Gibraltar wants to be high net worth. It’s simply yearning to be the new Monaco – sparkling new developments are springing up, one of the most prominent of these, Ocean Village, was actually going to be called Monaco Ocean Village.
It’s longing to get away from the fish & chips Brits that flock to the Rock for sun and sangria, and remodel itself as a land of yachts and luxury.
If you stroll along the marina, dine at one of the fine restaurants and view the yachts there that stop off on their first port of call into the Mediterranean, then Gibraltar does seem rather swish.
But walk two minutes onto Main Street and it becomes the land of C&A, fry-ups and lobster red families from Middlesbrough.
Both worlds exist, but it is the marina lifestyle that is flourishing and the one Gibraltarians want to promote.
The tiny British colony, just 5.8 square miles on the Spanish coast, is undergoing something of a facelift, with plush residential, leisure and retail complexes popping up and a new 20,000 sq m terminal planned for the airport.
There are direct flights to London, Luton and Madrid, and Malaga is only an hour’s drive away, from where flights can be taken across Europe.
For such a small jurisdiction, it’s pretty well connected.
A home for your riches
It’s not just the image of a luxury location for high net worth (HNW) individuals and their yachts that Gibraltar is trying to push; it’s also promoting it as somewhere to park your assets too.
Gibraltar, which is an EU state, has a strong economy – it grew by 12.7% last year. To put that into context, the UK’s economy grew at sluggish rate of 3.1% in 2007.
The finance industry on the Rock is home to 18 authorised banks, 60 insurance companies – three of which are life – and 24 investment managers.
It offers financial services ranging from banking to insurance to trusts, and also allows protected cell companies and experienced investor funds.
James Lasry, a partner at Hassans, Gibraltar’s largest law firm, helped set up the first experienced investor fund in 2005 and tells HNW the legislation has been very successful.
“We feel, and indeed have seen in many cases, that Gibraltar can be a very promising alternative to the Caribbean and Channel Islands jurisdictions for many types of funds, including hedge funds and especially private equity and real estate funds,” he notes.
Robert Vasquez, a partner at law firm Triay & Triay, reveals that Gibraltar could soon have a flourishing Ucits III market too.
He says one player in the Ucits III space is looking to set up in Gibraltar and “once they are set up here, I think more Ucits III funds will follow”.
The finance industry accounts for around a third of GDP and employs 3,000 individuals.
Banking deposits swelled from £8.2bn in 2007 to £12.3bn so far this year. Although banks and investment firms’ funds under management dipped from £10.3bn as of March 2007 to £9.8bn in March this year.
James Tipping, director at Gibraltar’s Finance Centre, says passporting of financial services, whereby a licensed financial services firm in the EU can set up an office in another EU member state without obtaining a new license, is very important to Gibraltar, and a growing area.
It’s worth remembering that Gibraltar is very much a small fish in the global finance pond though. For example, Jersey boasts nearly 50 banks with close to £210bn worth of deposits.
David Parody, chief operations officer at Gibraltar’s Financial Services Commission, is frank about Gibraltar’s size: “We have no illusions of grandeur here.
“As Gibraltar is quite small any small knocks will be felt by us like an earthquake. So our mantra is ‘protection and reputation’.
“As a small jurisdiction we punch way above our weight.”
Similar to other small finance centres such as Guernsey and the Isle of Man, Parody stresses that the financial regulator in Gibraltar listens and only intervenes when absolutely necessary.
“We have a big baseball bat and we will wield it when we have to but we want to talk and work with the industry first,” says Parody.
Reinforcing Parody’s claims of a strong reputation, a National Audit Office report last November said the jurisdiction was 100%-compliant or largely compliant with banking regulations.
Peter Caruana QC, Gibraltar’s chief minister, claims: “Our capacity to investigate our financial services is better than any other dependent state, and as good, if not better, than the UK’s own capacity. There’s no shortage of inclination to investigate here, and there’s no shortage of resources”.
