankings for up to five years in some categories.”

The Mutual Fund Service Guide has been providing comparative analysis of mutual fund service providers since 1986. The guide surveys and ranks mutual fund service providers in the categories of fund accounting, transfer agency, subaccounting and custody. Additionally, it provides data on hedge fund services, regulatory and compliance services, and shareholder communication services.

GBI Expands Into Asia

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Gold Bullion International (GBI) has announced the appointment of Jammy Chan as Head of Business Development for Asia. Mr. Chan will be responsible for sales and marketing of the firm’s precious metals solutions in Asia and will be based in Hong Kong.

“The investment appetite and sophistication for physical gold ownership are at an all-time high,” said Jammy Chan. “GBI offers a comprehensive solution for physical precious metals investment, featuring a robust platform for purchasing, global vaulting and insuring a wide range of products. GBI works with some of the largest wealth management firms in the United States and is looking to do the same in China. In fact, in the short time I have been at GBI, we have already added our first Hong Kong based wealth customer and are in a number of discussions with some of the region’s most prestigious institutions.”

Asia accounts for about two-thirds of global gold demand — with China and India the world’s top two consumers. These two countries alone account for about half of the world’s demand for gold.

Mr. Chan comes to GBI after four years as Head of Investment in China with the World Gold Council. He has held senior business development positions with Huaan Asset Management, Amundi and Fidelity. Over his 16 year career, Mr. Chan has covered business in the Greater China region from Hong Kong and also with onshore bases in Beijing and Shanghai. Mr. Chan earned a Bachelor’s Degree in finance from the University of Hong Kong and his MBA from Imperial College in London with full scholarship.

“We are very excited to expand our business into China, where gold is such an important asset class,” said Steven Feldman, Chief Executive Officer and co-founder of GBI. “We continue to replicate our strategy in more regions around the globe. While our focus remains the wealth business, we are also launching GBI Direct internationally, often with local partners. Our Asian launch follows our recent debut in the Middle East, and having Jammy Chan on board makes us very confident that this region will be a great success.”

GBI is the leading institutional precious metals provider to individual investors and the wealth management industry. GBI’s technology and operations platform allows investors to acquire and manage their physical precious metal assets directly through their existing wealth management or e-commerce relationships, as well as directly through GBI Direct.

Former Director of Pershing Latin America Division Joins FlexFunds

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Former Director of Pershing Latin America Division Joins FlexFunds
CC-BY-SA-2.0, FlickrFlorent Rigaud nuevo director de la compañía con sede en Miami bFlexFunds - Foto cedida. Ex-director de la división de Pershing Latinoamérica se une a FlexFunds

Florent Rigaud, former Director of Pershing Latin America Division, recently announced his decision to accept the position of Director of Miami-based company, FlexFunds, working with asset managers on creating their FlexETP.  FlexETP, a comprehensive vehicle for investment management and distribution, is wrapped and dispensed through a Euroclearable listed security, providing price (NAV) calculation and distribution, ISIN/CUSIP, Bloomberg page, trustee and audit services.

“This transition comes at a crucial time in the finance industry, where asset managers seeking custodial services, administration, and distribution, tend to undergo a process that dissuades growth and development by requiring more internal resources,” states Florent Rigaud. “With FlexETP, you benefit from a turnkey solution, quickly and easily establishing one of the most advantageous and flexible vehicles for raising capital and managing underlying assets. As the new Director of the New York office, I am thrilled with this opportunity and excited to witness FlexETP become a household name,” adds Florent Rigaud.

Mario Rivero, Director and Head of the FlexFunds Miami office, states, “It is a great privilege to welcome such an accomplished addition to our team. Florent is already proving himself to be a great asset, bringing with him 20 years’ experience in the industry with an established reputation in the region.”

Doug Ostrover, One of the Three Founders of Blackstone’s GSO, to Step Down from Firm

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Blackstone announced that Doug Ostrover will step down as a Senior Managing Director of Blackstone and will become a Senior Adviser to the firm. Mr. Ostrover was, along with Bennett Goodman and Tripp Smith, one of the founders of GSO, Blackstone’s alternative credit platform. Blackstone acquired GSO in 2008 and it now has assets under management of $75 billion. Mr. Ostrover intends to found a family office to invest capital and work alongside management teams.

