Choosing a trustee in an evolving European market

A variety of unique growth opportunities have emerged within the European debt and loan 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: February 25, 2020

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.

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 – from accountants to attorneys to anyone else involved.
 

Two new firsts

In 2019, the European market saw a number of “first-ever” transactions driven by clients seeking to explore the growth, exposure and regulatory opportunities of new domains. U.S. Bank, as trustee, oversaw a number of these transactions, including:

  • The first simple, transparent and standardised (STS)-eligible transaction on the Polish market
  • The first public non-performing loans and asset-backed securities (NPL & ABS) deal on the Spanish market

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. 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. Brexit, regulatory reform and numerous other factors will shape the investment landscape as the next 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 and loan market, we can help you understand 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.

 

Elavon Financial Services DAC (trading as U.S. Bank Global Corporate Trust) Registered in Ireland with the Companies Registration Office, Reg. No. 418442. The liability of the member is limited. Registered Office: 2nd Floor, Block E, Cherrywood Science & Technology Park, Loughlinstown, Co. Dublin, Ireland. Regulated by the Central Bank of Ireland. United Kingdom branch registered in England and Wales under the number BR009373. In the U.K., Elavon Financial Services DAC, trading as U.S. Bank Global Corporate Trust, operates from offices at 125 Old Broad Street, Fifth Floor, London, EC2N 1AR and is authorised by the Central Bank of Ireland and the Prudential Regulation Authority and subject to limited regulation by the Financial Conduct Authority and Prudential Regulation Authority. Details about the extent of our authorisation and regulation by the Prudential Regulation Authority, and regulation by the Financial Conduct Authority, are available from us on request.