Guernsey: Rising To The Challenge

Last Updated: 11 July 2008
Article by Joe Truelove

Most Read Contributor in Guernsey, November 2017

Originally published in the HFM Week, Guernsey Report, June 2008

European connections, a competitive edge and globalisation all mean Guernsey is more than prepared for the challenges ahead, says Joe Truelove of Kleinwort Benson

The turn of the year marked an important anniversary in Kleinwort Benson's Guernsey residence. It has been 45 years since the company established itself on the island; first as a bank and then as a prominent name in fund administration and fund custody.

Through the decades, business has grown from roots dealing primarily with large blue-chip fund managers, such as M&G and Prudential, to overseeing administration for London-listed fund of hedge funds and, increasingly, unlisted hedge funds, private equity funds, property funds and infrastructure funds.

While the products Kleinwort Benson specialises in – fund administration and custody – may be deemed fairly commoditised, the flexible approach it applies to these offerings is far more distinct.

The company is one of the largest fund custodians on the island, and though this in itself is enough to differentiate it from some of the smaller fund administration providers without a custodian licence, it is its capacity and willingness to offer both or either of these services, if required, that truly sets it apart.

"It's part of the secret to our successes," says Joe Truelove of Kleinwort Benson's corporate fiduciary services division. "Our custody team is independent to our fund administration team and the two product lines can be offered together or separately: we have clients who are administered by competitors, where we act as the custodian, and clients where we act as administrator and there is an external custodian.

"Some large fund administrator custodians which are part of banking groups provide services to open-ended funds but don't work as custodians with other smaller administrators. We do, and we've got a large amount of business this way."

As such, Kleinwort Benson can offer Guernsey as a domicile via a number of options: in terms of full service custody and/or fund administration; or while working with existing service providers that the client is happy and familiar with acting as sub-custodian or sub-administrator. Such flexibility of options is hard to find.

European Connections

Another aspect that differentiates Kleinwort Benson from other similarly sized local providers is its stance on foreign back offices. While other organisations establish them abroad, in Dublin or Luxembourg for example, Kleinwort Benson has chosen, instead, to work directly with outsourced service providers themselves giving flexibility to clients who have relationships off island or who wish to work with particular service providers.

The company has experienced significant growth through the range of asset classes it accommodates, and while Truelove admits this too is integral, he is keen to highlight the role played by Kleinwort Benson's European connections in maintaining success.

In terms of working with partners in other jurisdictions, he first points to Luxembourg where there's often an EU connection to property funds. Its Luxembourg-based partners enable Kleinwort Benson to administer complex fund structures that often involve Guernsey-based parent companies, administered by KB, which have Luxembourg subsidiaries that are administered by a service provider based in Luxembourg. Truelove then mentions the company's partners in Dublin, who can provide a more cost effective service for certain asset classes like debt funds, than would otherwise be available in Guernsey.

Thanks to this congenial business attitude, the organisation is both more agile and more able to accept business opportunities. "If we can't provide all of the services that a client requires then we will find a partner who can," Truelove states. "If, for example, a client asks us to provide lending, and we can't fund it, we'll help them to find an alternative provider. We're not limited by our own systems. Whatever the client needs; whether it's in terms of specialist systems, specialist knowledge or just a more cost effective service, our approach allows us to work with others to provide the best solution."

In terms of the Kleinwort Benson brand, Truelove is adamant that integrity remains a core value. "We believe treating people fairly is an honourable way to do business and conducive to long-term success," he says. "It's simple – if you're honest with clients, and have their best interests at heart, then they are not only more likely to be happy but, ultimately, more likely to stay."

Guernsey remains one of the more attractive destinations in Europe for fund formation. Truelove finds that clients want to use the jurisdiction particularly for listed and private equity entities – taking full advantage of the strong corporate governance culture – and to make use of the large pool of qualified non-executive directors.

Add to this, Guernsey's picturesque surroundings and the short flight times from London (enabling the board of directors to convene their quarterly board meetings with a minimum of fuss and hassle) and the appeal becomes clear. Kleinwort Benson has state of the art offices with panoramic views of all of the other Channel Islands and the coast of France.

Withstanding The Credit Crunch

However, Guernsey's current advantage is its relative insulation from the effects of the credit crunch. It has not remained immune, a number of asset backed debt fund managers have been impacted as their funds have invested in CDOs and mortgage-backed securities before the credit crunch, but the island's reputation for alternative assets has helped it adapt.

Kleinwort Benson has benefited from exponential growth over the last two years and Truelove credits this to an approach that accommodates market volatility and makes full use of Guernsey's alternative funds market.

"Our strategic approach is to always be willing to administer the next asset class," he says. "We recognise that as one asset class declines in popularity, there will always be another that is likely to benefit from increased volatility or bear markets. Traditional hedge funds should perform well in both bear and bull markets."

He clarifies: "And so, in many ways, our strategy remains unaffected by the credit crunch as it accommodates its presence. As one opportunity diminishes, another raises its head. Knowing where to capitalise is the key."

Truelove uses the increasing popularity of mezzanine and distressed debt funds as an example. The company's rise has responded to the decrease in interest in the stream of London listed funds which invested in asset backed securities until the credit crunch of August 2007.

Kleinwort Benson's strategic flexibility, its general ability to adapt, and willingness to consider any of the accumulating variations of asset class, are proving vital at a time when the fund industry itself is evolving at an alarming pace.

In terms of changes, Truelove cites the expansion in the number of asset classes available and the nature of these classes. "Two years ago, nearly all Kleinwort Benson's clients were fund of hedge funds and private equity funds," he says. "Since then, there has been a proliferation of property funds. Single manager funds are using the term hedge funds in the broadest sense by including the likes of debt funds and more exotic asset classes such as timber funds, wine funds and film funds."

It is clear there has been expansion across the board, not only in the proliferation of different asset classes but in the listing regimes as well. "We are familiar with five different listing regimes," Truelove continues. "Historically we've provided company secretarial services to London-listed funds, but in the last couple of years we've seen the emergence of AIM listings, Euronext listings, the Irish Stock Exchange and the CI Stock Exchange."

There has been huge growth in terms of assets under management, with fund capacities increasing dramatically. Truelove is no longer surprised to find London-listed funds trading at $US1bn each, whereas a few years ago expectations would have been around the $US100m mark.

He also mentions the industry's increasingly competitive edge and globalisation. Kleinwort Benson's clients are investing in the Far East, Russia, South America, Asia and Africa. Truelove tips Indian, infrastructure and Sharia compliant funds (or a combination) and funds with uncorrelated returns, such as commodities funds investing in assets like timber, as areas for future growth.

Whatever unexpected turns the road takes, and in these uncertain times nothing is sure, Truelove is adamant that Kleinwort Benson will rise to the challenge. "The future is nothing if not exciting," he says. "We will adapt to support it by doing what we've always done – being entrepreneurial."

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions