As provided for in the Free Trade Agreement with the EU, HMRC earlier this month announced that the UK will now apply the OECD mandatory disclosure rules (“MDR”) in place of the DAC6 requirements. Following suit, Gibraltar has aligned its reporting requirements with MDR. On 21 January 2021, the Income Tax Act 2010 (Amendment) (EU Exit) Regulations 2021 (the “Regulations”) were published, which amends the Income Tax Act 2010 (the “Act”) by replacing the previous DAC 6 rules contained in the Act with MDR. The Regulations are deemed to have come into operation on 1 January 2021.

DAC6 requires EU intermediaries to file information on Reportable Cross Border Arrangements to their home tax authorities. The OECD MDR is narrower in its provisions, containing fewer reportable hallmarks.

Only arrangements falling under the Category D hallmarks of DAC6 fall within the OECD’s disclosure requirements. This category comprises the obscuring of beneficial ownership and arrangements which undermine the reporting requirements under the laws implementing Union legislation or any equivalent agreements on the automatic exchange of Financial Account information.

The first reporting date under the new model will be 30 January 2021, and reporting will be in compliance with the OECD MDR requirements as transposed into the Gibraltar legislation.

It should be noted however, that due to Gibraltar’s commitments under the ongoing UK/Spain Agreement regarding Gibraltar, reporting standards in respect of Spain may be realigned with the EU Directive standards in the future.

For further information on MDR please contact Emma Lejeune emma.lejeune@isolas.gi ; Adrian Pilcher adrian.pilcher@isolas.gi ; or Stuart Dalmdo stuart.dalmedo@isolas.gi 

The post GIBRALTAR TO REPLACE DAC 6 REPORTING REQUIREMENTS WITH OECD MODEL IN LINE WITH UK appeared first on Gibraltar International Magazine.

Gibraltar’s lawyers are witnessing the greatest professional changes in 50 years after a comprehensive overhaul of legal services regulation that will bring greater transparency and openness to their practices, reports Ray Spencer

Described as being “no short  of a revolution” the imminent implementation of the Legal Services Act (LSA) will in a stroke for the first time see all of the jurisdiction’s advocates – Crown and in-house lawyers –regulated by a new body, the Legal Services Regulatory Authority (LSRA) to a uniform Code of Conduct.

The LSRA – described by some as the lawyers’ FSC (Financial Services Commission) – will be independent of the Bar Council that is to be replaced by the Law Council as soon as the LSA takes effect.  The move underscores Gibraltar’s fused profession – unlike in England from where most laws have originated – to involve barristers, solicitors, in-house counsel, legal executives and law costs draughtsmen.

In January, Gibraltar’s Supreme Court listed 233 lawyers, associated with 38 practice offices.  Now the new LSRA will also embrace an estimated near-100 qualified lawyers working in government, its associated bodies and the private sector.  Some 42 are government lawyers.

Keith Azopardi QC, Bar Council chairman at the opening in September of the 2017-18 Legal Year, said: “The Legal Services Act is more far-reaching than the system of regulation it replaced…. and a modernisation of the system of legal services that is long overdue.”

At the time of Gibraltar International going to press no information could be obtained from the Justice Minister, Neil Costa, as to when the Act would be implemented, nor the constitution or operation of the LSRA, but it is expected to be by the summer. Annual fee income it is understood could be £1,000 or more per head for lawyers and £1,500+ for Gibraltar’s 17 Silks and will be swollen by the addition of non-Crown counsel to support the new LSRA administration and premises.

Following UK experience, law changes in September permitted practices to incorporate as Limited liability companies or Limited Liability Partnerships (LLPs), the latter route having been taken by ISOLAS to mark its 125th anniversary.  It is the first large legal firm to do so.

