Finance 2011

Ethics: Honesty is the best company policy

Wed, 11 May 2011 17:00:53 +0100

Recently, a senior employee in a law firm asked for advice regarding a disturbing practice among some of the firm's partners. This behaviour, while not illegal, was certainly not ethical, so I suggested he look at the company's ethical policy. On the firm's website for all to see was an ethical policy so virtuous that it would have made Moses proud! But clearly it simply was not being adhered to or implemented. This is not uncommon. There are probably more companies out there paying lip service to their own value statements than actually living them.

It is not enough to prepare and publish an ethical policy - you have to really mean it and you have to live it. The leaders of a business are key to really making ethics part of their enterprises' company culture, and senior executives who lead by example will find they can actually change the landscape. Druker puts it thus: "CEOs set the values, the standards, the ethics of an organisation. They either lead or they mislead."

Too much time is spent trying not to fall foul of the FSA's Regulators' rules and similar codes of conduct, rather than pro-actively building a reputation for the company that it will stand and fall by.

Enter Good Business Practice.

Good Business Practice (GBP) was created by JABE (the Jewish Association for Business Ethics) to promote ethical behaviour in business, through membership of GBP. It provides CEOs, senior partners and business leaders with materials and practical advice to embed ethical principles into their organisations. This is achieved through:

● Senior-level training with realistic and practical information for the embedding and communication of ethical practice within an organisation.

● Guiding principles for the ethical conduct of business.

● Self-assessment toolkit to test the implementation of ethical processes.

● Exclusive senior-level forums where members can discuss topical ethical issues.

Some have accused the proponents of ethical business of naiveté. There will always be dishonest people in the world, they argue, and no amount of ethical training will rid society of that scourge.

They may be right that rotten apples are a fact of life, but that does not absolve the rest of us from behaving ethically. Being shrewd and canny should be no impediment to being decent and moral.

There are two compelling reasons for developing an ethical culture in the workplace. The first is the ethical imperative, where personal integrity is not motivated by the effects your actions will have, but is rather guided by an intrinsic desire to act honourably, to do what is right. Here you leave the bark and bite of the watchdogs to deal with the wrongdoers in society and focus instead on your own actions.

The second reason is the notion that good practice spreads. The influence on a company at large depends on the culture set by the chief executive.

Companies need to make a person at board level responsible of its ethical direction and should appoint an ethics director. Senior executives can and will influence others and thereby create a groundswell in the organisation that will spread throughout. Other companies can then be brought together to agree on a code of good business practice. And once involvement grows to comprise a critical mass of companies, good business practice will take on a momentum of its own.

It may take time to see a real sea change in the business world, but making your own business more ethical is certainly a realistic goal. Concentrate on creating the right culture in your own business and let the watchdogs find other cats to chase.

Insurance: Cuts require treatment

Martin Howell — Wed, 11 May 2011 17:00:52 +0100

While spending on the NHS has been ringfenced by the government, it is in all reality a cut in real terms that will plainly affect the quality and delivery of hospital treatment in the years to come. It is much better to receive treatment in a private hospital with hotel type accommodation, without delay. A quality medical insurance policy will enable you to access this treatment at a manageable monthly cost.

At MediSearch, we find that many of our newest customers have been renewing their current policy with the same insurer every year, because they assume there are no alternatives to their current cover. Not so! There are many innovative policies out there. For example:

● Policies where you choose the benefits from a "menu" so you can select the benefits you really need - and not pay for benefits you don't

● A policy that fixes the premiums for a five year period, also placing part of the premium into a fund which remains your property and can be reimbursed to you l Policies that either pay for the treatment if you choose to go private, or pay you the cash equivalent if you choose to use the NHS

● Plans that have no-claims discounts, which rewards infrequent claimers.

What is also different these days is that it is often possible to transfer your cover to a more competitive plan, even if your health has changed - without jeopardy to your cover! By transferring cover, we have saved clients thousands of pounds in one year.

Analysis: If this is good news,why does it feel so bad?

