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p6 Double Tax Deal? Winter 2008/9p21 Telecommunications

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Moves to keepbunkering afloat

WINTER 2008/9 GIBRALTAR INTERNATIONAL 3

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4 GIBRALTAR INTERNATIONAL WINTER 2008/9

What’s in a name?

EDITORIAL COMMENT

Gibraltar variously hasbeen described as a‘tax haven’ and, moredamaging, as an‘offshore tax haven’;

a place perhaps where tax thatwould properly be due in onecountry is evaded in another.

Several countries, Spainhistorically, but reinforced more recently by France andGermany, consider Gibraltar to be a tax haven.

True a zero tax rate for some companies, when other -sometimes competing - companies pay tax, has not helpedGibraltar’s situation. But this act of ‘material selectivity’ends next year.

The OECD campaign against “harmful” tax practices,principally tax havens, arouses mixed reaction; some claimtax policy is a sovereign entitlement. Prompted by 17countries, the OECD is now preparing a new blacklist oftax havens for summer. In its drive for tax transparencyand effective information exchange, it already has ablacklist of ‘uncooperative’ countries, but not Gibraltar.

In truth, it has not been possible to hide behind TheRock’s lack of any double taxation or informationexchange agreements, because of its anti- moneylaundering laws, firm regulatory system, EU taxation ofsavings directive and the Schengen Convention.

The European Court of Justice’s welcome decisionagainst the EU and in favour of Gibraltar - agreeing it canlegitimately set corporation tax levels independent ofBritain -has helped raise The Rock’s standing andreputation. It reinforces firmly the fact that Gibraltar ispart of the EU, able to passport financial servicesthroughout all 27 member countries.

It has also meant a new 10 per cent tax rate can beintroduced with confidence from July 2010, previouslyzero-rated companies contributing for the first time.Effectively, that removes the ammunition for Gibraltar tobe described as a tax haven.

But what about Gibraltar being ‘offshore’? The IMF at its simplest describes ‘offshore’

jurisdictions as having relatively large numbers of financialinstitutions engaged primarily in business with non-residents. It lists Jersey and Guernsey as offshore financecentres for example, and less obvious Switzerland andLuxembourg but, most surprisingly, the City of Londontoo!

Off-shore it is then; particularly when the IMFdefinition adds “jurisdictions that have low or zero ratetaxation”!

Spain cannot argue that Gibraltar is a finance centrethat wants to earn a living by providing a location onSpain’s doorstep in which its residents can simply concealtheir wealth. A double taxation agreement and exchangeof information agreement at the Tripartite talks thissummer will be positive for all concerned.

Now Gibraltar is presenting itself as an ‘on-shore,main-stream, international financial centre’. A bit of amouthful – but at least accurate.

NEWS

Double tax deal prospect

Wooing Spain

Gibtelecom share sale?

New casino opens 6-8

INSURANCE

Passporting on-line policies 10

FUNDS

Trend followers see growth 12

PROPERTY

2009 revival forecast 14

BUNKERING

Keeping refuelling afloat

Growing Straits competition

16

TELECOMMUNICATIONS

Competition hots up! 21

PROFILE

Perez balancing risk & reward 26

LAST WORD

‘Credit crunch’, words of the year 31

Winter 2008/9 Volume 15 / Number 1

Published by GibraltarInternational Publications Ltd.1/5 Irish Town, Icom House, Suite 6/PMB 104PO Box 561, Gibraltar

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Contents

No part of this publicationmay be reproduced withoutthe written permission of thepublishers. The publishershave tried to ensure that allinformation is accurate, butemphasise that they cannotaccept responsibility for anyerrors or omissions. Thepublishers accept noresponsibility for statementsmade by contributors or forany claim made in anadvertisement.

Gibraltar InternationalMagazine is available onsubscription, 4 issues postedto: UK £24 - EU £32 - Rest of World £44.

© 2009 Gibraltar InternationalPublications Ltd.

GIBRALTAR INTERNATIONAL MAGAZINE

is beginning to put its mindto”. He assured: “TheGovernment has no policy dif-ficulty with such agreements ifthe Finance Centre Counciladvises that they are in thebest interests of Gibraltar.”

Gibraltar’s status as amain-stream EU on-shorefinance centre brought manyadvantages that were beingexploited, but there were alsoa number of obligations.

This is why offers werebeing made “to match thebenefits we get from member-ship with a willingness to for-malise co-operation arrange-ments and exchange of infor-mation agreements”, whichmay include a double taxation

agreement.Last July, the official

Communiqué of theMinisterial Meeting of theForum of Dialogue onGibraltar – the TripartiteAgreement – involving theUK, Spain’s foreign affairsminister, Miguel AngelMoratinos and Caruana, saidthere was agreement to worktowards co-operation onfinancial services and taxation(amongst other things).

Since then officials from allthree countries have met toprepare the basis of agree-ments – negotiating briefs thatset out detailed objectives andhow they can be achieved -ready for the next round of

First double tax deal in sight as Gibraltar prepares to shed‘tax haven’ tag and kills off its Zero rate tax status

investments and ExperiencedInvestor schemes, bankinvestments and loans andinsurance for people living inSpain.

“Banks, insurance and,more recently, investmentservices businesses are keenon this agenda”, Caruanamaintained. Many within thefinance centre had been

“wary of double tax agree-ments, because they camewith an exchange of informa-tion clause, but this has comeabout anyway by anotherroute – the OECD, the EU taxation of savings directive and the SchengenConvention”.

Having already been“exposed to many of the historically perceived disad-vantages of double taxationagreements, I don’t thinkthey are seen as a sort ofthreat very much anymore, sowe now may as well get thebenefit,” he declared.

There were growing viewsthat such agreements are “agood thing, although thedebate within the FinanceCentre is quite young; it’ssomething the finance centre

NEWS


Gibraltar expects to have fulldetails of its new 10 per centcorporate tax rate passed intolaw by July removing anyobstacles to a full exchange ofinformation agreement withSpain later that month.

The agreement wouldcover tax, supervisory andregulatory matters and potentially include a doubletaxation agreement - a firstfor Gibraltar with any country.

It follows a land-mark rul-ing by the European Court ofJustice in December that con-firmed Gibraltar’s ability toset its own tax rates inde-pendent of Britain, despiteopposition from the EU.

The existence of a ZeroRate tax, which must bephased out under EU materialselectivity rules by the end ofnext year, is seen as a majorfactor that allows a largebody of opinion in Spain toresist acceptance of Gibraltaras a main stream finance centre.

Some 7,000 Gibraltar busi-nesses, including on-line gam-ing companies, some privatebanks and insurers, benefitfrom a historic nil rate taxband.

“Gibraltar is not, and doesnot aspire to be, a tax haven

on Spain’s doorstep”,declared Chief Minister PeterCaruana in a wide-rangingexclusive interview withGibraltar International onwhat he described as “thehuge opportunities” availablefor the finance centre.

Areas that would benefitfrom a Spanish double taxa-tion agreement include collec-tive investment schemes,Experienced Investor Funds,bank lenders – a range ofpassported cross-borderfinancial services.

And he revealed to EditorRay Spencer, that in advanceof the new low tax rate for allbusinesses, he would make afurther substantial, “mean-ingful cut” this summer in the present 27 per centCorporation tax rate.

In the space of two years,the tax on business profitswill have fallen then by nearlyhalf with the further reduc-tion to 10 per cent from 01July 2010.

Spanish tax prizeBut it is the prize of gaining adouble tax agreement withSpain that would have thegreatest impact on theFinance Centre. It wouldthen be unnecessary to deductwithholding tax on collective

NEWS

Ministerial talks.“We have made a lot of

progress, but are not yet work-ing on texts of agreements andare almost at the end of thatprocess”, Caruana said. Theyhad been ruminating oversome issues and there was notyet complete accord about theextent of any agreement.

As a result of a personalinvitation from the ChiefMinister, the TripartiteMinisterial talks are expectedto be held in Gibraltar and SnMoratinos had indicatedinformally “that there shouldbe no problem”.