Protected from errors

Senior partner Peter Isola, explained: “As the firm grows, having limited liability becomes important, because when it’s just family who are partners, you are probably quite happy to carry each other’s risks: when it’s more of a professional business relationship, you want to be sure you are protected from other people’s mistakes.  Of course, an LLP doesn’t protect you against individual negligence, but it protects other partners from it”.

He added: “Limited companies have Articles and a Memorandum, but with an LLP being a partnership, within that document we had to set out the terms of membership in a way in which I don’t believe any other law firm in Gibraltar has.”

Two other large Gibraltar firms – Hassans with 75 lawyers and 260 staff, and Triay & Triay (T&T) with 22 lawyers and 66 staff – both plan to morph into limited companies this year.

Melo Triay, T&T senior partner, revealed: “We were going to pursue the LLP route, but we plan to incorporate as a Limited Company after the LSA commences, probably this summer; a limited company structure provides more protection and gives certain tax advantages which an LLP structure does not.”

A partnership’s profits are taxed as partners’ income at their personal rate regardless of whether distributed or not. “The personal rate of tax is always higher than the corporate rate of 10%. The effect is that partnership profits are inevitably distributed and it is difficult to create reserves,” Triay declared.

Ramparts, an 11-strong specialist firm in financial services, payment, eGaming and Fintech, was established in 2012 and founder, Peter Howitt, opened a Manchester office two years ago.

Recruiting issues

Most clients are international and he expects to add two more lawyers and extra support to bring the total to around 15. “All of our lawyers here were born in  Gibraltar, but we struggle to find suitable candidates, given that we are small and younger than most other major firms, and we have a culture derived from having worked close to businesses rather than a traditional law practice,” he declared.

All major Gibraltar law firms report a surge in business interest in Distributed Ledger Technology (DLT) and Initial Coin Offerings (ICOs) following the government’s decision to regulate those sectors, (see Token Regulation, p10).

Howitt notes: “We have been involved with ICOs and have used an informal protocol that we established last summer with the GFSC to ensure they understood what we were doing and how we were working in the unregulated areas.  So far we have completed six ICOs and there are more in the pipeline: we also have four DLT providers with GFSC applications pending.”

Triay maintained crypto and DLT work is of concern.  “Gibraltar has been very brave being the first jurisdiction to regulate this type of activity and all within this industry must take great care and act with some trepidation.  The technology is very new and very technical – I don’t think our local professionals fully understand the technology – and as a result, we will need to ensure that our legislation is sufficiently flexible so that Gibraltar is not held hostage to fortune by abuse.

“Inevitably some bad eggs will be attracted to the industry because there is an opportunity to make money  - we therefore need to tread carefully.”  Some enquiries to Triay’s firm were “not within our risk appetite” and he observed: “Regulation isn’t a cure for everything; even with well-regulated financial services, there are still scams and you are never going to stop that entirely. Regulation of ICO’s will make it better, but there is a risk and Gibraltar is addressing it through this new legislation.”

Peter Montegriffo QC, a Hassans partner, admitted to being excited about DLT developments, but also concerned at potential risks.  “I approach the sector with caution.  ICOs are disruptive by definition and there are obvious signs of some pushback from the traditional areas affected – banking as an example.  Gibraltar, as a jurisdiction must not be seen to be going out too much on a limb: it is a delicate balancing act.”

Howitt was pragmatic: “ICOs, it is fair to say, are a high risk area and for lawyers too.  The new DLT law brings high standards and uniformity of approach.  The DLT and crypto space is not dissimilar to the dotcom space a few years ago when thousands of businesses were formed and most didn’t survive; most who did progress were regulated entities and some on the Stock Market.”

Isolas, with 114 staff, including 24 lawyers, gets “20-40 Fintech approaches a day from all over the world”, but turns down around 90% as not meeting requirements.  “There’s a lot of bulls..t around blockchain.  It is a nascent market and there are people who do not have defined products, or understand the risk criteria clearly,” commented chief executive, Marcus Killick.