Oliver Ralph — Wed, 11 May 2011 17:00:40 +0100

Those who view life through the microcosm of the stock market might be forgiven for thinking that all is well with the world.

Shares have done well, with the FTSE 100 rising by 22 per cent in 2009 and seven per cent in 2010, albeit after a disastrous showing in 2008. And the companies whose shares are traded on the stock market are, by and large, looking healthy. The corporate financial problems caused by the recession in 2008 and 2009 are largely at an end, leaving most firms on a strong financial footing. Profitability is up - according to data from the Office for National Statistics, company profits improved steadily in 2010 - after hitting a trough in 2009.

But out in the real world, life doesn't look so rosy. The full impact of government spending cuts is about to hit both the people employed in the public sector and the companies contracted to government bodies. Rising inflation is already starting to hit consumer spending power and the likely rise in interest rates will reduce consumer spending still further. The threat of a double-dip recession - or at least another tough year ahead - looms large.

This apparent divergence - strong corporate profits but an uncertain outlook - is giving the boards of UK companies some pause for thought. As we approach the third anniversary of the financial crisis, companies can look at their own accounts and feel confident. But they are, by and large, wary about backing that confidence with cash and investing for the future. The result is that investment, be it money put into new equipment or staff, or money spent on acquisitions, is proceeding at a cautious pace. Large-scale acquisition activity, a hallmark of boom times, is thin on the ground and those that attempt it have to tread with care - Prudential was embarrassed last year when shareholders objected to the price offered by the company to buy AIA, an Asian rival. And BHP, the mining group that is one of the five largest companies in the world by market capitalisation, was rebuffed by regulators when it tried to buy Potash Corp of Canada.

Those companies that are investing are targeting areas that offer the most secure prospects for growth. Geographically, that means emerging markets. By industry, it means commodities, energy and natural resources. Diageo, the drinks giant that owns Guinness, Baileys and Smirnoff, is a good example. In February it agreed a £1.3 billion deal to buy Mey Icki, the leading manufacturer of a spirit called raki in the growing Turkish market. Rio Tinto, the mining group, is another. It has committed to spending £12 billion on new projects since the start of 2010 to improve its ability to supply metals to China and other high-growth markets.

With domestic demand relatively weak (the employers' group, the CBI, expects GDP to grow by 1.8 per cent this year) few companies are planning major investments in the UK. With the exception of Kraft's acquisition of Cadbury last year - a deal which owed as much to Cadbury's position in emerging markets as it did to its UK heritage - the era of foreign raiders snapping up UK corporate titans has come to a halt.

The story is similar further down the size scale. Cautious investment in carefully selected growth markets is de rigueur. Construction group Carillion, which usually focuses on large-scale engineering projects, is investing just over £300 million in Eaga, a Newcastle-based business which supplies and installs energy-saving services. And Ashmore, a fund management group, in February announced the $246 million acquisition of Emerging Markets Management, which specialises in investing in emerging markets shares.

Across the board, companies are hoping that this cautious approach pays off. While chief executives may see a headline-grabbing deal as a surefire way to secure their legacy, the combination of austerity, inflation and rising interest rates should be enough to dampen the enthusiasm of even the most ambitious management teams for the rest of the year.

Analysis: Wealth tax should not be a stealth tax

Allister Heath — Wed, 11 May 2011 16:58:56 +0100

It was Milton Friedman, the late lamented economist, who described inflation as taxation without legislation. How right he was. Over the past year, the British public has suffered a national pay cut of around 2.5 per cent, becauseprices are rising at a much faster rate than incomes. The result has been a secret, giant act of redistribution from savers (whose wealth is being eroded as the purchasing power of sterling declines) to borrowers (the value of whose debt is gradually being cut in real terms).

Had the government passed a law in Parliament to take money from people's bank accounts to help pay down their neighbours' mortgages, overdrafts and credit card bills, there would have been outrage. Had the government decreed a partial default on the national debt, the financial markets would have erupted in anger.

Yet because this process is happening on the sly, without any discussion, hardly anybody is batting an eyelid - even though, once again, the prudent are being mugged to bail out the imprudent. Inflation is not just taxation without legislation: it is also the stealthiest of all taxes. Slowly but surely, sterling is being debased, with severe consequences.