If that happens, it will bethe first visit to The Rock by asenior Minister from Spain,

which has Gibraltar on its‘black ‘list’ of tax havens thatalso includes other EU coun-tries such as Malta andCyprus.

Under Spanish law therewas automatic delisting whenexchange of informationagreements are in place,explained Caruana.

A lot of rubbish is pub-lished in the less well-informedSpanish press, said Caruana ashe emphasised that “theSpanish Government at thehighest levels had no doubtabout what is on offer to themfrom Gibraltar and our will-ingness has been declared bothpublicly and privately.

“Gibraltar is not a financecentre that wants to earn aliving by providing a locationon Spain’s doorstep in whichSpanish residents can simplyconceal their wealth fromSpain,” Peter Caruana,Gibraltar’s Chief Minister,declared.

“We have no way ofknowing if that happens”, headmitted, “but the financecentre has moved in greatleaps and bounds away fromthe classical tax havenarrangement into a muchmore main stream financecentre.

“Everywhere there will beclients who are present fordifferent reasons. I’m told bybanks and others that peoplewho are resident in Spain useGibraltar legitimately for

their global organisationalstructures and have nothingto gain from using Gibraltarsimply to conceal wealthfrom the Spanish authorities,because of the tax savingsdirectives and the obligationto disclose anyway”.

In the meantime, Gibraltaris in the midst of a ‘winhearts-and-minds campaign’in Spain, accepting anyopportunity to speak on tele-vision, conferences and meet-ings about its modernFinance Centre.

“We have to overcomedeep-rooted, intense, concen-trate, long-running layers ofbrain-washing propaganda towhich Spanish public opinionhas been subjected over manyyears and this is not easy todispel on the reality of

Gibraltar”, he said.“The first reaction of

younger people is an unwill-ingness or reluctance tobelieve, because it disarms;it’s not what they have beentaught to believe. Because it ispolitically expedient – almostlike stripping someone’sclothes away, their first reac-tion is to cover up.

“That can be overcome intime, because the reality isthat the young, educated,more European and open-minded people - even if theythink Gibraltar should beSpanish - are much less vitri-olic and less hung-up aboutthe issue”, he went on.

In December, the Ministerlaid out Gibraltar’s case toMadrid’s Nueva EconomiaForum and recently spoke at

the University of Algeceras,the Law Faculty of SevilleUniversity and in January toCordaba University.

This initiative he regardsas “very important” and theaim now was for people toput aside whether they con-sider they have claims onGibraltar, and instead look atwhat can be achieved for thebetter of all parties con-cerned.

Gibraltar was welladvanced in repositioning thefinance centre as “a stable,sustainable and main streamfinancial service centre offer-ing quality and value addedbusiness away from brassplate tax haven”.

The extent to whichGibraltar as a whole depend-ed on Zero tax and brassplate tax haven companywork “is very, very small -maybe there is the odd opera-tor out there, but there arecasualties in all reforms!”


Moves to woo Spanishpublic opinion

matching benefits of EU membership withwillingness to formalise co-operation

arrangements

“

”

Continued on P10

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NEWS


Gibtelecom sale in prospect, butexperience does not bode well

But experience shows it may notbe as easy as advocates of theGovernment’s exit from con-flicting roles of telecoms opera-tor and telecoms Regulatormight have expected!

Peter Caruana, Gibraltar’schief minister, told GibraltarInternational that some inter-est had already resulted frommarket soundings. A decisionon the Government’s stake inGibtelecom was likely to bemade this year, Caruana indicat-ed, “to remove uncertainty onthis issue”.

Any sale had to be “at theright price” by an organisationthat would “ensure that invest-ment continues to be made intechnology to ensure a goodservice for business and residents of Gibraltar”, he said.

However, it’s an approachalready tried without success bythe Slovakian Government,which now owns around 49 percent of Telekom Slovenije, and,

as such, also has owned half ofGibtelecom since June 2007.

Gibtelecom’s pre-tax profitfor the year 2007 (revealed lastNovember) rose by more than aquarter to reach £8.7m onturnover of £30.4m, up 6 percent. The total dividend was 9per cent higher at £6.3m.

Telekom Slovenije share of 2007 dividends wasd2,820,000, the Slovenian opera-tor’s annual report reveals, hav-ing paid previous owner VerizonCommunications d36.7m for its50 per cent stake in Gibtelecomin April 2007.

At about that time, thetelephony company’s share wasincluded in the Ljubljana StockExchange prime market listinghaving being quoted there forover 18 months.

At the end of 2007, theRepublic of Slovenia hadreduced its ownership ofTelekom Slovenije to 52.53 percent; the next nearest single

The Gibraltar Government is trying this year to sell off - or at leastreduce - its 50 per cent stake in Gibtelecom, the former wholly State-owned telecommunications business.

Gibraltar Phone Facts● 23,000 fixed telephone lines● 98m minutes of calls originated in Gibraltar, nearly

two thirds from fixed landlines ● 25m local calls and 5.2m international calls were

made in 2007 from landlines, down from the 38m and 7m in the peak 2004 year.

● 3 VoIP providers - Gibtelecom, Easycall and CTS - accounted for 6.8m outgoing international calls, 27% of the total in 2007.

● half of VoIP international calls were to the UK; just over a quarter were to Spain.Guernsey’s largest independ-

ent captive manager, HeritageGroup launched HeritageInsurance Management(Gibraltar) in January as “anatural extension of the juris-dictional choice that ourclients expect”, says TraceyJones, who has been appoint-ed head of operations locally.

Formerly a self-employedconsultant to private banksand having trained with PriceWaterhouse Cooper as a char-tered accountant, 34-yearsold Miss Jones has worked inGibraltar for four years.

The independentHeritage Group provides

insurance management,broking, aviation underwrit-ing, company secretarial, fundadministration and wealthmanagement services inGuernsey and has insurancemanagement offices in Maltaand Bermuda, with affiliatesin London, Jersey andBahrain.

“We feel that Gibraltaroffers an exciting, well regu-lated market with a lot ofgrowth potential”, enthusesJones, whose local managingdirector Kevin Rye, andGroup chief executive,Richard Tee, hosted a Januarylaunch event.

Island captive’s choice

Dinner dateVice president of the CharteredInsurance Institute in London,Branko Bjelobaba, is to be theguest speaker at the first annu-al dinner of the GibraltarInsurance Institute on 26February at the Rock Hotel.

The event is expected to beattended by 150 people, includ-ing Gibraltar Financial ServiceCommissioner, Marcus Killickand Penny Hudson, who isPresident of the GibraltarInsurance Association as well

as being chief executive of Caledonian InsuranceManagement Services.

The GII was formed inSeptember and its President isAndy Baker, chief executive ofArgus Insurance Company(Europe).

His 2009 programmeincludes a breakfast visit to theFSC on 04 March to hear ofpointers and lessons learned forthe industry and a one-dayRisk Regulation & CapitalAdequacy training workshopon 26 March.

holding then was just over 14per cent.

High demand for thoseshares was encouraged by theGovernment’s announcementthat it would sell its interest inTelekom Slovenije to the bestbidder in an international off-loading process.

Experts assessed the value ofassets for the purpose of the bid-ding, while seven candidatesinterested in purchasing theRepublic’s shares conducted duediligence reviews of the company.

In the end, a total of 12 organisations submitted bids, and talks subsequently proceeded with two.

But in March last year, the

commission in charge of con-ducting and monitoring the saleof the State holding in TelekomSlovenije “recommended thatthe Slovenian Government notaccept any of the bids”.

None of the candidates hadmet the requirements, reportedBojan Dremelj, President of theTelekom Slovenije ManagementBoard.

Given the current world-wide economic downturn, finding a suitable bidder in 2009at the right price may prove difficult for the GibraltarGovernment too!

See also Competition hots up page 21.

