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Owning Distressed Debt Outside of the United States: the Ying and the Yang of Risk and Reward

The Case for Investing Abroad

Proponents of investing in distressed debt abroad can point to several advantages. First, foreign debt, especially in emerging markets, can have greater upside. Competition is less intense due to the higher level of research required. As a rule, buyers of debt exhibit a local country bias, preferring to buy issues of local companies that they know. This bias creates more liquidity in developed markets, which have deeper institutional markets. Foreign markets are much thinner, especially as credit quality declines. Local institutional buyers, such as pension funds, face legal restrictions that prevent them from investing in distressed debt. Hedge funds and absolute return investors are less plentiful. The shortage of investors results in a greater liquidity premium and more opportunities for adding value through research and exploiting the mispricing of debt. Second, covenants in bond indentures are often stronger. Investment banks demur from underwriting and investors balk at buying deals without extra protections, either in the form of additional security or restrictions on company behavior. Lastly, credit rating agencies penalize companies for country risk. An investor simply receives better credit quality for the same credit rating by investing abroad.

The Pitfalls

Detractors point to the complexities of investing abroad. Because markets are thin, liquidity dries up when markets are under duress and may not exist when an investor needs it. Currency risk necessitates knowing the denomination of a company’s revenues, expenses, and liabilities, which may be in different currencies and lead to a deterioration of profitability when one currency appreciates. Understanding a foreign culture and the local market can be a challenge. Legal systems are slower and often favor the local debtor. Corruption is a concern, leading to the disappearance of funds and unpredictable legal outcomes. Insiders often dominate corporate boards, limiting independence and affecting the quality of corporate governance. Labor laws may guarantee wages, pensions, and severance payments, effectively subordinating creditor claims to the claims of workers. The bottom line is a more difficult decision with many more variables, many of which are unknowable, and greater uncertainty.

The Anecdotal Evidence of Credit Spreads

What does the evidence tell us about the relative value of foreign markets? Most evidence is recent and anecdotal. Relative credit spreads offer the best metrics. BCP Securities surveyed emerging market credit spreads relative to those of the United States in January 2010. In Mexico, Brazil, and Chile, BBB credits traded at slightly tighter credit spreads than did comparable issues in the United States. In Brazil and many other emerging markets, the same pattern of tighter credit spreads held true for BB issues. But once credit quality deteriorated to B, emerging market issues traded wide of U.S. issues by 100 to 300 basis points, depending on the country. The conclusions are a lack of demand for distressed debt and investor concern about bankruptcy risk in emerging markets.

Two Models of Corporate Restructuring

The United States and foreign markets follow two different models of corporate restructuring. In the United States the restructuring process is well-defined. Bondholders and the debtor have the option of negotiating an out-of court restructuring or seeking resolution in bankruptcy court. An out-of-court restructuring usually takes the form of a distressed exchange, which grants the debtor extra time or reduces debt in exchange for additional collateral or equity. Bankruptcy filings are costly but prioritize debtor claims according to seniority in the capital structure and allow the debtor to operate under the protections of the bankruptcy court until the emergence from bankruptcy. In either case the outcome usually includes a reduction in debt, a rationalization of the capital structure, and a transfer of the equity ownership of the company from the shareholders to the debt holders.

In foreign markets, especially in emerging markets, the process is more opaque. Equity ownership rarely changes hands. Rather debt holders agree to extend or restructure debt, usually outside of bankruptcy, without gaining equity. Private ownership, especially by wealthy families, is much more common as opposed to public equity. Families are loath to surrender control or grant minority stakes. The bankruptcy process abroad is slower and more uncertain. From the creditor perspective, the poster child of the failed foreign bankruptcy is the case of Altos Hornos de Mexico, which has gone through three unsuccessful negotiations and ten years of bankruptcy. Three times the controlling shareholder reached a restructuring agreement with creditors and three times he withdrew his support at the last minute to continue operating the company as he pleased with negligible court supervision.As a result, negotiations occur outside of bankruptcy with the equity holder holding the advantage at the negotiating table. For the debtor, the reasons to resolve the default and restructure the debt are reputational and the desire to access the debt markets in the future.

