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Third world government defaults expected with US rate rises

Date: 14 Jan 2016

Citywealth

Daniel Martineau, executive chair of Summit Trust International, says government defaults will depend on rising US interest rates but may include Asia and South America and they will present a real threat.

What will 2016 be like for trusts?

I expect consolidation will continue with banks and trust companies. Regulation will not get any better, in fact in many jurisdictions like Switzerland it will get worse from a time implementation point of view.
The investment environment will be challenging whilst litigation will increase holding trustees accountable for investment (under) performance or ineffective tax mitigation. Meanwhile, adviser witch-hunt for aiding and abetting tax evasion will continue in US, Switzerland and spread to other jurisdictions. I also expect increased international pressure on tax avoidance particularly on corporations with tax inversions, sweetheart deals.

What does that mean for the industry?

As a result of all of the above, lawyers will continue to do very well. With consolidating service providers and rising complication, fees will increase amongst quality service providers who are struggling to cope with rising demand.
Government defaults will depend on rising US interest rates but may include Asia and South America. Meanwhile some new industry leaders will emerge in financial services with revised or robust business models, such as fintech, new and improved banks, and trust companies.

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