Despite all of this, there are many in Britain today who have gone soft on inflation. Employers' groups and many firms are lobbying for interest rates to remain as low as possible for as long as possible, seeking to portray what is indisputably a massive and permanent rise in inflation as minor and temporary. The government is also secretly happy - cuts in public spending will be easier to make. And of course, there are some benefits as well as costs to inflation.

The problem is that the latter are much greater than the former, and that there is no such thing as a controlled burst of beneficial price rises. Once the inflationary genie is let out of the bottle, it soon turns into a wealth-devouring monster that can only be slain with the sustained and painful imposition of much higher interest rates.

The speed at which savings are being confiscated is astonishing. Inflation at 5.5 per cent per year will raise the price level by 30.7 per cent over five years: this reduces the purchasing power of £1 by 23.5 per cent, to 76.5 pence. Over 10 years, inflation at 5.5 per cent raises the price level by 70.8 per cent and reduces the purchasing power of a pound by 41.5 per cent, to 58.5 pence.

One reason why there has not been more of public outcry at the return of inflation in the UK is that the balance of power between savers and borrowers has changed dramatically in recent years. The latter have seen their influence diminish; the former have gained clout. In part, this is because savers were given a huge fillip when banks such as RBS and Northern Rock were bailed out at the height of the financial crisis. Debtors now probably think it is their turn for a handout. But the real reason for the shift is that Britain went on a debt-fuelled spending binge over the past 15 years or so, and that the political power of debtors is therefore commensurately greater.

Another Friedman saying was that inflation is always a monetary phenomenon, by which he meant it is caused when too much money chases too few goods, services and assets. But it is also fair to say that inflation can also be a fiscal phenomenon - when a country's debt burden becomes too large, the temptation for the state to start printing its way out of trouble almost inevitably becomes too strong to resist. It doesn't really matter whether or not the central bank is independent. If a government wants to take money from one group of people and give it to another, it should say so explicitly. If it wishes to default on the national debt, cut wages or reduce public spending in real terms, it should do this openly. It shouldn't use the Bank of England to do its dirty work. Inflation violates contracts and property rights; it creates uncertainty and mistrust. Its costs - economic as well as moral - are too great. Britain desperately needs a renewed commitment to sound money - and a new war on inflation.

Analysis: Calling in the crash team to bring the economy back to life

Alex Brummer — Wed, 11 May 2011 16:57:26 +0100

The best book on the Great Crash of 1929 is John Kenneth Galbraith's succinct account, written in 1956, some 27 years after the events that brought the world economy to a shuddering halt. It had the advantage of perspective, something that was lacking from the many accounts of the financial panic of 2007 to 2009. This includes my own effort, The Crunch.

When the authoritative account is finally stitched together, some time in the future, I suspect that one of the features of interest will be positive role played by Jewish economists in the events leading up to the crisis, in the debate about how best to respond to it and in clearing up the mess.

Many of the key players, including Ben Bernanke, the Federal Reserve chairman and Dominique Strauss-Kahn, the managing director of the International Monetary Fund, can claim Jewish backgrounds. Indeed, this has been fertile territory for some of the conspiracy theorists on the fringes of the internet.

It is, however, a fact of life in the United States, that many of the most prominent economic gurus happen to be Jewish. This can partly be accounted for by Paul Samuelson, the Nobel Prize winning doyen of US economics, who found Harvard an uncongenial environment for someone of his ethnic background and instead set up shop at the nearby Massachusetts Institute of Technology (MIT).

It is from this powerhouse of economic wisdom that many of the great names in modern economics emerged, including Samuelson's nephew Lawrence Summers, until recently serving in the Obama White House.

Alumni of MIT include Paul Krugman, the Nobel-winning professor at Princeton and New York Times columnist, who has been a fierce critic of the West's approach to the great panic and the economic contraction which followed.

Another MIT product is Joseph Stiglitz, a Nobel prize winner, who has been critical of the Osborne- Cameron approach to fiscal deficits.

