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Re-financing: Foreign currency mortgage redemptions & offshore vehicles.


We were recently engaged in what, on the face of it, seemed like a complicated refinancing matter.

Our client in the matter was a trust administrator in the Channel Islands. Their client, the UBO (ultimate beneficial owner) had to redeem one mortgage denominated in euros. They elected to refinance in sterling, so needed the skills of a currency broker to ensure the GBP released from their new arrangement achieved at least the EUR amount they needed to pay back.

The complexity of the matter, at least on first glance, was to do with the parties involved and the fact that the UBO was not directly the seller or buyer of currencies.

Prime Cap received funds from the appointed solicitor.

The release of funds due to be exchanged had to tie in precisely with the date on which the mortgage needed to be redeemed.

Therefore, we needed to have all AML in place to proceed once the newly arranged borrowing was liquid; in addition to which we needed to ensure that the euro amount intended to complete the redemption was cleared with the receiver on the very same day, before the cut-off times associated with the payment processing of the issuing institution.

Regulations required us to know and understand not only the details of the UBO, but also those parties involved in the transmission and receipt of funds.

In this matter, our close relationship with the instructed solicitor ensured that all our data gathering was handled with extreme efficiency.

We were able to rely on the expediency and efficiency of the trust administrator, in whose possession was all the information we required to satisfy our AML and KYC obligations.

One of the particular issues in this matter was the time it took/takes for the solicitor's bank to transmit the GBP amount to us. It was imperative that we received the GBP in time to release the EUR amount bought.

Advising the use of a 'same day' contract, rather than the standard 'spot' contract meant that, in conjunction with the application of the necessary pressure to our clearing partner, we were able to release the euros before the 14:30 cut off. Which, in turn, ensured that euros arrived at the appropriate destination before the close of business on the day of redemption.

Matters such as this, where stakeholders are galvanised to act swiftly and diligently, and where precise actions are required to ensure deadlines are met, simply cannot be achieved through a purely online exchange platform.

The personal relationship we have with the instructing solicitor, supported by the strength of their relationship with the trust administrator, ensured every moving part in the process performed it's function on point.

Yes, receiving GBP and exchanging in to EUR to meet the specifics of the redemption deadline is one thing, but, by virtue of the rate improvement we provided, the EUR amount was bought comfortably with the GBP released by the new lender.

This in turn meant that less was in fact required to refinance the borrowing.

Whilst we cannot be sure, it is not unreasonable for us to assert that our involvement actually lessened the borrowing of the UBO.

When the vast majority of banks, lenders in this instance, work at 150 basis points from the market, our spreads of between 1 and 50 basis points mean a measurable saving. In instances like this solicitors, trust administrators and the underlying client are not necessarily focussed on a saving being made. Their focus is the execution of the refinancing process...so, to be able to tell one's client and their representatives that they have saved in excess of £45,000 simply by working with us, is a delight.

This entire matter is yet another example of a client sleep walking in to increased expense...or rather, how we are able to help clients avoid such expense.

The entire matter, from referral to clearance of funds, happened within a 4 day window.

Were it not for the action taken by the appointed solicitor, by introducing us to the scenario, costs would have been higher and there would have been no guarantee that the various players in the processing of funds would have met their time sensitive objectives.

We were able to report back to each stakeholder in real time and provide pin point accuracy as to the clearance of funds.

Furthermore, through our online platform the various stake holders were able to monitor and track the progress of the exchange without needing to chase...they simply needed to 'refresh' their browser.

To conclude, we feel the need to emphasise the fact that, just because currency does not leave one country for another, does not mean that a broker is without use.

Yes, in most instances of currency exchange there is a foreign or domestic recipient, but, fiduciary managers moving money between their own nostro accounts stand to gain by precisely the same margins of improvement when it comes to rate and efficiency.

We have one client who uses us to electronically transmit sterling overseas without any exchange involved.

The reason he uses us is because the online tracking and reporting we offer is more sophisticated, plus we charge him £10 where his high street bank charges him £27.

It goes without saying that we invite you to contact us if you would like further information, or, in fact, if you would like to be introduced to a firm of solicitors excellent in the provision of the services outlined above. It would be out pleasure.

brokers@primecappayments.com | 0203 172 8193 | www.primecappayments.com

#refinance #mortgage #offshore #ChannelIslands #solicitor #trustadministrator #offshoretrust #familyoffice

Prime Cap Payments Limited (T/A Prime Cap | Prime Cap Payments | Prime Cap Global Payments) is registered in England and Wales No: 10755730. Registered address: 27 Old Gloucester Street, London, WC1N 3AXPrime Cap is partnered with, and a programme manager of, Ebury Partners UK Limited who provide Prime Cap's FX and payment services.  Ebury Partners UK Limited is authorised and regulated by the Financial Conduct Authority as an Electronic Money Institution (Financial Services Register No. 900797) and is registered in England and Wales (registered no. 7088713). Registered office: 3rd floor, 100 Victoria Street, Cardinal Place, London, SW1E 5JL.  Ebury Partners UK Ltd is registered with the ICO with registration numnber ZA345828.