Joey Garcia, an Isola’s partner who has helped form Gibraltar’s new DLT legislation, is listed by Chamber directory as one of 12 world experts on Fintech, saying he is “a pioneering distributed ledger lawyer, hailed as a “super” practitioner by market sources”.

Since early last year, the sector has taken off “massively” growing the firm as a result, “but there is not a bank of DLT-trained lawyers in the world, so we have had to switch resources and adapt skill sets for existing and new staff”, Killick said.

Hassans too has seen significant growth in recent months as a result of DLT and crypto business.  Its overall income from 100 fee-earners grew 4.7% in 2017-18, (against 3.6% a year earlier), and it attributes 70% to “the FinTech phenomenon”.

Complacency warning

Generally, local law firms are finding greater competition and tougher markets.  “Even though there is no sign of business leaving Gibraltar because of Brexit, we cannot be complacent,” Killick maintained.  Issues include new AML requirements since February under the Proceeds of Crime Act and imminent Data Protection Legislation.  Later this year clients face MIFID ll and the Insurance Distribution Directive.

Montegriffo pointed out: “The whole business of law – here and in the UK – has been evolving, because clients today are better informed and in-the-know, given information is more open, and that is driving competition.  The tendency is for firms to become leaner and meaner; the trend is to downsize as Gibraltar firms, particularly, may be carrying greater overhead costs than are strictly necessary.”

Montegriffo, who remains Gibraltar’s only non-litigating QC after taking Silk in 2014, opined: “Gibraltar’s legal profession is diverse and the majority of practitioners have a range of experience, but there is probably a need for greater specialism in some areas.”

In his Legal Year address Azopardi declared there had been a spate of cases where “Gibraltar lawyers are being relegated to a sometimes nominal role by unregulated lawyers physically present in Gibraltar, for Gibraltar cases, on Gibraltar law. English Counsel get called to the Gibraltar Bar and submit to our Code of Conduct. English Solicitors however, do not.”

He noted: “It is important for the litigation Bar to develop and compete against English Counsel that are briefed in cases on Gibraltar. That is positive from the perspective of ensuring the continual professional development of local advocates.”

David Dumas QC, a Hassans partner and Bar Council chairman since December, added: “One doesn’t know when English solicitors are becoming involved in Gibraltar cases with, say, back office work or drafting of legal documents. This will require registration under the LSA and thus regulation by the LSRA. The Act creates various offences essentially where services are provided where a person is not entitled to do so, not registered to do so, or not exempt.”

Workload for Silks

Litigation and general contentious work has always been important to lawyers – big cases take a long time to resolve. The crash of the Marrache law firm in 2010 still provides litigation in 2018 with appeals by RBS International Bank and Jyske Bank – both cases will have incurred substantial fees.  More recently, the failure in 2017 of Enterprise Insurance is on-going. Triay disclosed: “These cases all provide substantial work for Gibraltar lawyers for many years, even though UK QCs have been involved.”

Launched in late 2016 by Elliott Phillips as part of a London-based firm, Signature Litigation (SL) identified a Gibraltar niche market. In July, SL senior associate Steven de Lara became the first litigator to be licensed by the GFSC to handle administrations, liquidations, receiverships and bankruptcies, a role traditionally identified with practitioners in major accountancy firms.

Formerly an in-house legal counsel at PWC locally and senior associate at Isolas, de Lara explained: “In practice 80% of insolvency appointments, involve legal work, especially when it is a compulsory insolvency.  The difficulty for lawyers is valuing businesses as going concerns. In the same way as accountancy firms instruct lawyers, I can instruct accountants to handle the financial side of things – there is complete synergy.”

SL was involved with the two largest value trust and commercial disputes in Gibraltar’s history the latest being a £1.9bn claim brought by a London-based client, who instigated parallel injunctive proceedings against a Gibraltar trust as part of an international divorce case.  The firm has also been instructed over substantial insolvency insurance cases – Lemma Insurance, (post administration), Hill Insurance and, currently, Enterprise where SL acts for a subsidiary.