But the most important of all is Ben Bernanke, the Federal Reserve chairman, who has been at the forefront of all the major decisions surrounding the crisis. All three of these men received their PhDs from MIT. Bernanke's has been most valuable, since his area of expertise was the Great Depression, a knowledge bank that made him invaluable during a crisis which Bank of England governor Mervyn King (a colleague of Bernanke at MIT) regards as the most serious for a century.

The policymaker whose reputation has suffered most from the crisis is Bernanke's predecessor Alan Greenspan. A free market economist, Greenspan earned his PhD from New York University. But his reputation, as the most powerful man in finance rests on his period as Federal Reserve chairman, having been appointed to the post of central bank chief by Ronald Reagan in 1987, holding on to the job until his retirement in 2006 when George W Bush was in the White House.

For much of this time Greenspan, a master of reading the economic runes, was credited as the genius who steered America and the world clear of the great inflation of the 1970s and 1980s and set it on a path to sharp growth. But in the wake of the great panic he has been widely criticised. Firstly, he is accused of having left interest rates too low for too long following the 9/11 destruction of the World Trade Centre in New York, setting in motion the conditions of the credit boom which followed.

Secondly, as chair of the Fed he is seen as having not done enough to restrain the greedy behaviour of the banks. The search for scapegoats is, of course, understandable. But Greenspan is much less responsible than the critics would have you believed.

In the wake of 9/11, he had little choice but to supply credit to the US economy. If not, Osama Bin Laden would have been rewarded for his symbolic attack on the heart of American capitalism.

Greenspan's mistake was to allow the credit free-for-all to run for too long. In fairness Greenspan was among the first to warn of an unsustainable housing market boom when speaking to other central bankers and economists at Jackson Hole symposium in 2005. But no one was seriously listening.

When the crisis reached its peak in September 2008 - after the collapse of the US broker-dealer Lehman Brothers - Bernanke found himself at the vortex of events. Learning the lessons of 1929, Bernanke opened the Federal Reserve's lending window to ailing banks and finance companies, like the financial arm of General Electric, and engaged in "quantitative easing" - printing new money.

When the economy failed to respond in 2010 and US unemployment remained unacceptably high, he organised the purchase of a further $600 billion of government debt designed to keep the financial system solvent.

Other key figures in dealing with the global financial crisis include IMF managing director (and now French presidential hopeful) Dominique Strauss-Kahn and his senior deputy John Lipsky. At the outbreak of the crisis the IMF seemed to be an institution seeking a role, but that role was quickly discovered, as countries ranging from Iceland to Mexico came a-calling. Strauss-Kahn reformed the Fund to give more voting power to emerging market countries and made it easier for nations to borrow than had been the case in the past.

But when it came to the euro crisis of last year, with Greece and Ireland needed rescues, it was old-fashioned IMF discipline on budgetary policy and cleaning up the banking systems that was required. The speed with which Strauss Kahn, a former French finance minister, acted is regarded as impressive.

In the financial crises of 2007 to 2010, the wisdom of people like Bernanke and Strauss-Kahn may have saved the world from a 1930s style catastrophe.

Tax: Call the plumber! It's an emergency

Wed, 11 May 2011 16:57:21 +0100

We are told that the Messianic era will be preceded by a period of great confusion, where previously accepted norms are turned on their heads. Over the past century, we have seen several events that previously were not thought to be possible, such as the creation of the State of Israel and the downfall of communism.

Even now, we are witnessing the fall of some long-standing dictators in the Middle East. Each of these events may be a sign that the ultimate Redemption is near.

The UK government, together with America and other developed countries, would like to see another change take place, perhaps no less radical. This change would mean that people would declare all of their income to the taxman, and have to pay the right amount of tax, precisely when it was due. No longer would comments such as "it's my money and I'll do what I want with it" or "what's it the taxman's business how much I earn?" be acceptable attitudes, or even the norm. By tackling non-compliance, increasing investigations and making threats to those who do not come forward, the government is committed to increasing tax revenues.