Bennett Goodman and Tripp Smith,the co-heads of GSO, said, “Doug has been our great friend and colleague for the last 25 years. The success of GSO as the leading alternative credit platform in the market today is in no small measure the result of Doug’s creative thinking and energy. While we will miss him as a colleague, we are delighted that we will still have the benefit of his advice and counsel as a Senior Adviser.”

Stephen A. Schwarzman, CEO, Chairman and Co-Founder of Blackstone, added, “On behalf of all of us at the firm, I want to thank Doug for his many contributions to Blackstone and GSO. He leaves behind a deep bench of finance professionals at GSO, whom he helped mentor and train over the years. I wish him well in the next stage of his career and I am glad that he is keeping a continuing affiliation with the firm.”

Before co-founding GSO in 2005, Mr. Ostrover was Chairman of the Leveraged Finance Group of CSFB. Mr. Ostrover received a BA in Economics from the University of Pennsylvania and an MBA from the Stern School of Business of New York University.

Bank Degroof and Petercam Sign Final Merger Agreement to Create an Independent Leader in Belgium

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Bank Degroof y Petercam se fusionarán creando la mayor entidad financiera independiente de Bélgica
CC-BY-SA-2.0, FlickrPhoto: Willy Verhulst. Bank Degroof and Petercam Sign Final Merger Agreement to Create an Independent Leader in Belgium

The reference shareholders of Bank Degroof and Petercam signed a definitive merger agreement on May 2015 following the successfully completion of the due diligence phase initiated after the signing of the Memorandum of Understanding on 19 January 2015.

By signing, Bank Degroof and Petercam formally engage in creating a leader at the service of its clients. With assets under management of over 50 billion, the new entity becomes the reference independent financial institution in Belgium with a leading position in its three businesses (private banking, institutional asset management and investment banking) and a leading player in Europe.

The Merger Agreement provides that the merger will be preceded by transactions in each group in order to align the shareholder base and the activities of the new group.

Bank Degroof will transfer – through a partial demerger – its long-term equity portfolio in a new entity called Degroof Equity. In parallel, the family shareholders of Petercam will constitute a new company called Holding Petercam to which they will contribute their shares and acquire Petercam shares available for sale, bringing their stake in Petercam to approximately 70%.

The combination of the two companies will be effected through a merger involving the transfer of all assets and liabilities of Petercam to the legal entity Bank Degroof, which will allow the new group to maintain its banking license. The merged entity will issue new shares to the shareholders of Petercam based on a valuation of 70% for Bank Degroof and 30% for Petercam.

Immediately after the merger, Bank Degroof ‘s reference shareholders will bring in their shares in the merged entity into a holding company called DSDC.

After the merger, the capital ratio Basel III (CET1) of the new group will amount to minimum 15%. The shareholdings will be allocated as follows: ca 50 % DSDC and minimum 20% Holding Petercam. The balance will be held by the former partners of Petercam, the management and staff, the financial partners and by the company itself. A shareholder agreement will be established between DSDC and Holding Petercam.

The board of Bank Degroof Petercam will be composed of seven members of the executive committee, two independent directors, five members proposed by DSDC, and three by Petercam Holding. The board will be chaired by Alain Philippson.

The teams are jointly working to finalize the organizational model of the future group activities by capitalizing on their complementary services and expertise to strengthen and expand its offering to the clients. The integration and the actual organization of the group.

Guy Wagner, CIO at Banque de Luxembourg: “Hopes of Faster Economic Growth Likely to Be Disappointed”

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With GDP growth significantly lower in the United States, slightly better economic figures in Europe, no clear trend in Japan and continuing weakness in emerging markets: as has been the case in recent years, hopes of an upturn in economic growth may well be disappointed again this year. This is the view of Guy Wagner, Chief Investment Officer at Banque de Luxembourg, and his team in their monthly analysis, ‘Highlights’.

Despite In the United States, GDP growth came in significantly below expectations in the first quarter, mainly due to difficult weather conditions during the winter and strikes at the country’s west-coast ports. In Europe, economic statistics improved slightly thanks to the weakness of the euro, despite fewer positive economic surprises since the beginning of April. In Japan, economic activity is still not displaying any clear trend, while in emerging markets it is continuing to slacken. “As has been the case in recent years, hopes of an upturn in economic growth may well be disappointed again this year,” says Guy Wagner, Chief Investment Officer at Banque de Luxembourg and Managing Director of BLI – Banque de Luxembourg Investments.