The difference in process can lead to outcomes uncommon in the United States. Creditors may gain the right to appoint independent directors while the board is the exclusive preserve of shareholders for domestic companies. During tender offers foreign law often negates the right of smaller bond holders to hold out and demand payment of their bonds on the original terms, allowing debtors to cram down all debt holders at the same time. The concept of equitable subordination, which protects creditors against shareholders using debt purchases to manipulate the bankruptcy, does not exist. Holding company/subsidiary guarantees are less meaningful.

The Strategy of Successful Investors

Despite the minefield of potential issues, many investors succeed in investing abroad. What are their secrets? First, they ask the age-old questions about the viability of the business and the competence of management. No amount of financial engineering will rescue a business from bad management and poor execution while good management will take advantage of what opportunities exist. Next, successful investors evaluate the incentives and character of management and the controlling shareholders. Distressed companies fall into two groups: those with morally corrupt ownership and those with concerned, responsible owners going through a tough period. Successful investors spend a great deal of time shunning the former and seeking the latter. Country risk is another component. The objective is to find a good company when a country is in trouble. If the company is well-run, it should survive the hard times and appreciate in value once the economy recovers. The ability of the government to support the private sector is another factor. A country with deep foreign currency reserves has greater ability to support industry than a country that does not. Lastly, the successful investor prefers a just and efficient legal system in order to fairly balance the rights of creditors and shareholders.

Thomas P. Krasner is Principal and Portfolio Manager at Concise Capital

McCombie Group Relies on Club Deals to Provide Value Added Services to its Clients

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McCombie Group se apoya en los club deals para aportar más valor a sus clientes — From left to right, David McCombie, Michael Hoyos, and Jay Lipsey. Courtesy photo. McCombie Group Relies on Club Deals to Provide Value Added Services to its Clients

McCombie Group began as a consulting firm, advising High Net Worth Families with their direct private equity investments, although over the years, the collaboration with those Family Offices which they serve has led them, without losing sight of their origins, to focus on club deals in order to provide their clients with added value, as David McCombie, founder and CEO, explained in an interview with Funds Society.

At McCombie, they believe that in addition to contributing with good investment advice to the growth and preservation of their client’s capital, they can also assist it through “good business deals to which the Family can provide their expertise. “Undoubtedly, club deals, especially between high net worth families are other routes which increasingly contribute to define their investment strategies, and which also offer them control and potential value.

To that end and for a while now, McCombie has been organizing bimonthly breakfast meetings to which several families are invited in order to exchange ideas and projects; these are always private and confidential affairs. Attendees bring to the table those businesses or opportunities which they have come to know through their business and contact networks in order to assess their feasibility and interest and add synergies.

“Finding a good business is hard, and on average it may take 18 to 24 months to close a deal, but good opportunities arise from this kind of ‘show & tell’… especially through the experience of those people present,” McCombie said.

The proposals are many and varied and the executive knows that it is not just a matter of putting the business or opportunity on the table, but that the project must be matched with the right investor; McCombie also co-invests with the family or families, so that their capital contribution adds greater confidence to the operation. “We do not offer any business deal in which we are not going to contribute money,” he said.

Likewise, he pointed out that finding a good business is difficult, and more so if you are looking for one or more families to add value to the operation. Unless that is the case, they do not push the project because at McCombie they are convinced that in order for the investment to come to fruition, it must be made on the strategic investor’s side.

The executive emphasized that the investment is much more conservative than that of a traditional private equity company, with lower risks but in good companies which guarantee capital preservation. As to which sector they are aimed at, McCombie explained that they focus “on the least exciting industries in the business world, but where there is less competition and more affordable prices.”

For the company, families have much more value to bring to the table in these club deals than in private equity or than in traditional investment arrangements, because, unlike traditional private equity, to be sold over a period of a few years, the project here involves a longer term. “Sometimes, forcing a sale does not make sense… it’s much easier to buy than sell… We are thinking of building a platform that lasts decades. It must be done right, built well, and contemplated on a long term basis.”