Gibtelecom call centre staff answercustomer quieries 24 hours each day

INSURANCE


A new direct private motorinsurer for the UK market hasbeen launched combining for the first time separateGibraltar-based insurance andbroking companies that arepassporting their services withthe target of writing £70m ofbusiness in the first year’s operation.

Leading the wayAlready providing “tens ofthousands of quotes” and hav-ing issued 2,000 policies in thefirst few weeks, First CentralInsurance Company Ltd andbroker First Central InsuranceServices Ltd, are togetherworking exclusively throughspecialist insurance compari-son sites such as confused.com,

gocompare.com and money-supermarket.com.

Cover is provided by bothfirms because aspects are pro-vided through the broker withthose insurance risks laid-offelsewhere.

First Central has becomethe first insurer to market itspolicies solely through com-parison web-sites, known as aggregators.

Both firms are members ofthe First Central Group, basedin Guernsey, and founded by acore team of Ken Acott andPatrick Tilley, previously jointmajority owners of ZenithInsurance PLC, which wassold to Guardian HoldingsLimited in early 2005.

Under the terms of the

deal they were prevented fromworking in the market for aperiod, but now have beenjoined as First Central jointfounders by three others -Mike Leonard, Peter Creedand Anne Cowland - all ofwhom previously worked inthe Zenith Group.

Motorcyles & vansThe plan is to launch policiesto cover motorcycle and vaninsurance later this year.

The new businesses arebeing managed from Gibraltarby the fast growing QuestGroup, under chairman SteveQuinn, and UK administrator,First Central InsuranceManagement Limited, is fulfilling policy and claims

administration at offices inHaywards Heath, West Sussex.

Already employing 60staff, First Central anticipatesthat this will grow to over 100in 2009.

Group chief executive,Leonard said: “The aggregatordistribution model will fullymeet our business needs as ourresearch identified that moreand more people in the UK areusing comparison sites tosource their personal linesinsurance requirements.”

Further information contact: Tom Acott

([email protected])or Steve Quinn

([email protected]).

Link to passport direct on-linecar insurance to UK

“If this doesn’t happen, itwill not through a lack of will-ingness on Gibraltar’s part”,he declared.

Low tax not bad“Low tax is good, not bad”Caruana declared, pointingout that Gibraltar was like theRepublic of Ireland, Cyprusand most of Eastern Europewhere there were lower ratesof tax.

“All countries should striveto have the lowest possible rateof taxation. The differencebetween good and bad cannotbe the distinction between highand low tax. There is no virtuein high tax and there is no sinin low tax”, he emphasised.

The new low 10 per centrate will mean less income, off-set to some extent by the taxthat will be paid for the firsttime by exempt companies,which the Governmentbelieves will not be encouraged

to find alternative countrieswith still lower, or no tax.

Had Gibraltar lost the ECJcase, Gibraltar would havehad to adopt the UK’s compa-ny tax system and companytax rates and “that wouldresult in the bulk, if not all, ofthe finance centre and gam-bling companies leavingGibraltar”.

Those new tax contributorswere not in Gibraltar only forthe tax advantage, which stillwould be good, but for a vari-ety of other reasons. “A poli-cy of zero tax is simply just notgoing to be sustainable withworld opinion,” he felt.

Nevertheless, Caruana hassaid publicly that the zero-rated on-line gaming compa-nies and insurers effectivelywill pay less than 10 per cent.

Taxation computation ruleswould result in the effectiverate being less and separatemeetings were taking place at

which “specialist taxationtechniques” needed to beworked out covering the insur-ance and on-line gaming sec-tors that would be defensible –“staying the right side of EUState Aid rules and not beingmaterially selective”.

Panel to adviseIn the UK, for example, therewere legitimate differences inthe way profit is calculated indifferent industries. “We arenot talking about re-inventingthe wheel - we not trying to beclever here – it’s a question oflooking at other systems of taxthat are valid and learning sothat we can properly tax a sec-tor that has not being payingbefore”, said Caruana.

The Government hasemployed a panel of eight taxexperts locally – lawyers andaccountants – to help with thedetails of the 10 per centscheme and drafting of

legislation.There was now some feeling

for how much extra the insur-ance industry, tax-exemptbanking businesses and on-linegaming companies might con-tribute in tax

A separate group of external tax advisers, alongwith the Inland Revenue andthe government, are consider-ing the implications of eitherasking the exempt companiesto forfeit the final six monthsof tax free existence – fromJuly to December 2010 – orwhether the shortfall in thatperiod can be made up by util-ising Government reservesarising from past surpluses, orfrom finding the money else-where.

The current year is likely toend up with another budgetsurplus of £12-15m, Caruanaforecasts, if oil prices remainaround US$50 a barrel or lessuntil March.

Deal in sight continued from P7

2008 will go down in history as one ofthe worst periods for the global invest-ment industry.

The value of global equities declinedby over 30 per cent, commodity indexesmade multi-year lows and property val-ues collapsed, following the sub-primemortgage debacle.

The problems for investors havebeen made much worse by the exception-al levels of market volatility and a seriesof major scandals, culminating in theBernard Madoff affair involving allega-tions that investors were defrauded ofUS$50 billion in a “ponzi” (pyramid)scheme.

In effect, the global situation is sobad that politicians are apparently loathto admit to the depth of the problems,and the implications for national debtand pension commitments.

Only a few independent commenta-tors are prepared to address the serious-ness of the situation.

The Alternative Investment industryhas suffered greatly from the series ofmajor fund disasters, with the shatteringof trust in the competence and integrityof fund managers and regulators.

Alternative Investment vehicles(“hedge funds”) were developed to pro-vide absolute returns and, therefore, tooffer some security in the event of the

decline of equity and property values. In early 2007, the hedge fund

industry had assets under managementestimated at US$ 2.5 - 3 trillion. Sincethen, there has seen an investor exoduswith total assets now estimated atUS$1.5 trillion - and still declining fast,as investors run for cover. But just whereare these investors going to put theirmoney in 2009; and is there anywhereleft that offers a safe bet for investors?

The simple truth of the matter -whichever way you cut it – is that thealternative investment industry probablystill offers investors the best chance of asafe and profitable place to put theirmoney in the current circumstances.

The recent spout of scandals andreports of poor performance is, unfortu-nately, exactly what is needed to shake upthe industry – an industry that has longsuffered from misconceptions, poor definitions of terms and a regulatoryblanket that has failed to do its job.

Still performingDespite the recent traumas, many of these alternative investment funds have continued to perform well.

These are generally the funds withsound strategies and risk managementwho have avoided the traps of excessiveleverage and the trading of financial

instruments with little of no liquidity.Certainly the way forward for the

alternative investment industry lies ingreater transparency and accountability.

But the general lack of trust in theindustry and demands for excessive regu-lation will hamper their ability of thosefunds to operate efficiently, effectively,resulting in the baby being thrown outwith the bathwater!

Maybe recent events will wake upinvestors, regulators and otherGovernment agencies alike to the factthat you cannot throw generic terms like“ Hedge Funds” around and that youneed to do the homework, as with any-thing in life, if you want to be successful.

Look up the definition of a hedgefund on any good internet search engineand you will probably come across atleast ten variations.

Once you think you’ve defined whata hedge fund is then look at how theindustry itself categorises the 10,000-plushedge funds with confusing terms suchas ‘long only equity’, ‘equity short bias’,‘equity market neutral’, ‘event driven’,‘managed futures’, ‘equity arbitrage’,‘short volatility’ and many more!

The list is seemingly endless, butunfortunately, it is also essentially mean-ingless as many hedge funds do not oper-ate with any constraints and the authori-ties are apparently unable to ensure thatthey do what they say they will do.

Realistic aims neededSo how can an investor select a suitablefund? The secret lies in the identificationof sound strategies and competent man-agement capable of achieving realisticaims.