Stable oil prices have stemmed a further drop in inflation rates

With the stabilisation of oil prices, inflation rates have consolidated at low levels. In the United States, inflation dipped from 0% in February to –0.1% in March, while in the eurozone, the inflation rate rose from –0.1% in March to 0% in April. The Chinese central bank has reduced the commercial banks’ required reserve ratio. The US Federal Reserve has not given any further indications about a timetable for a first interest rate rise. As a result, analysts are not expecting the Federal Reserve’s first rate hike until September at the earliest. In Europe, the ECB is continuing to buy up government bonds at the rate of EUR 60 billion per month. In China, the central bank reduced the commercial banks’ required reserve ratio from 19.5% to 18.5% and is preparing to accept debt issued by regional governments as collateral.

Government bond yields are rising in Europe and the United States

In April, eurozone government bond yields rose. The upturn in yields in Germany, Italy and Spain seems to have been triggered by short positions adopted by hedge funds in view of the paltry level of almost all bond yields in the eurozone. Bond yields also rose in the United States. “Despite the rise, European long rates still lack appeal. US government bonds are the only viable alternative in industrialised countries given that they still have potential to appreciate if economic activity slows further,” asserts the Luxembourg economist.

Equities remain the default investment

US and European stock markets held their high levels in April, while Japanese and Asian stock markets even continued to rise. According to Guy Wagner: “Given the good performance of most shares since the start of the year, a stock market correction at the beginning of the May to October period – a time historically less favourable for stock markets than November to April – would not be particularly surprising.” Unless there is an external shock, equities should maintain their status of investment by default due to the ongoing prospect of a zero interest rate environment for the coming months.

Net UCITS Assets Reach EUR 9 Trillion Mark for the First Time

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The European Fund and Asset Management Association (EFAMA) has today published its latest Investment Funds Industry Fact Sheet, which provides net sales of UCITS and non-UCITS for March 2015.

27 associations representing more than 99.6 percent of total UCITS and non-UCITS assets at end March 2015 provided us with net sales and/or net assets data.

Net assets of UCITS break through the EUR 9 trillion mark for the first time in March 2015, while Net sales of UCITS remained strong in March attracting EUR 69 billion in net new money, albeit down from EUR 87 billion in February. This reduction in net sales can be attributed to a turnaround in net flows of equity funds and money market funds during the month.

Long-term UCITS (UCITS excluding money market funds) registered a second consecutive month of net inflows of EUR 71 billion in March: Bond funds posted net sales of EUR 26 billion, being the same level as February; Equity funds experienced net outflows of EUR 3 billion, against net inflows of EUR 14 billion in February; And Balanced funds registered a jump in net inflows to EUR 39 billion, up from EUR 22 billion in February.

Money market funds registered a turnaround in net sales in March to post net outflows of EUR 2 billion, compared to net inflows of EUR 16 billion in February.

Total non-UCITS net sales amounted to EUR 18 billion, compared to EUR 21 billion in February.  Net sales of special funds (funds reserved to institutional investors) decreased to EUR 12 billion during the month from EUR 16 billion in February.

Total net assets of UCITS stood at EUR 9,004 billion at end March 2015, representing a 2.5 percent increase during the month.Total net assets of non-UCITS increased 2.3 percent to stand at EUR 3,547 billion at month end.  Overall, total net assets of the European investment fund industry stood at EUR 12,551 billion at end March 2015.

Bernard Delbecque, Director of Economics and Research commented: “Long-term UCITS continued to attract strong net inflows in March thanks to a leap in net sales of balanced funds, which continued to attract investors by providing broad market, asset class and sector diversification.”

Investors Selectively Lowering Risk After Bond Sell-off

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Global investors have less appetite for higher risk exposures, particularly in the U.S., according to the BofA Merrill Lynch Fund Manager Survey for May.

While a net 47 percent of respondents remain overweight equities, this is down seven percentage points month-on-month. Appetite for U.S. stocks has declined to a net 19 percent underweight, in contrast to strong overweights across Q1. Confidence in corporate profitability has also fallen, with only 7 percent of investors viewing the U.S. as the region with the most favorable earnings outlook. Long U.S. dollar remains investment markets’ most crowded trade, in fund managers’ view. However, the survey’s 41 percent reading on this measure has fallen sharply from last month.

At the same time, overweight cash positions have risen sharply. This month’s reading of a net 23 percent is the survey’s highest since December 2014.

These shifts follow the recent aggressive sell-off in bond markets. The survey shows a strong rise in panelists’ assessment of bonds as the asset class most vulnerable to volatility in 2015 – up to 56 percent. Bond underweights have also increased.                            