Since its founding, McCombie Group has worked with over 20 families; most of them are Latin American, although they would like to gradually distribute that weight 50/50 with American families. The company, located in Miami, offers services which span the life cycle of the investment, from its study and analysis of agreements, negotiation strategy, due diligence, and company monitoring, to business development and consulting.

Sun Life Financial Introduces Roland Driscoll as Head of International Sales

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Roland Driscoll, nuevo gerente de Ventas Internacionales de Sun Life Financial — Photo: JLPC. Sun Life Financial Introduces Roland Driscoll as Head of International Sales

Sun Life Financial has appointed Roland Driscoll as the new Global Head of International Sales (Investments) for its Bermuda-based SLF International business unit (SLF International).

Through our SLF International business unit, Sun Life Financial provides offshore financial solutions specifically designed to meet the objectives and concerns of affluent and high-net-worth individuals residing outside of the United States, Canada or Bermuda. The SLF International investments sales teams and field offices in Dubai, Panama and Singapore will report to Roland.

“Under Roland’s leadership, the sales team will continue to represent and position our investment solutions for affluent and high-net-worth clients to the international financial advisor community with commitment, enthusiasm and certainty,” said Mark Rogers, Vice-President, International Investments Distribution, SLF International.

Andrew Darfoor, Senior Vice-President and General Manager, SLF International added: “We believe our integrated customer proposition, encompassing investment and intergenerational wealth transfer solutions, has huge potential for growth in all our markets. Roland brings a vast array of experience with him and will form an important part of the senior distribution team responsible for seeking out new growth opportunities and ensuring we are delivering a first class proposition to advisers and customers.”

With over 25 years of sales, distribution and offshore experience, Roland joins Sun Life from Old Mutual (Bermuda) Ltd., where he spent the last six years as Senior Vice-President, Global Distribution. Prior to Old Mutual, Roland was at JP Morgan Chase & Co. for over 20 years where he was involved in international sales management in a number of senior roles. Roland holds a Bachelor of Business Administration in Finance from Hofstra University and an MBA from Pace University.

New Issuance Trends in the European High Yield Market

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Europa sigue mejor que EE.UU. en high yield, aunque hay aspectos a vigilar respecto al destino de las nuevas emisiones — Ben Pakenham, portfolio manager of Aberdeen's Select Euro High Yield strategy. New Issuance Trends in the European High Yield Market

Aberdeen’s European high yield portfolio manager Ben Pakenham gives a brief overview of the high yield market with interesting insight over the quality of new issues.

How do you feel about the progress of the recovery in Europe?

Looking at the Purchasing Manager Index (PMI) measures, Europe is beginning to recover quite strongly, and importantly, we are seeing a convergence between the core and the periphery. Not only that, we have also seen a number of sovereigns that were previously barred from corporate or sovereign bond markets coming back to market, such as Greece. We are also seeing an increasing number of peripheral corporate bonds come to market which we think improves the solvency of those countries and companies overall.

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How do you think this will translate into bond market returns?

We don’t think that growth is going to be so strong that we see inflation rebound nor government bond yields spike dramatically. Unemployment remains rather high, and if anything, the ECB seems to be more concerned about deflation than inflation at present. So from that perspective, we think the government bond risk remains far more muted than in perhaps the US. Looking at spreads, today the European high yield market is still discounting that more than a fifth of the market will default over the next five years. However the very positive story driving high yield at the moment is that default rates are low and the outlook remains relatively benign. Moody’s forecast and outlook for default rates remains relatively muted; the best case scenario remains that less than 15% to the market will default over the next five years so we think that we are being well compensated for default risk.

Have improving economic conditions opened up the Euro-new issue market?

We believe The European high-yield market continues to grow and outstrip other high yield markets. We saw nearly 20 billion Euros of new issuance in the 1st quarter of 2014 and 25 new names added to the Merrill Lynch Index. New issuances for the first quarter ran at about 12% above the previous year and remember that 2013 was a record year in terms of issuance for the European high yield market.

How do you feel about the quality of the new issues in the European market?

 Year-to-date we believe the quality of issuance continues to be reasonably positive. In fact, the average rating is higher. When looking at last year, we have had more BB rated issuance and leverage levels (which is a function of the fact that we are seeing higher average ratings)have come down from about 4 turns on average in the new issue market in 2013.