The post Revolutionary changes coincide with caution over ‘disruptive’ technology appeared first on Gibraltar International Magazine.

Insurance Sector Challenges in 2016

By Steve Quinn, Chief Executive Officer, Quest Insurance Management (Gibraltar) Limited

When I was given the opportunity to submit an article to Gibraltar International last year I listed several issues as representing current developments and challenges to the insurance sector including Solvency II, ratings being obtained by local insurers, local operations and representation, Part VII Transfers and ILS opportunities.

Unsurprisingly a year later little has changed. A review of those issues follows but there is of course one new entrant that has usurped all others in the last few months. It is interesting to see that the article I wrote just under a year ago, around the time of the last UK General Election did not reflect the public mood of Brexit as being a major issue at the time.

How the times have changed!

Brexit

It would be impossible to write an article that focuses on challenges to our industry without starting with the elephant in the room. I have never known any topic to dominate both business and social conversations as much as Brexit appears to at the moment. Trying to distil the facts as they are known at the time of late March/April, the key issues to be aware of if the Referendum votes “Out” are as follows:

• A UK exit from the European Union would mean a Gibraltar exit as well.
• Gibraltar insurers passporting into the UK currently should be broadly unaffected as arrangements in place between the UK and Gibraltar are not strictly reliant on EU law. It should reasonably be expected that the UK will continue to respect the bilateral trading relationship with Gibraltar.
• For the rest of Europe the situation is less straightforward. Technically the transition out period should be two years, but withdrawal requires agreement from the European Parliament.

The view is that it will most likely take considerably longer than this for the UK to finally exit the EU, but any extension to the two year period requires unanimous EU member state approval. During this transition period all EU rights should remain. The UK would need to negotiate a new trading arrangement with the European bloc, and without offering any political statement whatsoever, this could take several years (Canada, for example, took roughly seven years from 2007 to negotiate a trade deal with the EU), possibly beyond the transition period.

So in summary how will Gibraltar’s insurance industry be affected by Brexit should this occur? The answer to this is technically probably not greatly, as over 90% of Gibraltar insurance business is conducted with the UK and should be unaffected. Of course there are, however, several currently unanswerable questions that could hugely impact the wider situation, such as:

• What will be the impact of Brexit on the EU economy?
• What will be the impact of Brexit on the UK economy?
• What will be the impact of Brexit on the Gibraltar economy (especially gaming)?
• What will happen at the Gibraltar border in a post-Brexit world?

No answers to any of those questions offered here, I’m afraid, as they really are all unknown at the moment.

Turning to other key current issues….

Solvency II

We should probably stop referring to Solvency II as Solvency II now as it really should be Business As Usual. As of 1st January (2016), we are in the brave (?) new world and the market appears to have satisfactorily handled this change.

There were a small handful of insurers that chose to go into run off in 2014 and 2015 but by and large the overwhelming majority have passed into 2016 without the need for Transitional Arrangements from the Financial Services Commission (FSC).

The key over the next few months will be for regulators and regulated alike to become familiar with the changed requirements, to reach agreement on those areas which are open to interpretation, and perhaps a goal for 2017 and beyond will be to not refer to “Solvency II” for too much longer.

Local Operations

When commenting last year I suggested that amongst other consequences one of the implications of the advent of Solvency II may be the requirement for insurers to go further to show their presence in Gibraltar. I still believe this to be the case and it is important that the FSC understands fully what work is undertaken locally.

Some insurers operate with significant local teams, some with smaller ones and the majority via insurance managers. Just because an insurance company has representation from an insurance manager does not necessarily mean that there is little work being undertaken locally, and indeed I am aware of self managed companies locally that could be viewed as being little more than representative offices rather than fully functioning insurance companies. It is not entirely clear at the present time what the regulator will require from new and presumably existing insurers in terms of local presence.

