Guernsey Focus – Charting a Course for the Future

Dave Sauvarin, Northern Trust’s Chief Executive Channel Islands, shares his perspectives on the outlook for Guernsey in 2024 as part of an interview with Asset Servicing Times.

What has been the most significant change in the jurisdiction over the past year?

At a macro level the continued climb of interest rates in 2023 after nearly 15 years of net zero inflation has had an impact on Guernsey, as with other global international financial centres. This has resulted in a more challenging environment for fund raising as cash has returned to being an asset class. Despite this, the latest Monterey Insight Guernsey Fund Report shows 80 new groups and sub-funds were launched in Guernsey in 2023 and the Island’s differentiated product set has meant it’s been relatively well-insulated.

As we are now beginning to see inflation tapering off and a return to normal economic cycles, Guernsey is poised to support more attention from fund managers this year as a jurisdiction to domicile and service their global investment funds.

What trends are you noticing in the market, and how are you responding to them?

We are seeing more innovation from our global fund manager clients. They are increasingly offering a broader set of products to attract capital and deliver returns to their investors. This is resulting in more complex and diverse funds which Guernsey’s long-established fund industry has the experience and flexibility to support.

How is the jurisdiction continuing to differentiate itself from competitors?

Guernsey continues to offer managers a comprehensive toolbox of options to meet the spectrum of investment objectives – from funds targeting a very specific investor base to large-scale global funds across traditional and alternative structures. The island’s pragmatic regulatory infrastructure offers speed-to-market and experience in a time-zone friendly jurisdiction.

While Guernsey is not a member of the EU it operates a dual regulatory regime to enable the distribution of Guernsey-domiciled funds into both EU and non-EU countries.

How is the jurisdiction dealing with scalability issues?

With 50+ years of financial services experience, Guernsey has demonstrated it’s well-equipped to support change in the industry. We have a strong record in deploying ‘near-shoring’ and ‘out -sourcing models’ to support growth within a proven and mature infrastructure.

Guernsey is also a great incubator of new ideas, with the ability to implement changes quickly. Digital transformation is key to supporting scalability in 2024. From a service provider’s perspective, we believe digital transformation can facilitate asset managers’ access to services, solutions and new technologies across the investment lifecycle.

How are you continuing to incorporate ESG into your offerings and stay ahead of competitors in this space?

As ESG factors continue to play a heightened role in many investors’ considerations, our asset servicing solutions support our clients’ investment strategies and ongoing oversight. From supporting research and idea generation to risk management and reporting, Northern Trust combines asset servicing expertise with industry-leading collaborations to help solve our clients’ evolving ESG requirements throughout the investment value chain. This includes a suite of analytics and reporting solutions designed to provide transparency and actionable insights on ESG exposures.

At a jurisdiction level, Guernsey renamed its ‘Guernsey Green Finance’ initiative to ‘Sustainable Finance Guernsey’ in 2023 to reflect the broad work Guernsey does within the sustainable finance sector.

What are your plans and predictions for the jurisdiction in 2024 and beyond?

We are starting to see signs of Central Bank monetary policy take an effect on inflation indicating we may be through the peak of interest rate cycles. If we are moving into an economic growth cycle phase in 2024-25, asset managers need to position themselves to capture that growth as it comes through.

Guernsey continues to be well positioned to harness that demand through our board product set and speed-to-market infrastructure. As Guernsey’s largest administrator, custodian and transfer agent as reported in the new Monterey Guernsey Fund Report, Northern Trust is anticipating being part of this growth story in 2024 and beyond.

Extracts of this article appeared in the Asset Servicing Times Issue 332; Channel Islands Focus report. The full report can be accessed here.

Meet Our Expert | Dave Sauvarin

Dave is Chief Executive of Northern Trust's business operations in the Channel Islands. In this role Dave is responsible for managing and supporting the continued growth of Northern Trust’s business in the Channel Islands.

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