Over the last four years, HMRC has introduced amnesties and facilities to enable people with money offshore to pay their tax and make a new start. After some initial wariness, people are declaring hidden income and paying over money that they never intended to join HMRC's coffers.

The Liechtenstein Disclosure Facility (LDF) is still open until 2015, allowing people to declare offshore income on favourable terms. This has helped bring in over £8.5 billion of tax in 2009/2010.

However, HMRC estimates that there is £42 billion a year of tax which it is still not collecting, either through mis-statement of tax or non-payment of agreed liabilities. Closing this gap would mean a massive boost to the economy. But that can only come if attitudes to tax change. In the meantime, HMRC has commenced the most serious of investigations against some people who are known to have offshore bank accounts, but have not yet come forward. We do know of several cases where HMRC is holding incorrect information, but where it discovers that someone was holding offshore accounts and did not come forward, the consequences can be most serious.

And the government is at the same time ensuring that there are fewer places to hide. Who would ever have imagined that Liechtenstein would be cooperating with international tax authorities? The next target is Switzerland, already in negotiations. Some Israeli banks have handed over information about customers and the Channel Islands are also complying with HMRC notices for information.

For people earning money in the UK, but not paying the right amount of tax, a new facility opened on March 1, targeting plumbers, but open to all UK tradesmen. HMRC has obtained details of people who are Corgi-registered and is giving them an opportunity to clean up their tax affairs. For some reason, HMRC suspects that many plumbers prefer payment in cash and do not declare it to HMRC, also potentially saving them VAT. Terms of the facility are quite favourable and non-disclosure at this stage is likely to mean much harsher penalties and monitoring in the future. So for anyone with a Corgi registration, it is time to speak to your accountant or to a specialist who can deal with this for you.

After plumbers, another industry will be targeted. And in a world where we leave many electronic footprints, it is not hard to imagine HMRC collecting lots of data, to help target its inquiries. So will we look at a world in 10 years' time with no Swiss bank accounts, where all labourers take credit cards and give you a VAT invoice? Who knows, but if those who need to declare don't come forward soon, it might be time to start praying for the Messiah.

Dispute resolution: Instead of courting disaster, try something more agreeable

Wed, 11 May 2011 16:57:16 +0100

Business-related financial disputes happen. Most will be settled by negotiation. However, should matters escalate to litigation, resolution can become particularly costly and time-consuming, and can divert attention away from the management of the business itself, where it may be most needed.

In the current economic climate, unsurprisingly interest is increasing in cost- and time-saving alternatives to litigation. In this article outlines some of the possible options known as "alternative dispute resolution" (adr).

Disputes involving joint ventures, partnerships, boardroom management and shareholder interests, company sales or mergers, trusts and inheritance, and divorce, among others, are all capable of resolution by some form of adr process. As adr methods differ, suitability should be considered and legal advice taken. In certain circumstances, court litigation may be the only route to resolution. The focus of this article is on adr processes known as arbitration, expert determination and mediation.

Arbitration and expert determination both offer disputing parties:

● Flexibility and control over the process. This can enable an outcome which is quicker and less costly to obtain than litigation.

● The ability to choose their tribunal. This may be one possessing expertise in the technical matters in dispute which can also assist in achieving this outcome.

● Privacy and confidentiality, as opposed to public exposure in court. This may help ring-fence the problem and preserve working relationships.

Arbitration involves a neutral third party deciding the dispute and the parties agreeing to be bound by the decision. Its scope is similar to litigation and a range of enforceable court-like remedies are available. The Arbitration Act 1996 provides the parties with procedural autonomy and states that: "… the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay and expense…"

Expert determination is a contractually-based process and usually less formal than arbitration. It is commonly used when a valuation is required or an expert opinion is needed on a technical matter. Although there are significant differences, as in arbitration the parties agree to be bound by the decision of the expert.

Mediation offers similar attributes, but is otherwise entirely different. The role of the mediator is to assist the parties in reaching their own settlement. The mediator makes no decision.

Existing contractual arrangements may already contain an agreed dispute resolution mechanism based on one or more adr methods. Furthermore, court litigation procedure may require the parties to engage in mediation. Whatever the circumstances, adr options do exist and disputing parties may wish to explore them.