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Anything to be cautious on with this strong new issuance trend?

The only slight negative I would say when looking at new issuance trends is that the use of proceeds is starting to be used for things other than refinancing. About half of the proceeds year-to-date have been used to refinance existing debts. However, compared to the previous year, a significant amount is being used for general corporate purposes. This would generally be cash on balance sheets to be deployed for either capital expansion programs or for selective M&A. This is something we are keeping a very close eye on. It is also worth pointing out that covenant quality is beginning to decline. Nevertheless we still think that the quality of new issuance remains good when compared against pre-2008 types of issuance. And when you look at the maturity profile, the amounts of debt coming due over the next two to three years remains very manageable. The trigger for default really doesn’t exist in the short to medium term in our opinion.

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Risk Aversion Applied to Space is Holding Back U.S. Leadership in the Space Race

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On the 45^th anniversary of the first flight to land humans on the moon, a new book explains why we haven’t been back there or anywhere beyond earth orbit in over four decades, and why the US is dependent on Russia for access to its own space station.

“Since the end of Apollo, space hasn’t been considered important enough to risk human life. The House recently passed a NASA authorization bill that said ‘safety is the highest priority.’ That means that everything else, including actual spaceflight, is a lower one. We’re apparently willing to spend billions on it, but that’s for jobs, not actual progress in space,” says Rand Simberg, author of the new book, Safe Is Not An Option: Overcoming The Futile Obsession With Getting Everyone Back Alive That Is Killing Our Expansion Into Space.

“Despite the fact that, to get our astronauts to ISS, we have to send millions of taxpayer dollars to Russia, which continues to act against our national interests, there seems to be no hurry to end our dependence on them. It’s apparently more important to Congress to not possibly lose an astronaut than to regain control of our own space destiny. Congress underfunds Commercial Crew and insists that NASA continue to develop it the old, expensive slow way that killed fourteen astronauts anyway, in the name of ‘safety.'”

He points out that had the US taken this safety obsession as seriously in the 1960s, it wouldn’t have sent astronauts around the moon in 1968, when the US won the space race, let alone landing them in 1969. “Buzz and Neil thought they had maybe a 50-50 chance of success, but they went, because it was important,” Simberg says. “If I were an astronaut today, I’d be outraged at Congress, that thinks I don’t have ‘the right stuff’ to support my country in space, or that what I’m doing is so trivial it’s not worth the risk.”

The book notes that space is the harshest frontier that humanity has ever faced in its history, and it is unrealistic to think that it will be opened for development and settlement without the loss of human life, any more than any previous one was. Simberg elaborates, “I’m not saying that we should be trying to kill people in space, or be reckless, any more than I like to see people die on the highways. But the only way to not have people die in space is to not send them. We should be doing so much there that deaths are just as inevitable as they are in any other human endeavor.”

The Roca Brothers will prepare Meals for BBVA’s U.S. Clients at Two Texas Art Venues

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Spanish financial services group BBVA has selected a pair of grand art venues to host its series of once-in-a-lifetime private client dinners prepared by the Roca brothers, whose restaurant in Girona, Spain, landed atop the influential World’s 50 Best Restaurants list last year.

The Rocas will prepare meals for BBVA’s U.S. clients next month at the Rachofsky House in Dallas and at Rienzi, the commanding former home of the arts patrons Carroll Sterling Masterson and Harris Masterson III that now houses the European decorative arts collection of the Museum of Fine Arts, Houston.

“These two venues are the perfect settings for our clients to enjoy the culinary journey the Rocas will take them on with their multi-course dinners,” said BBVA Compass Chairman and CEO Manolo Sanchez. “As an organization, BBVA has an emphasis on the arts, and the Rocas’ particular brand of gastronomy is precisely that: an art. It’s only fitting that the venues reflect the brothers’ creative and innovative approach to gastronomy.”