The alternative investment industryprobably still offers most investors thebest chance of future success, butinvestors can no longer assume anythingand will have to develop a better

FUNDS

Systematic trend followers havesimple beliefs for future growth


Despite a general loss of trust in the veracity and expertise of those managing alternative investments, some Hedge Funds still offer a “safe andprofitable” home, argues Chris Clarke – probably!

The Chart shows a comparison between the S&P 500, a widely used benchmark of Global stock markets ,the Credit Suisse Tremont Hedge Fund Industry benchmark of returns, and a custom benchmark of thereturns for the ten large ‘trend following’ vehicles (asset weighted and managing US$20 bn).

1999 2000 2007 2002 2005 2004 2005 2006 2007 2008

£400

£350

£300

£250

£200

£150

£100

£50

£0

CSFB Hedge Fund Index S&P 500 Index of 6 Trend Following Funds

Continued on p14

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The rise is the result of the twineffects of lack of sufficient suitable properties and ananticipated increase in demandprompted by the poor

exchange rate and the recent EuropeanCourt of Justice (ECJ) ruling that confirmed Gibraltar’s Corporation Tax-setting ability according to estate agent,Chesterton.

Commercial property too shouldreceive a boost, both because 80 per centof the 15,000 sq m of new office spacehas already been let or sold and alsofrom more companies choosing to relocate to Gibraltar following thefavourable ECJ decision.

Euro promps“For some time we have known of insurance and gaming companies in particular, holding off their decision tomove here until the tax situation wasresolved; now there is nothing to stop them”, explains Jeremy Boyd,Chesterton’s local director.

But deteriorating and unsettledSterling-Euro exchange rates is prompt-ing existing staff working on The Rockand living in Spain to consider moving

across the border to save money.The first quarter of each year always

sees an increase in letting enquiries whenHigh Net Worth and other individualsconsider relocating to Gibraltar to takeadvantage of the favourable tax ratesbefore the UK financial year ends inApril.

The Ocean Village estate agency,opened last summer, has confidence thatthe revival in the rental market will alsogenerate interest in property sales, aftera year of some decline in prices – down5-10 per cent on 2007.

The currency value issue, coupledwith the availability now of low mortgage rates, has prompted people tolook at buying Gibraltar property.

However, stock levels are expectedto diminish in 2009 as more sellerschoose letting as an option whilst theywait for market conditions to improve.

In the last 24 months, Gibraltar hasseen the largest delivery of privatelybuilt property – some 900 units completed – “and occupancy rates nowexceed 90 per cent with the best rentalproperties receiving multiple offers”, asituation expected to remain in 2009.

Boyd notes that “there is a distinct

shortage of quality one and three bedroom rental apartments, and as aresult generally yields on capital areexpected to remain around 6 per centthis year”.

In the final quarter of 2008,Chesterton reported an upturn in inter-est from some buyers looking to buyGibraltar property as opposed to leavingcash in the bank, because saving ratesare low at about 4-4.5 per cent.

Local tax breaksMost employed and self-employed firsttime buyers who live in Gibraltar alsobenefit from Government tax breaks.

Boyd calculates that a working couple buying a typical £150,000 prop-erty with a 90 per cent mortgage couldrecover half of the interest paid for thefirst four years of their loan, through tax relief and the present attractive mortgage rates.

“Unlike other Mediterranean desti-nations, where the local population havebeen priced out of the market,Gibraltar’s first time buyers benefitingfrom both reduced Sterling interest ratesand the favourable tax incentives to buyproperty”, he notes.

PROPERTY

An expected shortage of rental property, heavily favoured by finance centre workers, is expected to push achievable rents up by around 10 per cent this year.

Ruling prompts property revival,but shortages again predicted


understanding of where they put money.Similarly, investors will have to fully

understand that consistent, smooth andguaranteed investment returns are a“Holy Grail” that simply does not exist.

Some well established strategies do,however, continue to achieve the twinaims of high levels of return and low risk.The most successful investment categoryin 2008 – and many, myself included,would argue the most successful invest-ment category for the last 30 years – arethose funds generally referred to as ‘sys-tematic trend followers’.

From my many years of research I

can find only eleven investment vehicleswith a 20-year track record averagingmore than 20 per cent a year, and fourout of five of those vehicles are systemat-ic long term trend followers.

Systematic trend followers have asimple belief that you must trade with theodds in your favour and also that effec-tive risk management is the core to suc-cess.

However, typically it is this simplici-ty that seems to puts investors off; mostseem to believe that a successful strategymust involve great complexity, largenumbers of economists and mathemati-cians and “star” managers.

Trading with the odds in your favourdoes not, however, guarantee the smoothreturns that investors are most happywith.

Results are best judged over yearsrather than months and investor patiencewith some volatility of earnings is chang-ing. Investor demands for smoothreturns are responsible for most of thedangerous high leverage strategies developed in recent years!

Chris Clarke is a fund manager forCrystalClear Capital Management Fund,

part of Quay Umbrella Fund PCC Ltd.www.QuayUmbrellaFund.com

Trend followers continued from p12

Faced with growing competitionaround the Straits of Gibraltarand physical constraints withinthe Bay, Government, PortAuthority and industry leaders

are turning their attention to how thebunkering business can be retained – andfurther expanded.

However, Gibraltar has very little landavailable for on-shore fuel storage facilitiesand bunker operators experience conges-tion at the deep water anchorages whereship-to-ship fuel transfers take place.

Further pressure on Gibraltar to find asolution comes from the concern of environmental groups in Spain at risk ofpollution arising from accident or spillageinvolving the three floating bulk fuel storage vessals known as ‘mother ships’.

According to industry sources, there isthe strong possibility that EU and interna-tional maritime Regulators may seek in thenext few years to outlaw these ships.

For two years, the Gibraltar governmenthas been in behind-the-scenes negotiationwith the British Ministry of Defence to takeover around a dozen large fuel tanksinstalled more than 50 years ago at theMoD’s King’s Lines fuel depot, deep insideof The Rock.

That would involve total refurbishmentor replacement of the disused tanks andtheir associated two separate pipelinesdown to the Port at a significant cost - “pos-sibly easily up to $US 30m”, according toan industry insider.

“Even in these days of credit shortages,there are still sources very interested toinvest in such a venture”, the source con-firmed, “but it would take two years for theventure to become a reality and possiblyfive years to achieve full potential”.

Transfer from military ownership tocivilian use of the depot could lead also toopportunities for blending fuels at the on-shore depot, simplifying the bunker bargeship-to-ship operation, which still would beneeded.

There would be local employment too; atpresent those manning mother ships gener-ally are foreign nationals not contributingto the local economy.

But the government would be underpressure to ensure a good financial returnfor Gibraltar and to guarantee equal accessfor all operators to the available supplies, ifany private sector company was to gaincontrol of the large on-shore depot.

Another, even longer-term potential solution involves installation of a land-based storage facility underwater,which might involve widening of GibraltarPort’s Detached Mole that protectsGibraltar’s harbour basin.

More immediately, the Gibraltar PortAuthority is looking at how to better usethe - at times congested - sea anchorages.

The aim is to achieve “greater efficiencythrough better management of the facilities

and thereby shorten calling times,” explainsCaptain of the Port, Peter Hall, who is alsothe GPA chief executive.

The Port is bidding for £500,000 of extra capital spending in theGovernment’s 2009-10 departmental budg-et plans, which would go on extra staff tocarry out on-board barge vetting and tosupplement existing CCTV, purchase ofnew infra-red night time vision cameras toaid monitoring of bunkering activity.

At the same time, re-opening of anchor-ages on the Eastern side of the Rock – sub-ject to the prevailing strong weather condi-tions, at certain times of the year - is anoth-er idea being actively considered.

Whilst this would require governmentrisk management assessment and approvalto give perhaps up to 20 more bunkeringanchorages, crucial to all the efficiencymeasures is introduction of greater manage-ment of information systems.

“All ships today have auto-identification systems that help plot theirposition, but this is presently limited byhorizon range, so a new aerial on top of TheRock is an essential ingredient”, Hall pointsout.

