Almost 20 months after the buyout of Barclays’ trust and fiduciary business and the launch in seven jurisdictions, trust and corporate service provider ZEDRA finally held its official launch party in Cayman in October.
The event was originally planned for last year but business got in the way. First, the rebranding and restructuring efforts took precedent, then the acquisition of Barclays’ UK Trust business took up senior management’s time.
Now, after having moved offices in Cayman, it was finally the opportunity to celebrate the business and to take stock of the first nearly two years.
“We have delivered on our strategy which we formulated at the launch of ZEDRA,” says Ivo Hemelraad, group director Corporate, Funds and Legal.
During that time, the company expanded both its office network and service lines. ZEDRA started out as a private client business in Jersey, Guernsey, the Isle of Man, the Cayman Islands, Singapore, the U.K. and Switzerland.
“That gives us a good background but we thought what we were missing for the more entrepreneurial client was the ability to also deliver corporate services and fund services. And that was also one of the reasons why we expanded into the Netherlands and Luxembourg and places like that,” Hemelraad says.
The company then opened its office in Hong Kong for corporate and trust services and added corporate services to the private client business in its expanded Singapore office.
Most recently, ZEDRA opened an office in Miami to cater for the North American and Latin American market. “The idea is to represent the group and sales in the North American and Latin American markets for high net worth individuals, private entities, corporate clients and family offices,” says managing director Tomás Alonso.
ZEDRA’s latest acquisition of Barclays’ onshore trust business in the U.K. was not part of the original strategy but, Hemelraad says, “when an opportunity presents itself, you have to take a look and analyze it and we thought it made sense.
“We are now in the interesting spot that we are a leading trust company in the U.K. as well.”
The company also entered the U.K. property market by offering local property management services, especially for a high concentration of clients that have invested in properties in London.
As an independent trust company that is not owned by a bank, ZEDRA can focus on its role of trustee and outsource other functions like investment services for its clients.
“Because we are not being paid for banking and investment services, we can take a broader perspective and look at all the assets a client has, whereas a bank would only look at whatever is bankable and they can make money from,” Hemelraad notes.
Brian Taylor, managing director of ZEDRA in Cayman, adds that as an independent trustee the firm looks at different asset classes and specializes in those. “That would obviously cover most of the fund space for corporates and private clients, but also property management, marine and aviation.”
Compared to other independent trust companies, ZEDRA can have a slightly different approach.
All of the company’s larger competitors are owned by private equity investors and focus more on profit maximization and realizing capital gains, Hemelraad says. “We can approach it with a longer-term view.
“We have an environment in which we can focus on people, both clients and staff, and that is what delivers at the end the high-quality service, of course supported by systems.”
Taylor adds clients are looking for certainty and security and are a somewhat concerned about private equity ownership because the trust companies might be sold off. “To the extent that we are truly independent and given our history, it allows our clients to know that we are going to be around for the longer term,” he notes.
ZEDRA’s initial challenge after its launch in January 2016 was to get the firm’s new name recognized in the marketplace.
“That is going very well, we have been very active,” says Hemelraad, citing the company being named as one of the top trust companies of the year by eprivateclient and winning the accolades of Citywealth independent trust company of the year and a similar award in Asia.
“That proved we have not only captured the attention but people recognize us for being able to deliver,” he adds.
Most importantly, Hemelraad says, the efforts bear out in the numbers. “It shows in our results, especially the number of new clients, which we are attracting, has more than doubled from last year.”
This client growth is broad-based in all of the company’s operating regions, he says.
The future of the trust business will involve more complex services for growing client needs, ZEDRA’s management believes.
The latest STEP LatAm industry conference showed “an obvious trend toward U.S. trustee services” among Latin America’s private clients, Alonso says. He believes this has to do with the desire to be under a FATCA reporting environment rather than a common reporting standard environment, because clients don’t want the authorities to disclose their foreign assets for privacy and personal security reasons.
“In many countries in Latin America, this type of information easily gets into the wrong hands and becomes a threat to the families,” Alonso says.
Most client families now have international links and are dispersed across different countries. They will need more sophisticated advisers and trustees who understand the international links, the diversification and the next generation’s mindset, he says. “As a result, the types of service are getting more sophisticated, more challenging and interesting.”
Taylor notes that clients are also more aware of trust solutions, which 20 years ago would not have been part of Latin American clients’ plans. Those clients are now much more comfortable with trusts and increasingly need structures because families are spread across various countries.
“I think the need for trusts will remain in place for wealthy families. What is going to change is the sophistication of services and how you are going to deliver that to more demanding clients,” Taylor says.
Hemelraad points to the number of millionaires that is still growing, especially in emerging markets, which should benefit service providers like ZEDRA.
In addition, he says, the consolidation in the industry will continue driven by private equity investments and the cost of compliance and regulation which forces trust and corporate service companies to invest heavily into their systems.