The flexibility of Focus: a case study
One of our private bankers talks to Interface about experiences
he has had recently in dealing with intermediary clients who have
fully exploited the flexibility of Focus.
Background
The turmoil of 2008 resulted in professional trustees, who
bear great responsibility for the stewardship of trust funds,
wanting to diversify their risks from the banking sector. Fairbairn
Private Bank actually grew their deposit base through this
difficult time through a clear communication of its conservative
positioning and active risk control. Nevertheless, acting as banker
for many valuable intermediary clients, including trustees, we
wished to help them address their concerns - thus making their
lives easier and building a strong relationship which will go far
into the future.
How did we help?
As the custody platform - available as part of the Focus
service - is segregated from all direct bank risk, assets held bear
only the risks embedded in the holding itself so investors can
trade with confidence into the required instruments. As an example,
at the height of the financial crisis, many clients, including
trustees, fled to government bonds and gold* as a safe haven from
further turmoil. By already holding Focus accounts, it meant that
such purchases were only a phone call away for our clients, which
allowed trustees to react to the unprecedented events of late 2008
in a highly responsive manner and without the need for further
paperwork. With our help, our trust clients had discharged their
fiduciary responsibilities without the addition of further
stress.
How did the situation develop?
As time moved on towards the end of 2008 and into 2009,
the availability of government bonds in the secondary market became
extremely restricted, to the point where yields were driven into
negative territory. To assist in this area, we were able to work
with clients and brokers to participate in government bond auctions
- the method of new (primary) issues coming to market. The upshot
was that our clients were often able to maintain a protective
stance without suffering negative returns as a result.
What has happened since?
The potential for systemic failure has largely abated and
the attraction of government bonds has since waned, especially
given the huge cost of stimulus packages and the creation of
massive budget deficits. For many clients, 2009 saw fears replaced
by a sense of opportunity in selective risky assets and for those
wary of equity markets, corporate bonds were the asset of choice.
Whilst many investors have entrusted us with the management of
their bond exposures and thus benefiting from ongoing professional
oversight, some have preferred to seek selective direct issues on
an execution-only basis - a riskier activity but with the
potential for outsized returns. Once again, we stepped in with the
ability to participate in many new issues (primary market) through
our strong partnership with specialist brokers.
The delivery of Focus capabilities through proactive and responsive
relationship management is key to the bank's proposition. Whilst no
one can predict with any certainty what will happen in global
economies and markets, our clients can rest assured that we will be
here to help.
*Gold can be purchased through the Focus service via
exchange-traded funds (ETFs), certificated gold and allocated gold
which are all backed by physical commodity.