In the meantime, bunker operators are

The Rock holds a key strategic position forcommercial shipping – arguably the mostimportant and cost-efficient means methodof transporting goods around the World.

Vessels carrying all types of cargo haveto be fuelled along the route of their voy-age. Some 75,000 ships pass through theStraits of Gibraltar on their way from theMediterranean, the Black Sea, the IndianOcean and beyond to the Atlantic ports ofEurope, North and South America andWest Africa.

Shipping routes between Europe andWest and South Africa, Latin America andEurope, North America and Africa are alsoin close proximity to the Rock.

It’s little wonder that the Port ofGibraltar, at the cross roads of major glob-al trading routes, has established a strongposition as a major bunkering centre,accounting for just short of a quarter of allthe business undertaken at the top tenMediterranean bunkering ports.

Unprecedented world-wide economicgrowth in the last couple of decades result-ed in a huge increase in maritime trans-portation and consequently the demand for

marine fuels soared. Gibraltar proved wellable to reap the benefits of growth andnow is estimated to be the 7th largestbunker port in the world!

According to Gibraltar Port Authority(GPA) figures, 4.3m tonnes of bunkerswere delivered in 2007, compared with just0.84m tonnes in 1990.

Only 1,617 ships called to Gibraltar forbunkers in 1991, but 5,367 did in 2005and still more - 5,640 - in 2007, represent-ing more than two thirds of the deep-seavessels calling at Gibraltar.

Other main ship re-fuelling centres inthe region include the Suez Canal andGreece, with Piraeus / Kali Limenes supply-ing around 4m tonnes. But whilst Ceuta,just across the Straits from Gibraltar,remains small in this business, other near-by locations may in future represent a larg-er competitive threat.

Bunkering stallsOil giant Total is understood to beinvolved with the Moroccan government ina long term plan to construct a new portfacility for Tangier that will include signif-

icant bunkering, and Span’s Algeceras, onthe north of the Bay of Gibraltar, is alsoexpanding its port facilities with associatedbunkering expecting a larger share.

But bunkering growth in the Regiongenerally stalled in 2008 and Gibraltar’scapacity to handle more business has beencalled into question. Nearly all marine fuelfrom Gibraltar is supplied off-shore andindustry sources suggest there is only limit-ed further space at the anchorages, whichwould severely limit further growth.

Apart from its strategic location, shipoperators are also attracted to Gibraltar,because its high turnover provides a com-petitive market, there are low port duesand the government continuously monitorsactivity, the GPA says.

Gibraltar has been successful too inattracting an increasing number of cruiseship to call at the Port and being able totake on competitively priced bunkersalongside the berth at the same time as call-ing at a popular destination is an addition-al attraction to ship operators withWestern Mediterranean itineraries.

However, the government receives rela-tively little direct income from the fourcompanies in bunkering, even though it isby far the Port’s largest activity, becausemost of the transfers of fuel take place at

Continued P19


also considering how much extra use couldbe made of existing anchorages if the pres-ent three large ‘mother’ storage ships areforced out of operation.

But in response to inquiries fromGibraltar International, both theInternational Maritime Agency andEuropean Commission representativesdenied knowledge of any plans to preventuse of floating bulk storage ships. Many inthe industry, however, believe otherwise!

BUNKERINGBUNKERING

Far reaching plans are being made to secure and expand Gibraltar’s positionin 2009 as the most important ship refuelling point in the Mediterranean. ButGibraltar International Editor Ray Spencer finds that significant obstacles havestill to be overcome.

Moves to keep Gibraltar’s key ship refuelling sector afloat


Growing Straits CompetitionChoice of which port to refuel at and which company to use is aboutlocation, price and availability and speed of turn-around; until recently,the demand for bunkering has been greater than Gibraltar’s supply.

Cou

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y of

GPA

and

pho

togr

aphe

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ny D

avis

Bunkering GrowthAction PlanMeasures being investigated include:■ reinstate ex-Military under-Rockstorage tanks at US$ 30m;■ greater harbour anchorageefficiency management at £0.5m togain 10% more capacity;■ re-opening Eastern anchorages toadd 30%+ capacity;■ under-sea bulk storage.

Gibraltar 24%

Athens 23%

Algeciras 11%

Genoa 9%Istanbul 8%

Marseille 8%

Novorossiysk 5%

Barcelona 5%

Malta 4%

Venice 3%

Top 10 Mediterranean bunker ports18.3 million tonnes

Cruise ship Island Escape bunkering in Gibraltar Port

Continued from P17

sea from the three bulk storage vesselsanchored in Gibraltar territorial watersthat in turn, receive their supplies fromtankers. GPA revenue is around £4m ayear in Port dues and pilotage (that alsoincludes cruise ships) and a bunkeringlevy. A fleet of 14 bunkering barges – inreality, well-equipped sea-going tankers-mostly ferry fuel between the anchored‘mother ships’ and the merchant cargoships that stop in Gibraltar’s waters.

Five more barges ply between shorestorage facilities in Gibraltar and alsoparticularly from the CEPSA refinery atAlgeceras used by tankers from theGibunco Group, which accounts fornearly a third of Gibraltar bunkeringactivity.

Only the Gibunco Group is Gibraltar-based and operates its PetroleumDivision from Europort, via a jointly-owned operation with Spanish oil com-pany CEPSA, and also through its ownPenninsula Petroleum Company.

“I believe the perception is thatGibraltar does not get enough frombunkering, but our costs here are in linewith the rest of the world and in addi-tion, The Rock economy benefits frombusiness generated by agents with crewchanges, the airport, supplies andrepairs”, said John A Bassadoni,Penninsula’s managing director.

Not rust bucketsContrary to the view of some environ-mental pressure groups, the floatingstorage vessels operated in Europeanwaters are not ‘old rust buckets’, butmodern, double-hulled sea-worthyships, capable of normal freight duties.

They are manned by sufficient crewto satisfy both the local MaritimeAuthority from a safety perspective, andthe vessels’ own Maritime Registry onsafe manning levels for the type of oper-ation for those vessels.

Peninnsula has invested in 7,000tonne bunker tankers, like the £15mGibunker 100, the largest and mostmodern bunker tanker in the area; it isthe only one of the new breed opera-tional in Gibraltar at present, butBassadoni is considering moving a sec-ond of his four from Singapore toGibraltar to meet demand.

The bunkering operations, whetheron or off-shore, require not only storage

and delivery facilities, but in most cases,blending capabilities to suit the varyingquality of desired fuel for the differentengine requirements. The varieties ofmarine engines require different types offuels, ranging from heavy oil fractions tothe light types of marine diesels.

Delivering bunkers requires close co-ordination with the Port Authorities, thecalling vessel, the Shipping Agent andoften the ship owner. Logistics for thebunker supplier are also an importantfactor with a need to have the rightbarge with the right fuel available at theclosest time to the arrival of the vessel.

Current vessel charter rates are suchthat delays for any reason are expensive,making close co-operation not onlyimportant but also necessary to improveavailable space for other bunkers.

Another factor is the focus being puton environmental issues and safety, suchthat Gibraltar moved in 2002 to intro-duce a Bunkering Code of Practice, witha Bunkering Superintendent position,and a licence-based operation, usingstandards based on Singapore, consid-ered to be the safest and cleanestbunkering port in the world.

“Increasing competition in this partof the Meditteranean will be good for

us, because it will bring still furtherfocus on the available bunkerage solu-tions and particularly on the other facil-ities that can also be offered as part of acomplete package”, says Bassadoni.

The Gibunco Group, founded by hisfather in 1968, “is also in ship repair,hull cleaning and fuel conservation serv-ices, so we have potential to offer clientsmore than a refuelling service”, hepoints out.

However, there are global factors thatmight have a short-term negative effecton the Gibraltar Bunkering Industry.

The “credit crunch” and economicdownturn being experienced by majorindustrialised nations will lead to anoticeable reduction in the volume ofmaritime shipping. The level of bunker-ing has already dipped slightly locally,sources report, and the volume of fuelstransferred will most likely fall furtherthis year.