Daniel Djanogly is a chartered arbitrator and forensic accountant and provides expert services in the resolution of business-related financial disputes.

Venture Capital: California dreaming or wake up screaming?

Wed, 11 May 2011 16:57:12 +0100

I suppose I am not the only corporate lawyer to reach a point where my clients' faces are becoming younger and younger. I keep reminding myself that, from a business perspective, that's a good thing. The younger faces are, one hopes, the future clients of the firm, relate well to our younger lawyers and bring fresh drive and impetus to our practice. All of that is true, but of course I am covering up the fact that I am feeling older...

So why am I telling you this? Well, the other day I had a visit from a 20-something entrepreneurial client, looking very pleased with himself. He had been looking to find £3 million to develop his growing e-retailing business and was delighted to have been courted and offered the money from a very well-known and respected venture capital outfit in California.

You could see his delight at being presented with the key to his future plans and how the deal could liberate his business. With some pride, he recited the terms that he had struck and of course gave me the "well thought-out timetable", which meant that the deal had to be "legalised" yesterday, but preferably earlier.

And then, he looked up and saw my face. I tried to smile and show my enthusiasm, but - rather like a child looking for the blessing of a father but realising that it would never quite come - he could see through me.

Don't get me wrong. I was genuinely pleased for him, but at the same time a tad protective. I always encourage young owner/managers (particularly successful ones) to think really carefully about the level of equity - and rights - they give away. There is always a price for money, even if this does not translate into hard cash. We have seen a significant increase in funds made available from the private equity and venture capital communities, particularly those in California. These deals often appeal to our younger clients. They are very aware of the importance of the right management team and industry expertise and certainly these outfits can often provide the business with access to industry leaders, some of whom join the board and all of whom have a genuine interest in the business. The energy and drive of the Californian spirit resonates with the hungry entrepreneur.

However, when you read the small print, many of these deals are more "engulfment" than "liberating". In fact, liberty is a good place to start. You see, in addition to the 30 per cent of hard equity that you may have to give up, you are likely to see a change in class rights - the actual rights that attach to your shares. Suddenly the shares that go across to your funder may well become "preferred stock", paying a coupon to the funder and having preferential treatment compared to the ordinary shareholders. And there's more. Mr California may well want some really complicated anti-dilution rights to ensure that his shareholding will never dilute below a percentage in addition to having a long string of veto rights - oh, and did I mention the exit fees?

There is nothing wrong with wanting to grow your business - and quickly. It is just worth remembering that there are a number of ways to do it. We always start with the existing shareholder base, because often there is a real appetite for further investment. This can have the advantage of keeping the company private and investor relations have a track record and history which, if positive, can be extremely helpful. In addition to certain mezzanine and structure debt products, we have had some success recently with the PLUS market.

A smaller secondary market that enables companies to obtain a listing with considerably less regulatory red-tape than with larger markets of AIM and others. There is a good deal of flexibility built into the rules concerning PLUS and you do not need to have a full-blown admission document which significantly reduces the legal fees on listing.

Like all these decisions, the route to capital and ultimately exit is reflective of a number of factors - but the key point here is make sure that you take the time to explore your options - even if the trip to California looks the most appealing at first sight.

Personal Finance: Dog-loving bank unleashes a new way of serving UK customers

Wed, 11 May 2011 16:57:05 +0100

When MetroBank opened last year, it was the first new bank to open in London in more than a century. And the inspiration behind it, Vernon Hill II, is very pleased with the way things have gone since the first store, as the branches are called, began trading last July.

"It's been wildly successful, much more than we expected. The customers and the press have overwhelmed us with their response," says Mr Hill.

So far, four branches (known as "stores") have been opened: Holborn, Earl's Court, Fulham Broadway and Borehamwood, Anglo-Jewry's biggest growth area in the south of England.

Another eight stores are planned for this year, including one in Watford. The target is more than 200 by 2020.