Other challenges that the regulator and the industry locally share jointly relates to understanding the roles and responsibilities that are performed locally. Company boards tend to be quite small compared to – for example – the UK, and as a result it is less likely that each Board member will have a tightly defined job description, rather looser areas of responsibility. This is an area which I expect to be developed further by the regulator this year.

Other Current Issues of interest

• Current Comparative Strength of the UK Motor Insurance Market

The Gibraltar insurance industry is dominated by UK motor insurance premium (it is estimated that just under 20% of total UK motor premium currently emanates from Gibraltar), and this insurance market is notoriously cyclical.

It has been enduring a difficult period for two or three years but there are signs that 2016 and hopefully beyond will be stronger performers. This recovery is well timed given the enhanced capital requirements that all insurers face in the new Business As Usual world.

• Investment returns

The financial markets have been turbulent for several months now and the prudent insurer will most probably have lowered return expectations with funds being moved away from potentially more risky investments to shorter duration, higher quality asset classes. The market volatility has arisen at a time when the new Solvency II (sorry, Business As Usual) rules have impacted on certain asset classes by requiring higher capital charges being imposed; to illustrate the point, property now incurs a 25% charge whereas a three month bank deposit with a secure institution will incur only 7%.

• Rating Agencies

I am aware of several insurers that have obtained strong ratings from AM Best in the last year or so, although many are choosing not to publish these at the present time. I believe this will be an area that will continue to develop.

• Part VII Transfers

Sad to report but there have been no noticeable positive developments in this long running saga. Should Brexit happen it would be imperative that the Government of Gibraltar agree with the UK Treasury that Gibraltar be allowed to receive portfolio transfers from the UK. Bizarrely, we have seen further inward transfers from other EU member states, but this door may be closed in a post-Brexit world.

• ILS Business

The first of these transactions was completed last year and it is believed a second is imminent. There has not been the steady stream that was to be hoped for as yet, and again I believe it will be an area that is uncertain until after the UK Referendum.

The post Insurance Sector Challenges in 2016 appeared first on Gibraltar International Magazine.

Tuning into TV leads to broadband wars

Telecommunication company profits are under pressure as competition intensifies, prices fall across the board and demand for service content grows. Ray Spencer looks at how, in a small market, the suppliers of broadband Internet services are counting on diversification to maintain business growth

High bandwidth, superfast broadband services have been available for well over a decade to Gibraltar’s eGaming and financial services sector businesses fuelling the growth of State-owned Gibtelecom (Gibtel) and private concern, Sapphire Networks.

But with uncertainty over expansion of the jurisdiction’s all-important Internet gambling sector (as a result of a spate or industry mergers and acquisitions), the two largest telecoms suppliers are being joined by two smaller firms in a bid to attract residential custom.

More than £25m has been invested by three firms on installation of fast broadband through new fibre optic cables offering download speeds of 100mps or more – GibFibreSpeed, an offshoot of old-established local firm, A J Sheriff Electrical, even boasts 200mps, way more than most computers can handle!

A readily available superfast bandwidth of 100mbs puts Gibraltar “well ahead of the EU digital agenda on delivery of broadband speeds”, points out Gibtel chief executive Tim Bristow, who with a claimed 90% broadband market share says his fibre cabling reaches directly to homes and offices throughout The Rock, or within 500m of their premises.

Sapphire Networks is spending some £5m over three years on top of the £10m already invested in fibre optic cabling to extend its network beyond the estimated 70% of eGaming companies it presently supplies, to reach small and medium sized businesses (SMB) and also to homes through its new u-mee subsidiary.

A necessary move

u-mee claims it can already reach more than half of residential and business properties with fibre optic cable and will be everywhere by mid-next year, while GibFibreSpeed says its 50% coverage will exceed 60% by year-end and 80% by 2016.

