LONDON, Feb 22 (Reuters) - Gibraltar will scrap a key curb on its funds industry as the minnow British territory tries to take on Ireland, Luxembourg and rivals further afield to become an international financial services hub.
Under current rules a fund and its administrator must be based in the same place, a major burden on funds looking to use the territory as a gateway to investors across the 27-nation European Union which it joined with Britain.
Gibraltar Financial Services Minister Gilbert Licudi said he would scrap the location rule within the next few weeks and replace it with an authorisation system.
“It will permit funds to be established in Gibraltar even if the administrator is not in Gibraltar,” Licudi told reporters during a visit to London.
“We are not going to open the door to anyone. We need to be selective,” he said.
There is already interest from the Channel Islands.
Gibraltar’s financial services sector is nearly a third of its one billion pound economy and the government hopes growth will pay for big social improvement programmes.
There are 150 funds based there, a fraction of the 20,000 in rival Cayman Islands. Top names operating in Gibraltar include Credit Suisse, Societe Generale, Barclays , Royal Bank of Scotland and Lloyds.
Changing the location rule is part of a wider strategy of shifting away from being primarily a funds service centre to becoming a bigger location for funds in its own right.
The Mediterranean port city abutting Spain stresses its “onshore” and EU credentials to attract business from the “BRIC” countries like Brazil and China.
It has signed 20 bilateral tax information sharing agreements, enough to put it on the OECD’s “white list” of fully cooperative tax jurisdictions. It signed one with the United States in 2009 when the Group of 20 economies began a global crackdown on tax havens.
“We are very well aware of the international pressures,” Licudi said.
He hopes the new EU hedge fund law from July 2013 will attract new business as it will give a fund approved in Gibraltar a “passport” to operate across the EU.
Licudi said other reforms were being looked at, including setting up formal trusts and foundations.