Investors’ macroeconomic views have changed little since last month. A net 59 percent still expect the global economy to strengthen this year, though forecasts of corporate profitability have fallen a little. Seventy percent of respondents see both growth and inflation remaining below historical trends over the next 12 months.

They are increasingly divided over the timing of a U.S. rate rise, however. Almost as many now see this in 4Q as in 3Q – 36 percent versus 45 percent, respectively.

“There is no loss of faith in economic recovery, and positioning still assumes that the U.S. dollar goes up, but doubts are creeping in – hence this jump in allocation to cash,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research. “Investors are keeping faith with European stocks for now, but this remains biased towards currency plays,” said James Barty, head of European equity strategy.

Europe and Japan still preferred

In contrast to their reduced conviction towards U.S. equities, which a net 39 percent now intend to underweight over the next year, investors remain positive on both Europe and Japan – both economies where quantitative easing continues. A respective net 49 and 42 percent of fund managers are overweight the two markets.

Europe also remains the market most would like to overweight from a 12-month perspective. A net 33 percent still take this position, although this is now down as much as 30 percentage points from March’s very strong reading.

A net 18 percent make Japan their top pick for the coming year. This is a slight decline from last month.

At the same time, fund managers are less negative on emerging markets. Only a net 6 percent are now underweight, compared to April’s net 18 percent. Intention to own emerging markets stocks over the next year has risen similarly.                           

U.K. picks up

Britain’s recent decisive election result is reflected in investors’ more positive stance on U.K. assets. Global investors have halved their equity underweights month-on-month, while a net 3 percent of European fund managers now intend to overweight the U.K. market over the next 12 months. Last month, a net 50 percent said they would underweight it over this time period.                     

Similarly, views of sterling as overvalued have fallen notably. Only a net 8 percent of global fund managers now take this stance, compared to April’s net 15 percent.

Currency correlation

Investors’ stance on the major currencies correlates with their equity positioning. A net 69 percent expect the U.S. dollar to appreciate over the next 12 months. This is up slightly from April’s reading. In contrast, a net 32 and 35 percent expect the Euro and yen to decline. Yen bearishness has risen by 16 percentage points since March.

Bullishness on oil has fallen, meanwhile. Fewer than half of fund managers now expect the commodity to trade at a higher price in 12 months’ time. This is down significantly from April and March’s reading of 64 percent. 

Japanese Private Capital Interested in Investing in Peru

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El private equity japonés se interesa por Perú
Photo: José María Mateos . Japanese Private Capital Interested in Investing in Peru

Mr. Carlos Herrera, Executive Director of Proinversion, the Peruvian Investment Authority concluded a successful investment roadshow in Tokyo on Friday, which also included Beijing and Seoul. The government delegation was joined by over 80 attendants at the Mitsubishi Bank Office and had more than 10 bilateral meetings with private investors and conglomerates, all of who were keen to discuss investment opportunities in Peru.

The conference, organized with the support of the Peruvian Embassy in Japan and the prestigious Japanese Bank of Tokio-Mitsubishi UFJ, was inaugurated with an introduction by Peruvian ambassador Elard Escala, highlighted the more than 140 years of diplomatic relations and the fact that Japan is Peru’s fifth largest trade partner. He noted the favorable investment conditions for foreign capital such as the equal conditions for foreign and domestic investors and the solid legal framework to protect assets.

The Managing Director for the Lima branch of the Bank of Tokyo-Mitsubishi, Kohei Hoshide, gave a presentation on the general state of the Peruvian economy. He emphasized, “With their economic reforms, solid growth projections and political stability, Peru is one of the leading and most attractive investment destinations for Japanese businesses and private investors.”

Carlos Herrera, Executive Director of Proinversion, presented to Japanese businesses and investors some of the many projects available for private investment in the Agency’s portfolio of infrastructure projects and explained the way in which the private investment and tender process works in Peru. He exhibited several projects such as Lines 3 & 4 of the Lima – Callao metro, the Huancayo – Huancavelica railway and several regional roads. He included also the calls for tender that are open such as for the construction of electricity generation plants, correctional facilities, real estate and solid waste treatment plants. Mr. Herrera concluded: “the visit to Tokyo has been a great success, proving that there is an ever increasing interest from Japanese companies in doing business in Peru, due to a like-minded approach of transparency and public responsibility.”