Sapphire has been doing well in gaming in recent years, a sector that is still growing, but diversification into the residential market was seen as “a necessary move”. As Sapphire Networks and u-mee chief executive, Lawrence Isola, explains: “Gaming revenues are not growing; we are selling more capacity for less and that is part of the reason for going into other areas – banks, small businesses and [homes]”.

The choice has been between offering residential services “or do we stick with local business and make hay while the sun shines without diversifying”. Sapphire decided a year and half ago to extend fibre to the home. “It wasn’t an easy decision to go into the residential market, because it is without doubt a risky investment given the size of our economy,” Isola observes.

Given a small market – an estimated 15,000 residential dwellings, plus the data hungry gaming companies and thriving business community – financial returns are uncertain.

Gibtel’s 2014 income stalled at £41.9m, the result of price competition in key sectors such as data storage centres, and the bandwidth supplied to eCommerce and eGaming. “Last year we announced price reductions of between 4-25% and this year we have taken further steps with price reductions”, Bristow explains.

With the intervention 18 months ago of Financial Service Minister, Albert Isola – Lawrence’s brother – the gaming companies have seen prices fall. “The price is continuously coming down – it’s probably 70% down on those from 2-3 years ago for the gaming community. Its been the combination of government intervention and competition with Gibtelecom”, the Sapphire chief executive suggests.

Now the retail cost of broadband has become the battleground. Bristow denies the reduction in Gibtel’s publicly advertised rates are primarily the result of competition. “It was something we had been meaning to do anyway, because we had always recognised that our prices were comparatively high, compared to some larger places”, he maintains.

Gibtel has twice cut its original £96pm price for 100mbs internet connection, to today’s £54pm! The telco sells 16mbs services for £28pm, little different to its 8mbs and 4mbs offerings.

Internet speed is as promised

Even so, Bristow is “most disappointed” with the take up of higher Internet speeds, being “nowhere near as great as we wanted; most people have stayed around the lower bandwidths in the 4-8mb offerings we always had when we ran them over ADSL”.

One reason, “is the fact that what we offer is what you get”, suggests Bristow. In another place, a 50mbs [download contract] may rarely run beyond 8mps “whereas when we offer 8mbs, broadly speaking you are getting it.” However, actual speed can be reduced: if copper wire is being used to households, or the number of devices being used at the same time, it can slow down individual units.

Gibtel’s Internet revenue accounting for 13% of the total, saw 7% growth – “more customers joining every month still”, Bristow notes, adding “whether we get hit in this area by competitors has yet to be seen – how much they will eat of our cake”.

Attractive add-on services are growing. u-mee offers free voice calls over the Internet (VOIP) as part of, or in addition to, users’ Gibtel landline number. Normal fixed line ‘phone use has declined for years throughout the world – however, at £7.2m it still accounts for 17% of Gibtel revenue after falling 5% in 2014. “One reason is that people are using more data to communicate [on computers and mobile], and second, there are disruptive technologies where people are able to use voice services and not having to pay for it [Skype, etc]”, he explained.

TV is an attractive, potentially profitable, but contentious area. UK terrestrial channels – BBC, ITV, Channel 4, etc – plus Sky, all refuse to transmit outside of the UK under EU agreements, yet with availability of fast internet connections IPTV makes viewing possible throughout the world.

A J Sheriff Electrical, which as Gibsat has been providing television services through a UK supplier to around 85% of The Rock using cable for 27 years, began its GibFibreSpeed to home internet & TV service 6 months ago. “We tried to get contracts with the channels, but they said ‘Gib is not part of the UK, nor part of Spain, it’s nowhere’ – the revenue is too little for them to bother about”, explains Andrew Sheriff. The company’s Internet offering ranges from 10mps for £10pm to 200mps costing £65.

Most TV ‘provided legally’

Isola says u-mee is now offering HD quality access to more than 120 TV channels, including from all UK broadcasters, with catch-up, rewind and recording as part of its fast broadband account.