But the Shipping Industry will notcollapse as there always will be demandfor transportation of goods regardless ofthe ups and downs in the economiccycle, but the volumes of trade almostcertainly will be lower for a couple ofyears.

Well before the 2008 hike in fuelprices, the trends was for building muchlarger tankers and container ships, ascargo charterers continue to seek greatercost-efficiency and it is expected this willbe maintained as the cost of barrelsagain gets more expensive.

The result is larger engine sizes and agreater daily consumption of fuel - up to250 metric tones - which means a singlebunker requirement of 6,000 metrictones or more. Significant investment islikely to be needed to gain larger andmore sophisticated bunker barges.

In the past year alone, five morebunker barges began operating inGibraltar waters – a 25 per centincrease.

There is already evidence that newmarine engines operate on lower-gradeand cheaper fuels with high viscositiesand densities

With suitable “bunker barges” capa-ble of blending fuels to the requiredgrades on-board and delivering these inlarger quantities at the right tempera-tures, Gibraltar bunkering operatorswould be able to attract the super-tankers as well!

BUNKERING

Bunkering in Gibraltar

2008 estimated2007 actual

Total volume:4.3mtonnes

Vemaoil Aegean Bunkers Cepsa Gibraltar Gibraltar

38% 37%

27%

23%

3%

8%

32% 32%

MS Europa Ventures bunkering


Although the Gibraltar RegulatoryAuthority (GRA) was established more than eight years ago with aremit “to develop an effective

choice for both business andresidential consumers” it is only now in2009 that a significant effect will be seen on landline, internet and mobile telephony.

Owned 50:50 by Telekom Slovenije(Slovenia’s part-State owned telephonybusiness) and the Government,Gibtelecom is still Gibraltar’s largest supplier by far of fixed and mobiletelephony and internet provision.

But it is now that the business facesits strongest competition on all fronts.

Two private companies, SapphireNetworks and CTS, have been workingto supply alternative services claiminglower prices – and there’s the prospect ofstill greater competition to come.

Newest on the scene is CTS, whichwas granted 40,000 landline and100,000 mobile numbers, when licensedat end 2007. However, for Gibtelecom’saccess charge and technical reasons toeffectively share access to cabling and atkey junction boxes, it was a year beforethe CTS 216 fixed line prefix could bemade workable, even within Gibraltar.

Competitive powerThe firm, started 22 years ago by Oxfordcouple Angie Jones and SteveLambourne, began in Gibraltar in 2000providing computer systems services,data recovery and server hosting. But inlate 2003 it evolved into a telephonyservice provider offering internationalvoice routing over the internet.

At that time, Gibtelecom chargedbetween 19p and 29p a minute for directdial UK calls, while Steve says CTS came

in at 12p for businesses and 8p for resi-dential customers using VoIP (Voice overInternet Protocol).

By end-2008, Gibtelecom’s rate forthose calls was down to just 7p a minute,illustrating worldwide trends and the power of competition, with CTS countering with an alternative £10-a-month unlimited call package.

“With regard to Local Loop Access,we’ve been trying to gain access for about18 months, but the pricing structure fromGibtelecom is ridiculous and we believe,anti-competitive. The Regulator isreviewing this situation at present”, Stevesaid in December. As a result, CTS offersa variety of wired and wireless solutions.

Sapphire Networks in late 2004 wasthe first fully independent telecommuni-cations company to be granted a licenceborn out of the takeover by itsBroadband Gibraltar Ltd of the 1995

independent internet pioneer companyGibNet Ltd.

Prompted by demands from thegrowing number of Gaming companiesfor a secure and reliable mass data net-work, Sapphire decided to invest over£6m to satisfy the ‘high end’ corporatebusiness market – bandwidth & speed-hungry businesses – and other internetand potential landline traffic.

By end-2007, it completed installa-tion of a 10km ring of fibre-optic cable – capable of handling far greatervolumes of data and voice traffic at muchfaster speeds than traditional coppercabling – utilising Ministry of Defenceand GibElec ducting around The Rock.

It also had installed a 6.5km fibreoptic cable through the frontier to LaLinea in Spain!

That gave Sapphire its trump card bymaking possible internet and leased linesthrough dual independent fibre opticdata links via Telefonica and ONO to itsMadrid Point of Presence (POP) datamanagement centre.

Sapphire, like Gibtelecom, uses aTelefonica link to Madrid, but also backsthis up with a separate ONO fibre datalink to help ensure complete reliability ofservice with differing technologies.

Dual supply essential(The POP supports multiple customersfor any service they need, including next-generation services suchas triple and quadruple play, and high-bandwidth business applications.)

With southern Spain traditionallythe weakest link in the international com-munications chain to Gibraltar, this dualarrangement has been essential forSapphire, as with the other key marketplayers.

TELECOMMUNICATIONS

Telecommunications in Gibraltar are suddenly blooming, with tens of millions ofpounds being invested in establishing and upgrading new networks and physicalinfrastructure as part of liberalisation measures.

Competition hots up to bring still better deals and more telecommunications services

Engineer working on Gibtelecom’s advancedswitching equipment.

Continued P22

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“As a result - by using two independ-ent companies through Spain - there hasnever been a time when both are down atthe same time”, explains Lawrence Isola,Sapphire director and chief executive.

“Being ‘out’ even for a fraction of asecond can cost some companies thou-sands of pounds and make or break adeal; we have had 100 per cent up-time”,he adds.

Undoubtedly, with one eye on actualand anticipated greater competition,Gibtelecom has continued its policy ofinvestment in and upgrading of it networks and infrastructure.

To satisfy customer demand forinternet ‘Hosting services’, Gibtelecomcommissioned a state of the art data andserver hosting centre at its MountPleasant premises.

Such was the demand that the facility was quickly oversubscribed and asecond £1m phase launched in November2008.

£20m+ investedGibtelecom’s Network OperationsCentre is also based at Mount Pleasantproviding 24/7 call centre facilities andnetwork monitoring of its local and inter-national infrastructure.

To help stay ahead, “some £20m”was invested in the 2001–2006 period ontechnical and physical developments,according to Tim Bristow, Gibtelecomchief executive

Still more has been spent since then,including at Mount Pleasant and onestablishing in January a JohnMackintosh Square building adjacent tothe Haven and City Hall, where much ofthe company’s fixed line switching andinternet equipment is located.

For more than two years,Gibtelecom has also each month beenoffering a new price reduction or serviceenhancement. However, as the dominantsupplier Gibtelecom is prevented underCompetition rules from cross-subsidisingits different products, many of which areinter-related, and provided on a cost-plusbasis.

Majors in broadbandGibtelecom told Gibraltar International,that even in 2008 it was the major broad-band supplier with an estimated 90 percent market share.

Nevertheless, Sapphire after threeyears claims an impressive 50 per cent ofGibraltar’s Gaming Companies use itsinternet services, although some financialservices businesses contract with morethan one company to safeguard continu-ity of service – a belt and bracesapproach.

Isola, who also manages Europort,Gibraltar’s largest commercial centre,also says that Sapphire has quietly targeted specific market segments andcaptured four trading companies andfour banks as well.

He maintains that Sapphire’s pricingoffers significant savings over Gibtelecomfor high-end internet bandwidth users,

especially on three year contracts, andstill bigger savings for its leased line customers.

Land line use in Gibraltar – as else-where in the world – is falling in relationto mobile calls and also because of use ofVOIP by companies as well as by individ-uals. Gibtelecom estimates that over 60per cent of Gibraltar households have abroadband internet connection.

High internet bandwidthThe number of internet subscribers grewaround 15 per cent to just over 8,000 inthe year to 2008.

TELECOMMUNICATIONS

Monitoring of Gibtelecom’s network and international routes at the Network Operations Centre

Continued P24

Competition from P21

The Company’s latest annual report(published in November) shows 2007fixed line revenue only slightly down at£9.6m, but that was before significantprice cuts last year; wireless turnoverhowever, was up by just over 16 per centyear-on-year to reach £8.45m.