"We call them stores, because we think of ourselves as being in the retailing business, rather than banking," says Mr Hill. "It does redefine how we deliver. It's meant to be an inviting retail area to encourage people to come in. It's about seven-days-a-week banking, 361 days a year, in great locations."

"I have started four banks in the United States and this is the same model transplanted to Britain," says Mr Hill.

"When I have been asked why Britain and not Los Angeles or Chicago, I say it is because the level of service is so poor in Britain that we saw a tremendous opportunity to redefine what banking is all about.

It is Metro's boast that a new customer can enter a store, open an account, be given a debit card and cheque book all within 15 minutes.

The bank takes what many would view as an unorthodox approach to marketing. For instance, it promotes a "love your dog" campaign and even gives away dog scarves and bowls.

Mr Hill explains: "Most banks won't allow a dog anywhere near the premises. The message we're giving is 'we love your dog, so bring it in and take a bone home with you when you go'."

Mr Hill doesn't mince his words about how some banks in Britain are behaving. "The level of service to the small business community by British banks is shockingly bad. Our business is half consumer, half commercial. We are out there to serve all aspects of the business community and we offer very competitive rates of interest," he said.

In America, he says, there are some 8,000 banks. "Generally speaking, the bigger the bank, the poorer the service to the consumer and the small business community. They are served best by small and medium sized banks, which is where we are bracketed.

"Every town in the US has its own bank, known as the community bank. That's what this model is called over there.

"Borehamwood is a good example. We have a whole team of people whose only job is to serve the whole community of Borehamwood. Customers can see the difference we make and say 'where have you been?' We get that a lot in Borehamwood, probably more than anywhere else. People there are just thrilled to have us.

"What customers want is service, both on the consumer side and the commercial side. Commercial borrowers want a banker who understands their business and can handle their commercial loans. That's what we do very well and why we succeed."

Financial planning: Relatively complex

Wed, 11 May 2011 16:57:01 +0100

Your parents have retired to Netanya, your daughter is in Australia and your son has settled in New York and started a family there. You could be heading for an inheritance nightmare. Anglo Capital has teamed up with the international law firm Withers LLP to share their expertise on tax and financial planning for "the international Jewish family".

At a recent seminar in London, an invited audience of financial professionals, trustees and high-net-worth individuals discussed UK, US and Israeli tax issues, US and Lichtenstein voluntary disclosure programmes, the possible pitfalls of acquiring property in the US and tax benefits granted to new Israeli residents.

Chaired by Withers' partner, Elaine Aarons, Anglo Capital was represented by CEO Philip Braude and the Withers' team included Tim George (UK), Jay Krause (US) and Justine Markovitz (Switzerland). Withers LLP is an international law firm with particular expertise in assisting individuals and families based in over 80 jurisdictions to mitigate their exposure to tax, both during their own lives and for future generations.

Anglo Capital is a financial services company offering comprehensive financial planning services, specialising in international tax structuring and wealth management. It also has extensive experience in assisting Israeli-resident clients to ensure that their family's offshore trust benefits from the generous Israel tax benefits that may be obtained if the trust is correctly structured.

"Recent changes in legislation in a number of jurisdictions can cause unexpected problems", explains Braude, "and families should look carefully at their wealth structuring arrangements. For example, having parents or children living in a different jurisdiction may have devastating impact on inheritance, with risks of double taxation in some situations. Domicile, residency and citizenship statuses have many different implications in different countries. Some people think, for example, that not going on aliyah protects them from exposure to the Israeli tax system, but spending more than a certain number of days per year in Israel may bring you into the system, for better or for worse. It is important to investigate the many advantages for new Israeli residents."

"However," comments Tim George, "if you do decide to leave the UK, recent case law has shown that it is no longer simply a case of spending fewer than 90 days in the UK in any tax year. You must make a clean break from the UK and you should take advice to ensure you are not accidentally pulled back into the UK tax net."

Justine Markovitz adds that "many families with accounts or structures in Switzerland or Liechtenstein are not able to use their money, as it has not been declared to the tax authorities. Whether you are leaving the UK or staying, there are opportunities to make full disclosure of offshore accounts on beneficial terms, but these may not last forever."