The Roca brothers — head chef Joan, sommelier Josep, and pastry chef Jordi — will shutter El Celler de Can Roca for five weeks to recreate their restaurant experience for clients in countries where BBVA operates, including the U.S., Mexico, Peru and Colombia.The U.S. events in Houston and Dallas kick off the tour with a series of dinners for clients of BBVA Compass, BBVA Group’s U.S. franchise. BBVA is sponsoring the chefs’ tour as part of its three-year partnership with El Celler de Can Roca.

The tour begins in Houston on Aug. 4, where the brothers and their staff will prepare dinner for 300 guests over the course of three days in Rienzi’s ballroom. The tour will conclude its swing through the United States on Aug. 8 and 9 at Dallas’ Rachofsky House, the private home of Cindy and Howard Rachofsky. Roughly 800 works of contemporary art — including American Minimalism pieces, post-war European art with a specific focus on Italy, and the art of post-war Japan — are on display in the Rachofsky home on a rotating basis.

Joan Roca is considered a pioneer in sous-vide, a cooking process where food is vacuum-packed and cooked in water. He developed the Roner, a professional sous-vide cooking device. Josep Roca, the sommelier, meanwhile, has won over critics with his unorthodox wine pairings and techniques. And Jordi Roca, the pastry chef, won the World’s Best Pastry Chef Award 2014. The judges called him “part chef, part architect, part magician” and an “eccentric but modest genius,” citing his work recreating famous perfumes in edible form.

China will Advance Ahead of Both the UK and Japan to Become the Second Largest Equity Market by 2030

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For the most part, emerging nation capital markets remain underdeveloped relative to the size of their economies, despite rapid growth in capital-raising over the past two decades. Emerging markets have a 39% share of global output (or 51% on a purchasing power parity basis) and yet account for only 22% of global equity market capitalization and a 14% share of both corporate and sovereign bond market value, respectively.

Credit Suisse believes this gap will close, driven by a disproportionately large contribution from emerging equity and corporate bond supply (as company capital structures benefit increasingly from lower financing costs via disintermediation of bank loans) and demand (driven by growth in domestic mutual, pension and insurance funds), given relatively high savings ratios prevalent among emerging economies.

In 2030, the United States will retain its ranking as the largest global equity market with a (nominal dollar) capitalization of USD 98 trillion, with a weight of 34.6% (representing a USD 74 trillion gain since 2014), while China advances ahead of both the UK and Japan to become the second largest equity market with a USD 54 trillion capitalization and a weight of 18.9% (representing a USD 50 trillion nominal gain from 2014).

In the proprietary study of Credit Suisse Research Institute “Emerging Capital Markets: The Road to 2030”, the firm extrapolates established historical patterns of growth in emerging and developed capital markets to assist in projecting their absolute and relative dimension and composition of market value by the year 2030.

And Credit Suisse finds a strong relationship between the historical expansion of developed nation aggregate equity and corporate bond market value relative to GDP and gains in economic productivity, and thus using long-term projections of per capita GDP, they are able to make projections for both emerging and developed market equity and fixed income issuance over the 17 years to 2030. And they go on to calculate implied underwriting fees and commissions from primary and secondary capital market activity and then apportion future emerging market equity and fixed income deal revenue between emerging and developed market-domiciled financial services companies employing the evolving observed trends in allocation.

As a result, Credit Suisse estimates that the market value for emerging equities, corporate and sovereign bonds will increase by USD 98 trillion, USD 47 trillion and USD 17 trillion, respectively, in nominal dollar terms between 2014 and 2030, versus gains of USD 125 trillion, USD 52 trillion and USD 24 trillion, respectively, for these asset classes in the developed world.

Hence, the company projects that, by 2030, the emerging market share of global equities will increase to 39%, for corporate bonds to 36% and for sovereign bonds to 27%. Emerging markets may understandably retain their aggregate equity skew toward resources, given their collective characteristic as a net commodity exporter; however, over the duration out to 2030, there will likely be a normalization toward more under-represented industry sectors relative to the developed world, particularly healthcare, industrials and consumer discretionary.

Ampliar

They examine the capacity for growth in assets under management of emerging market domestic mutual, pension and insurance funds to 2030 to absorb incremental equity, corporate and sovereign bond issuance. In total, they forecast this to be USD 6 trillion for equities, USD 16 trillion for corporate bonds, and USD 17 trillion for sovereign bonds.