Gibtelecom investment in bandwidthcapacity enables high IP bandwidth availability via diverse and resilient international routes crossing Spain andlinks to Morocco. Since 2002, theCompany’s bandwidth capacity hasincreased over thirty-fold.

This year, Sapphire expects to get itsown telephone numbers and plans anattack on the residential and small busi-ness market with extensions to its cabling“to take in the whole of Gibraltar’s westside from Main Street down so that wecan begin in mid-2009.”

At that point, Sapphire hopes tomake further price reductions and intro-duce product bundles with advancedtelephony features on the network”, Isolareports.

Technology convergenceA similar convergence strategy is beingpursued by Gibtelecom, which does notbelieve that competitors are always pro-viding services at lower prices and “defi-nitely not with higher standards”, said aspokesperson.

Late last year CTS introduced anovel twist with WIMAX internet, theworld’s first self-install subscriber unit,eliminating the need for installation engineers and provided free with sub-scriptions. It also gives the same speedfor upload, which is particularly useful tobusiness.

In the first year of service, CTS han-dled at least £1m worth of calls and nowaims for “the lion’s share based on easeof use and price, our 512kb ADSL offer-ing being around half the cost ofGibtelecom”, explains Angie Jones, thebusiness director for CTS.

The Company also claims line rentalsavings for the business community byproviding tiered ISDN lines from 8 to 30channels (lines/simultaneous calls) andpaying only for the amount needed.

A business needing 10 channels, for example, would pay CTS £400 installation and £100 rental per month,

whereas it says Gibtelecom would cost significantly more - £1,500 installationand £610 rental!

In February 2007, Gibtelecom con-cluded the first roaming agreement witha Spanish operator, Telefonica, allowingGibraltar GSM customers to use mobilesthroughout Spain as a result of Spain recognising Gibraltar’s +350International Direct Dial Code.Gibtelecom also roams with otherSpanish mobile operators.

Gibtelecom then boasted 24,000GSM customers with a per capita penetration of 83 per cent and since then Gibtelecom and other networks have concluded wider mobile access agreements with greater use and lowerprices.

In November 2007, Gibtelecomrevealed investment of over £2m inupgrading its mobile network to 3G stan-dard, High Speed Downlink PacketAccess and an intelligent pre-paid plat-form, aided by the substantial experienceof its much larger Slovenian shareholder,which operates in eight other (mostlysouth-eastern European) countries.

TIME challengeThat meant higher speed internet accesson mobile handsets and prepaid cus-tomers being able to make outgoing callswhilst roaming across networks.

And as a pointer for the future,Telecom Slovenia’s 2007 annual report

notes: “We will continue to address theTIME (Telecommunications, Information,Multimedia, Entertainment) challenge,with a special emphasis on all activitiesthat concern content development andsupply.”

Telekon Slovenia’s Report describedGibraltar as “a small but very developedMediterranean market with huge devel-opment possibilities in the area of inter-national operations”.

CTS has developed its independentbroadband network for Gibraltar initial-ly using microwave links across the border, and is in the process of installingits own fibre-optic circuits.

It is now investing around £3mbuilding a 3G network to supportadvanced features, including high speedmobile broadband and expects to be running in the first quarter of this year togive CTS a target 30 per cent share of themobile market.

More competition“Everything will go mobile in future,because there is no need for a landline;our variety of connections will give cus-tomers an effective fixed line facility”,says CTS’ Jones.

Last summer, the GRA noted: “Withall the available options, one of the mostimportant choices consumers will make isdeciding which Internet Service Provider(ISP) to use and it is the GRA’s role topromote the development of competitionin the internet services market therebyincreasing consumer choice and the possibility of reduced prices for betterquality products.”

It went on to report that there wereeight companies providing a variety offixed and mobile networks and services,“a slight increase”.

But the GRA also revealed: “Therecontinues to be interest from several companies, which provide services andnetworks in other countries, to establishfacilities in Gibraltar”.

That interest may be as stand-aloneventures – Cloud Nine, a Guernsey-basedmobile network operator made Gibraltarbusiness presentations last year - oranother company that may see theGibraltar strategic potential!

Report by Editor, Ray Spencer* See also Gibtelecom sale in prospect –

Page 8

Gibtelecom engineers working round the clockto ensure service throughout The Rock

TELECOMMUNICATIONS


Competition from P22

All

pict

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ibte

leco

m.

Gibraltar need not be your telecoms weak link. Our network has been designed from the

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Reliable Resilient Reassuring

As a local pupil who gained ‘A’Levels at Westside SecondarySchool 38 years old Emma iskeen to encourage more school

leavers to find out what the Finance Centre has to offer, particularly in specialist banking.

Although it can be good to havework experience beyond The Rock, shethinks more attention in the bankingarea at Career Fairs and similar activitywith schools can help to ensure there arefuture generations of Gibraltarianbankers.

“There is no problem with recruit-ment of youngsters into the accountancyand legal professions in Gibraltar, butwhen it comes to insurance and sophisti-cated banking there is a real shortage ofsuitable applicants”, Perez maintains.

And she should know - as a bright,studious 18 years old, she was advisedby the then Hambros head to get herselfa qualification suitable for the financesector and trained with KPMG as anaccountant before joining private bankCredit Suisse in the finance department.

“The majority of my contempo-raries in accountancy have also gone onto hold successful senior positions locally”, she points out.

That choice of career training bi-passed the University route, but stillenabled her to become the SG Hambrosfinancial controller just over 10 yearsago.

Since then Perez has seen SGHambros, part of French banking giantSociete Generale, take over two otherpure private banking operations. In2003, SG Hambros took on the privatebankers of Credit Agricole, which endedits Gibraltar operations. It was then thatPerez became deputy managing director

of S G Hambros. And five years later, SG Hambros gained the local privatebanking business of Dutch ABNAMRO.

Now, the enlarged pure privatebank in Gibraltar claims to be the thirdlargest on The Rock with some £1.3 billion assets under management and£700m of deposits to support its lowrisk small loan book.

Emphasising the strength of theoperation, Perez says there was“remarkable synergy” between ABNAMRO and SG Hambros - “in generalthe staff welcomed the acquisition” -and there was “surprisingly very littleoverlap” in the 1,500-strong combinedclient base.

There is new language strength too,with the former ABN team addingGerman and Danish speakers, as well asDutch, which gives Perez a growingopportunity to further serve clients fromthe Costa del Sol and the Algarve.

“We are not a tax exempt bank, sowe are able to take deposits fromGibraltarians as well as clients acrossEurope and the rest of the world and

that gives us an advantage at presentover some others here”, she explains.

Doubling profitabilityIn mid-June 2006, Perez was offered thetop job at SG Hambros following thedeparture after six years of FrancoCassar — now head of operations forBarclays (Gibraltar) — who had firstspotted her talent for attention to finan-cial detail and recruited her as hisdeputy.

“In that way there was continuity ofmanagement and no upheaval”, shesaid, “and since then we have doubled insize each year in terms of profitability”.

Even in December amidst the finan-cial market turmoil, Perez claimed anincrease both in the number of privatebanking clients and in client activity.

In part this is because Hambros hasalways taken the strategic decision tolower its entry threshold into privatebanking from the more usual £250,000minimum disposable asset holding toinclude those people with over £100,000“with the potential to grow” the fruit ofestablished relationships with otherbanks across the border.

It’s also partly to do with client con-cern at poor investment returns fromtheir traditional investments.

Staff are utilising a client profilingsystem called Wealth Solutions to ques-tion all clients on their attitudes toinvestment and risk, which is “focusingtheir minds in a more structured way.

Perez calls it “risk managementboth for the client, to establish individual investment profile, and forthe bank to safeguard its operational profitability”.

The bank’s clients are “concernedabout counter-party risk, particularly


since Lehman Bros collapsed and we arereassuring clients about where to puttheir money - some have gone intoGovernment Bonds and others are limit-ing their exposure to any one sector, preferring to diversify”.

