Choosing a trustee in an evolving European market

A variety of unique growth opportunities have emerged within the European debt market over the past year. Navigating this landscape and securing deals can require investors to execute complex transactions – often involving multiple parties with diverging interests.

Tags: Debt, Loans, International, Regulations, Trustee, Corporate trust
Published: March 03, 2021

More than ever, trustees are being stretched to their limit in terms of what’s asked of them. Some trustees have the flexibility, experience, technology, global network and breadth of services to embrace these challenges, and some are less equipped to adapt.

This article will examine how the European market is changing and how those changes are raising the bar for trustees moving forward.

 

Relocating assets

One hallmark of the evolving European marketplace is that more investors are shifting assets to new jurisdictions. This process presents numerous legal and structural hurdles – testing the ability of trustees to extend beyond their traditional roles.

“Increasingly, investors are leaning on their trustees to provide specific guidance and expertise related to the assets they administer and the domains where those assets reside,” says Michael Whelan, Head of Business Development-Europe for U.S. Bank Global Corporate Trust.

Today’s trustees must keep abreast of emerging opportunities and the intricacies of new markets. They should be able to manage complex transactions, protect the interests of their investors and effectively engage with all parties.

 

Several new firsts

In 2020, the European market saw numerous “first-of-a-kind” deals driven by clients seeking to explore the growth, exposure and regulatory opportunities of new domains. U.S. Bank, as trustee, oversaw several of these transactions, including:

  • The first European green commercial mortgage-backed securities (CMBS) deal structured around a €200 million loan to acquire an office property outside Paris.
  • A unique, first-of-its-kind deferred payables special purpose vehicle (SPV) platform, which has facilitated more than $3 billion in extended payments to date.
  • Our first leveraged exchange traded product (ETP) collateralized and settled through the international central securities depositories (ICSDs).

Each of these deals required out-of-the-box thinking to align the clients’ goals with the strategic and tactical approaches necessary to achieve them. Beyond that, it took a highly skilled team communicating consistently and working in unison to achieve cost and efficiency savings.

 

An increase in intricacy

Transactions are becoming more intricate, and this trend seems set to continue.

“Each deal is unique with its own specific structure, challenges and requirements,” says Cameron Munden, business development officer for U.S Bank Global Corporate Trust. “The more intricate the transaction, the more challenges it creates for clients.”

Challenges compound when an agent can’t keep up with the pace of evolving expectations. Poor document management, lack of agility or limited experience with certain instruments can lead to inefficiencies, added expenses or – even worse – missed opportunities.

 

Evidence of experience

To thrive in the current European marketplace, investors should find a trustee that can show clear proof of a successful track record. They should be able to demonstrate, with examples as evidence, how they improved market position and market ranking. If they can’t, it might be time to explore new partnerships.

Several additional qualities investors should look for in their trustee include:

  • Advanced knowledge of new markets
  • An ethos of embracing challenges and complexity
  • A strong background managing multiplex deals in diverse jurisdictions
  • The ability to be commercially aware, respecting a client’s time and costs
  • An understanding of the key ramifications of managing and executing a deal
  • Detailed cash, currency and investor reporting
  • Agility, flexibility and responsiveness
  • Proactive communication

An uncertain future

The outlook for European markets into this year and beyond remains unclear. COVID-19, regulatory reform and numerous other factors will shape the investment landscape as the decade unfolds. The only prediction that seems assured is that change will continue to occur.

At U.S. Bank, we have the experience, reach and technology to navigate the mechanics of complex deals with transparency, consistency and unwavering quality. As new opportunities emerge in the European debt market, we can help you understand and overcome some of the new legal and structural hurdles in this evolving market. Learn more about our European trustee solutions or connect with one of our global corporate trust experts.

 

For more information about our European trustee solutions, contact Michael Whelan at michael.whelan@usbank.com.

 

U.S. Bank Global Corporate Trust is a trading name of U.S. Bank Global Corporate Trust Limited, U.S. Bank Trustees Limited and Elavon Financial Services DAC (each a U.S. Bancorp group company). U.S. Bank Global Corporate Trust Limited is a limited company registered in England and Wales having the registration number 05521133 and a registered address of 125 Old Broad Street, Fifth Floor, London, EC2N 1AR. U.S. Bank Global Corporate Trust Limited, Dublin Branch is registered in Ireland with the Companies Registration Office under Reg. No. 909340 with its registered office at Building 8, Cherrywood Business Park, Loughlinstown, Dublin 18, Ireland D18 W319.  U.S. Bank Trustees Limited is a limited company registered in England and Wales having the registration number 02379632 and a registered address of 125 Old Broad Street, Fifth Floor, London, EC2N 1AR. Elavon Financial Services DAC (a U.S. Bancorp Company), trading as U.S. Bank Global Corporate Trust, is regulated by the Central Bank of Ireland. Registered in Ireland with the Companies Registration Office, Reg. No. 418442. The liability of the member is limited. Registered Office: Building 8, Cherrywood Business Park, Loughlinstown, Dublin 18, Ireland D18 W319. In the UK, Elavon Financial Services DAC trades as U.S. Bank Global Corporate Trust through its UK Branch from its establishment at 125 Old Broad Street, Fifth Floor, London, EC2N 1AR (registered with the Registrar of Companies for England and Wales under Registration No. BR020005). Authorised and regulated by the Central Bank of Ireland. Authorised by the Prudential Regulation Authority and with deemed variation of permission. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website. All banking services are provided through Elavon Financial Services DAC. U.S. Bank Global Corporate Trust Limited and U.S. Bank Trustees Limited are Trust Corporations and not banking institutions and are not authorised to carry on banking business in the United Kingdom, Ireland or any other jurisdiction.
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