“We are bringing most of the TV channels down from the UK by fibre optic cable… we are not capturing channels over the internet,” he declares and insists that “most of our channels are provided legally”, with efforts being made to legally tie up similarly other “relevant channels”. The u-mee offer for 50mbs Internet connection, VOIP and TV, is £39pm.

His u-mee diversification “will either have been a big success or a flop”, but he hopes the new residential and SMB market offering will in future account for “30-35% maybe of profitability – but I could be wrong here”.

Gibtel has flirted with TV-down-the-line for years. Yet Bristow maintains: “Gibtelecom, as the leading telecommunications provider on The Rock, has to do things properly and sensibly. Yes, perhaps where others operate in ‘grey’ areas, we choose not to – but we are looking at the matter again to see if there is a way we can bring certain TV and DVD services. I suppose we are encouraged to do so by the competition.”

The Gibraltar government bought the 50% stake it didn’t own in Gibtel from Telekom Slovenije in January for £47.7m, a move prompted by privatisation of the eastern European telecoms giant. Dr Joseph Garcia, deputy Chief Minister, said: “There have been several expressions of interest, [but] the Government is not in a hurry to find a suitable partner.”

In the meantime, Bristow emphasises: “Gibtelecom, whether partially or fully State-owned, has to operate within what is a very clear umbrella of the law and, therefore, we are not in a position where we can afford to take risks in a way that more margin players perhaps can.” He thought it too early to say how successful his competitors might be.

However, it’s a different story with mobile, where the demand for data on the move – even live or catch-up TV shows – is growing exponentially. Mobile, where Gibtelecom dominates, “is our really big potential growth engine”, and “competitors haven’t seemed to fair as well”, Bristow reported. Mobile produces £12.3m for Gibtel -up by 2% in 2014 after price reductions – and at 29% it is the largest revenue sector.

A license to provide 4G services to 95% of Gibraltar’s population by the end of the year was enhanced for Gibtel by a £3.5m deal with Ericsson to provide 4G+ services providing 150mps downloads for mobile users. Fifth generation mobile facilities are on the horizon.

While u-mee is not extending into mobile connections, it plans by the year-end to compete through a mobile application that links to Sapphire’s switch and with VOIP subscribers keep their existing ‘phone numbers they gain a new number that will ring in the home and mobile at the same time anywhere in the world.

Smile, a small mobile ‘phone operator owned by Gibraltar-registered EaziTelecom, has been offering cheap pre-pay mobile ‘phone services for two years, and was reported to be up for sale last year, however, no company representative was available to comment.

Fierce price competition

For Gibtel, the big diversification has been its US$31m investment for a 4.1% stake in the Europe India Gateway (EIG) submarine telecommunications cable, selling unused capacity to telcos worldwide for the past two years. Around half of its wholesale capacity has been taken amidst “fierce price competition” from Gibtel’s international partners, “some with submarine departments much bigger than our entire company”.

The investment has a projected 15% return over the full 25 years expected EIG life and was 50% funded from Gibtel working capital, the balance via a bank loan. The company has 15 carrier partners, including a small amount into Europe for Telstra, the Australian telco, as well as 15 consortium members.

Now, Gibtel claims to be just about “the biggest, smallest global carrier around the world – in terms of reach” and Bristow notes: “No-one to my knowledge of our sort of size has moved into this global communications space.” He expects shortly to sign a deal with Asia “to carry a substantial amount of traffic on a back-to-back deal”.

Bristow has ambitions to join other submarine cable consortia (subject to Board and shareholder approval), and sees connecting further to Africa, perhaps via Morocco, as a natural long-term objective – “it’s not an overnight win” involving “quite serious money”.

The 2014 annual report for Gibtelecom shows net current assets of about £50m and “a very healthy balance sheet, so we can attract leverage”, Bristow points out.

A lot of people think worldwide telecommunications is via satellite, “but 96%+ of the world’s traffic is by submarine cable and the cost of investing in those cables and operating them is the same irrespective of the traffic that is on them”, he adds.