But at no time in her career hasPerez had clients of her own - somethingof a phenomenon in private banking cir-cles. “My background is my backgroundand it is as an accountant with the aimof balancing risk and reward elementsoperationally”, she declares.

Sharing the loadSo, following creation of the enlargedoperation, two members of staff withwide hands-on experience have beenappointed to the SG Hambros(Gibraltar) Board to share the loadincreasing the number of local directorsto five. The new Director responsible forthe Hambros Ex-patriot Team is ClaudiaRolf - a German national with 14 yearslocal banking experience- was formerlyABN AMRO Gibraltar’s head of privatebanking.

And with 40 years banking experi-ence and having joined SG Hambros aspart of the Credit Agricole acquisition,Gibraltarian Elliott Federico is now theDomestic Team Director.

Perez when aged 11 moved with herfamily from Grimsby in North-eastEngland when her father, Dr RobertMyers, became consultant anaethetist atGibraltar’s St Bernards Hospital.

She met her husband, Lieut. Col.John Perez, when she was a 15 years oldschoolgirl and he a private in theGibraltar Regiment where he is now theCommanding Officer.

“We are extremely competitive andboth in management positions”, sheobserves, “so we can understand andshare issues and experiences, bouncingideas around”. Having married in 2004and now with a three years old daughterElena, Perez combines a demanding job,Army wife commitments and a busysocial life, with no thought of what shemight next aspire to do with her career.

Husband John is expecting to retirewithin the next year “giving us quite

enough change to think about for now”,she explains.

Tougher times aheadIn the meantime, commercial life isbecoming tougher in Gibraltar, becauseof the poor world economic situation.“It’s a bit grim in finance at the momentwith some businesses starting to tightentheir belts with general cost cuttingmeasures”, she notes.

Nevertheless, she sees opportunitiesfor further growth for Gibraltar in insur-ance captives - those subsidiary compa-nies formed to insure or reinsure therisks of parent and associated groupcompanies as an alternative risk man-agement solution to the conventionalinsurance market - and also the evergrowing funds industry.

“The key for Gibraltar’s continuedsuccess is not being too dependent onany one sector. Being a small place, weknow where our strengths lie and areable to adapt our product offering tomaintain our popularity”, maintainsPerez.

PROFILEPROFILE

Welding the staff of two private banks into a single team, S G Hambros Bank(Gibraltar) managing director Emma Perez shares her concern at the lack of‘home grown’ expertise with Gibraltar International Editor, Ray Spencer.

Balancing risk and reward -young, local talent needed tosupport private banking


bedrooms104 Bedrooms and suites in a colonial

style all with a sea view

conference facilitiesFull upgraded conference facilities

available for board meetings, trainingcourses and presentations

InternetFREE Wireless broadband available

throughout the hotel and an internetroom for our guests to use

weddingsThe Rock is an ideal wedding venue

whether it be a small intimate weddingor large family gathering. We are also a

recognised venue for civil marriagesand ceremonies can now be conducted

in various parts of the hotel

Swimming PoolOutdoor swimming pool with poolside bar and pool side menu. We

welcome private pool membership,our lido club, with private pool hire

for parties and barbecues

RestaurantThe restaurant has stunning viewsover the bay. Our “house” menu isexcellent value for three coursesincluding an aperitif Manzanilla,

olives and coffee. A full á la cartemenu along with a superb eclectic

wine list is also available

wisteria terraceThe Wisteria Terrace for lunches,dinner, barbecues, afternoon teas,evening drinks and informal dining

Barbary barBarbary Bar and terrace for a

relaxing drink and for the winebuff, a choice of nine wines by

the glass

LoungesTake a good old fashioned Englishtea in one of the spacious lounges

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in a busy world

Europa Road, GibraltarTel: +350 200 73000Fax: +350 200 73513

E-mail: [email protected]

Modern Mediterraneandining

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closed Sundays + Saturday lunch

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14

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Heritage Insurance Management

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735 Europort Gibraltar

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www.heritage.co.gg

A Heritage Group Company

Licensed by the Gibraltar Financial Services Commission. Licence Number: FSC01003B


Surely few people can think whythat should be! But the term joinsa host of other new or newly-revived words – some serious,and some rather more light-heart-

ed - in her latest book, Words of theYear, published by Oxford UniversityPress.

Words of course, are the way wecommunicate – sometimes more effectively than others. And English is aliving language, making its nuancesinteresting and confusing.

The people producing the OxfordEnglish Dictionary say the 42nd mostcommon word is UP. It’s listed as beingused as an [adv], [prep], [adj], [n] or [v].

It’s easy to understand UP, meaningtoward the sky or at the top of the list,but at a meeting, why does a topic comeUP, why are the officers UP for electionand why is it UP to the secretary towrite UP a report?. We lock UP ourhome and clean UP the kitchen.

At other times the little word has a special meaning. People stir UPtrouble, line UP for tickets, work UPan appetite, think UP excuses andwrap UP gifts.

And this UP is confusing: a drainmust be opened UP, because it isstopped UP; we open UP a shop in themorning, but close it UP at night!When it threatens to rain, we say it isclouding UP; when the sun comes outwe say it is clearing UP and then, thingsdry UP.

We seem to be pretty mixed UPabout UP! Extending it a little more,why are we are down on our UPpers,when we are UPping the anti, and as aresult, possibly getting our come-UPpance!

It’s easy to understand why people

might see this language thing UPsidedown.

So words can be interesting andconfusing; how we use them, even moreso.

A look at some pairs or groups ofnouns that we most use reveals that manis 7th, whereas child is 12th and woman14th!

Work, however, is at number 16,but play and rest do not feature at all inthe top 100! Now problem is 24th, butthere is no solution in sight and whilemoney is surprisingly low at 65, cash isabsent.

But I digress. Susie Dent tells us:“As recession fears escalated, it may beproductivity of the linguistic kind that isthe safest bet.

‘Credit crunch’ is an example of anestablished term – it was already in currency back in the 1960s – being resurrected as circumstances change”.

And if you haven’t already guessed,the world’s financial markets have been one of the biggest generators of vocabulary in the past year, Ms Dentmaintains.

In addition to the now familiarfinancial terms such as NINJA LOANS,

LAST WORD

STAGFLATION, or JINGLE MAIL,Words of the Year also looks at expres-sions from other areas of our lives –including online social networking, ethical living, and the world of styling -that have been ‘bubbling under’ in 2008.

It was a year when the Google inter-net search engine increased its linguisticdominance thanks to our quest forGOOGLEABILITY, and the newerMOOFER (mobile out-of-office worker)and SCUPPIE (Socially Conscious,Upwardly-mobile Person – a sociallyresponsible yuppie) came to reflect ourmodern working lives.

The 2008 bank of credit crunchwords of the year also includes suchdiverse terms as IPOD – an acronym for‘insecure, pressured, overtaxed, anddebt-ridden’ - and FUNT – someonewho is Financially UNTouchable!

CRIPES, as Boris Johnson wouldsay (using a dated word expressing sur-prise or dismay), let’s not become aDOOMER (an abbreviation of ‘doom-and-gloomer’).

I’d better end where I started, byshutting UP – thanks Susie.

Ray Spencer

CREDIT CRUNCH are the ‘Words of the Year’,

but it’s not all down to doom and gloom…

Susie Dent, the lexicographer and resident dictionary expert and adjudicator onChannel 4 TV’s long-running game show Countdown, reckons that the words oneveryone’s lips to sum up 2008 are CREDIT CRUNCH.

the world’s financial marketshave been one of biggest generators of vocabulary

in the year

“

”

Contact: Brian ShayMerchant House, 22/24 John Mackintosh Square, P.O. Box 758, Gibraltar. Tel:+ (350) 200 41200, Nightline: + (350) 200 48282, Fax:+ (350) 200 41201, [email protected], www.deloitte.gi

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