For the most part, they do not foresee the required development of domestic institutional investment assets under management acting as a hurdle to our forecasts for equity and new bond issuance to 2030. Additionally, sustained foreign portfolio inflows will maintain a further source of demand for emerging market equities and bonds. Should the pace of gross portfolio flows into emerging markets continue to average 1.2% of GDP until 2030, then the cumulative inflows into emerging markets over the duration would amount to USD 10 trillion.

To see the report “Emerging capital markets: the Road to 2030,” use this link.

Bank of England May Take Away the Punch Bowl as Party Begins

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El Banco de Inglaterra podría aguar el inicio de la fiesta — Mark Carney World Economic Forum 2013. Photo: World Economic Forum from Cologny, Switzerland . Bank of England May Take Away the Punch Bowl as Party Begins

Bank of England (BoE) Governor Mark Carney has already hinted in his annual speech at the Mansion House – at which important economic policies are aired to the City of London audience – that a hike may come sooner than investors expect. Most do not predict one until at least 2015 – possibly before the next UK general election which is due to be held in May of next year.

British rates have been frozen at 0.5% for more than five years. The UK economy has since emerged from the financial crisis and recession, with a growth rate that may reach 4% this year. However, the central bank dare not raise rates too high, says Cornelissen. Aside from threatening a strong economic recovery, it would also prove risky to the highly indebted UK private sector, he says.

Surprising strength of the UK economy

“The UK economy has shown surprising strength in 2014 and is now firing on almost all cylinders,” says Robeco‘s Chief Economist Léon Cornelissen in his monthly outlook. “Jobs are growing at a record pace, average house prices have risen strongly, and all UK regions have experienced growth.”

“It was therefore no surprise that Carney explicitly stated that the first rate hike could happen sooner than markets expect. This comment didn’t fall on deaf ears, so Carney found himself almost immediately forced to weaken the impact of his remarks by stressing that the ultimate decision would be data-driven.”

“Of course, central banks no longer consider it their primary task to take away the punch bowl just as the party gets going. They’ll now do their utmost to err on the side of caution and not hinder the recovery.”

The UK economy in numbers

House prices prompt bubble fears

House prices – the subject closest to most British hearts, due to high levels of home ownership – are approaching bubble territory, particularly in London. The average UK house price rose 12% in the year to June 2014, passing the 2007 peak. The BoE has been pressing for mortgage lending controls and could use a rate rise as a further bubble-bursting weapon.

“Bubble fears are understandable,” says Cornelissen. “Asset price inflation is clearly being used by central banks as a means to stimulate the wider economy into a self-sustaining recovery. But, of course, things can get out of hand.”

“The first line of defense for the BoE concerning the housing market is to introduce limits on the degree to which banks can operate in the risky sections of the mortgage market (so-called macro prudential measures). The BoE has now reintroduced a ‘corset’ for banks, but as the Economist magazine wittily remarked: “As corsets go, this is not unduly tight”.”

Cornelissen says the Taylor rule of economics – used to calculate the level of rates that will stabilize the economy in the short term but still maintain long-term growth – suggests a longer-term UK base rate of as much as 3.0%. “That’s 2.5% higher than the current rate – but then the Taylor rule is, of course, only a rule of thumb, and conditions in the world economy are far from normal.” He cited recent remarks by the BoE’s chief economist, Andy Haldane, who said: “Lots of nutty things are still happening,” justifying the bank’s extremely loose policy stance.

Cornelissen predicts that the BoE will also remain cautious on future rate hikes due to the high indebtedness of the private sector, whose debt pile is currently a hefty 163% of GDP. A rate rise would also increase the government’s own borrowing costs. He believes that 10-year yields on British gilts should rise from their present 2.75% above 3.0% before the year-end, and sterling should show continued strength versus the euro, which is damaging for UK exporters.

Scottish independence and Brexit threats

In the political sphere, Cornelissen believes a Scottish vote for independence due in September could prove damaging for the economy if Scots vote to secede from the UK. There may also be a referendum on the UK – or what remains of it – leaving the EU. British Prime Minister David Cameron has promised one in 2017 if his ruling Tory party is re-elected next May, largely to head off the growing electoral threat of the anti-EU United Kingdom Independence Party (UKIP).