The post Tuning into TV leads to broadband wars appeared first on Gibraltar International Magazine.

The case for Gibraltar as a great place to do business, is made time and time again by industry professionals, as well as Gibraltar Finance and the Gibraltar Insurance Association.

Most of us know the script off by heart; we can talk confidently about the merits of Gibraltar in terms of EU passporting rights, regulatory efficiency and corporate taxation. But what we rarely do is talk about Gibraltar as a great place to develop one’s career. Promoting Gibraltar as a ‘career domicile’, and not just a corporate domicile, is vitally important to the future of our industry.

In the UK there are likely to be hundreds of industry professionals who would seriously consider a move to Gibraltar, if only they knew about it. Many employees in the industry in the UK would love to work abroad, but feel hampered by their inability to speak a foreign language.

That’s why, for example, a lot of them talk about the US, Canada, Australia and a few other international centres, such as Dubai and Singapore, where English is the de facto business language. Europe is generally ruled out in its entirety due to perceived language difficulties.

Only Ireland is a realistic option, but its climate and lifestyle is quite similar to the UK. Gibraltar however, offers a great opportunity for a positive lifestyle change without leaving Europe and without learning another language. So what are the opportunities in Gibraltar?

Opportunities for insurance professionals

Gibraltar has a well-developed insurance industry with insurers, reinsurers, insurance managers, brokers and of course, a regulator. Some insurers and brokers focus on the local market, whereas others are more focused on other European markets, particularly the UK. Lines of business vary widely. Motor insurance remains a dominant class, but Gibraltar companies also underwrite property, liability, personal accident, financial lines, health, surety, marine and most other major classes of general insurance.

In anticipation of the forthcoming Solvency II regulations, regulators are renewing their focus on corporate governance. The concept of “mind and management” is particularly relevant because it means Gibraltar insurers must demonstrate they have the expertise to manage their businesses here in Gibraltar.

In practical terms, this should mean increasing demand (and therefore opportunity) for specialist underwriters, managers and directors.

The close-knit nature of the Gibraltar insurance industry means that it’s possible to gain exposure to areas of the industry which, in the UK or elsewhere, would be far less accessible. An insurance underwriter in Manchester, for example, is unlikely to have any sort of interaction with their regulator or have the opportunity to sit on their employer’s Underwriting Committee.

Similarly, in Gibraltar there is far more interaction with business owners and entrepreneurs. This level of exposure can significantly accelerate personal development and lead to new opportunities in unexpected areas.

Gibraltar also provides opportunities for more formal continuing professional development. The Gibraltar Insurance Institute (GII) is, among the more active local insurance institutes and hosts regular seminars on a range of topics. They also offer support for those studying for professional insurance qualifications with the Chartered Insurance Institute (CII).

Developing local talent

Currently around 50% of the Gibraltar insurance industry was born in Gibraltar. In its efforts to attract expertise from outside, the industry must not ignore the huge potential of local graduates and school leavers. Over the past two years, the GII has done an outstanding job of raising awareness of the insurance industry among 16 and 18-year olds. I am certain this will continue over the next few years and hopefully we will see more local young people attracted to the industry.

This will not be easy, as other sectors, particularly the accountancy and legal professions, continue to have a very high profile among local graduates seeking a professional career.

Promoting Gibraltar as a ‘career domicile’ is vital for Gibraltar’s future. It has long been my view that one of the critical risks to the Gibraltar insurance industry is a potential shortage of skilled professionals. In many respects, this is inevitable in a territory the size of Gibraltar. With only 30,000 people living here, to find a specialist underwriter in a new line of business is not always easy.

There are simply not enough people outside the industry trying to get in. By raising awareness of the Gibraltar insurance industry, both inside and outside Gibraltar, we can hopefully encourage more people to think of it as a career option.

www.robus-risk.com

www.gia.gi

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