“Though the going seems good in the shorter term for the UK economy, a more long-term worry is the risk of the economic impact of Scottish independence and/or of the UK leaving the EU in the coming years in the so-called Brexit,” says Cornelissen.

“As the size of the Scottish economy is relatively small compared to the rest of the UK, the economic impact of the undoubtedly messy divorce will be relatively small. But the increase in political risk could hit sterling, at least for a while.”

“If Scottish independence does materialize, it would increase the risk of the remainder of the UK leaving the EU if only because Scotland is a Labour Party stronghold.” At present, the pro-EU Labour opposition has 41 members of Parliament compared to only one for the more anti-EU Tories who lead the current British government coalition. This would leave relatively more anti-EU MPs in a future rump Parliament that excluded Scotland.

However, opinion polls suggest a majority of Scots want to remain inside the UK, while a majority of voters across the UK want to remain part of the EU, in both cases for economic reasons. “Enlightened self-interest would suggest a majority of UK voters rejecting a Brexit. We therefore attach a low probability of a Brexit in the coming years of about 20%,” Cornelissen says.

Santander Sells 51% of Irish Based Insurance Companies to CNP

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Santander obtiene 250 millones en plusvalías al vender el 51% de sus filiales de seguros a CNP — Photo: Tamás Mészöly. Santander Sells 51% of Irish Based Insurance Companies to CNP

Banco Santander and CNP have reached a definitive agreement by which the French insurance company will acquire a 51% stake in the three companies that service Santander’s consumer finance unit (SCF) and which are based in Ireland. Under the terms of the agreement, SCF will distribute on an exclusive basis the whole range of products sold to SCF customers in several countries where it operates, including Germany, Spain and the Nordic countries.  

The agreement, which is subject to the relevant regulatory authorizations, values the insurance companies, which distribute life and non-life products through SCF, at EUR 568 million. The transaction, which is expected to close before the end of the year, will generate a net capital gain for Grupo Santander of EUR 250 million, which will be fully used to strengthen the balance sheet.  

CNP is a major European life insurer, with around EUR 28 billion of premiums. It is the leader in France while also having a growing international business, with operations in Brazil, Italy and Spain among other countries.  The partnership will enable SCF to boost its future insurance business and will deliver better products and quality of service for customers, thanks to CNP’s long track record and expertise in the insurance business, particularly in credit insurance and payment protection.

According to the company, he price of the operation is 395 million dollars (EUR 290 million).

Evercore Wealth Management Names Helena Jonassen Managing Director, Wealth Advisor

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Evercore Wealth Management has announced the appointment of Helena Jonassen as a Managing Director and Wealth Advisor.

Ms. Jonassen joins Evercore Wealth Management from U.S. Trust, where she managed investment accounts as a Senior Trust and Fiduciary Officer. Prior to joining U.S. Trust in 1997, she worked as financial planner and portfolio manager for Train, Smith Counsel in New York. She has 30 years of experience in wealth management.

“We are pleased to welcome Helena to our growing national practice,” said Evercore Wealth Management Chief Executive Officer Jeff Maurer. “She shares our values and will further strengthen our strategic wealth planning team, delivering independent advice and solutions to serve each client’s interests.”

Ms. Jonassen reports to Chris Zander, Chief Wealth Advisory Officer at Evercore Wealth Management. She is based in New York City. She is a graduate of the State University of New York at Albany and holds the Certified Financial Planner designation.

Evercore Wealth Management, a subsidiary of Evercore, serves high net worth individuals, families and related institutions, delivering customized investment management, financial planning, and trust and custody services. Evercore Wealth Management is a registered investment advisor with offices in New York, Minneapolis, San Francisco, Los Angeles and Tampa. The firm manages client assets totaling $5.2 billion as of March 31, 2014. Additionally, Evercore Wealth Management offers personal trust services to its clients through Evercore Trust Company N.A., a national trust bank with $42.3 billion in assets under administration as of March 31, 2014.