The financial services group is relocating its HQ from Gibraltar, a jurisdiction with which it has been hit by allegations, and the arrest of its CEO.
Cross-border financial services firm STM, which has locked horns with Gibraltar’s financial regulator about alleged failings at the business, is moving its headquarters from the British Overseas Territory and relocating it to the UK.
STM announced the decision, which it said it had been reached in the fourth quarter of last year, in a trading statement yesterday. (See a related story about the matter on Compliance Matters, sister news service to this one.)
“This [HQ] decision has been well received by intermediaries, investors and other various stakeholders in our business, who recognize the benefits of being based in the UK. This relocation is now in progress,” the firm said. STM has offices in centres including Gibraltar, Malta, Cyprus, Jersey and Spain.
As reported by this news service late last October, STM’s chief executive, Alan Kentish, was arrested in Gibraltar for allegedly not disclosing information on a client involved in an international tax dispute. The client, who has not been named and wasn’t identified in media reports on the matter, was involved in a tax dispute between two countries about their right to tax Kentish from 2008 to 2013. STM has reportedly said allegations had no merit. This publication contacted STM at the time; emails were not returned. (See another story about developments at STM here.)
In its trading statement, STM said performance matched market expectations, and it expected to deliver a profit before tax for the year to 31 December 2017 of not less than £3.8 million (2016: £2.8 million).
One factor in delivering such a profit was STM’s launch of its International SIPP product after the March 2017 UK budget announcement. “The Budget effectively made the Recognised Overseas Pension Scheme (ROPS) product for new applications non-viable for non-EEA countries due to the punitive Overseas Tax Charge being imposed. This affected 80 per cent of all new ROPS business for STM. Pleasingly ISIPP volumes are now comparable to the lost ROPS new business,” it said.
“Just as importantly, our existing business across the group, particularly in relation to our pensions and life businesses, continues to perform as expected. This annual recurring revenue stream makes up over 70 per cent of our revenue, giving predictability over our underlying monthly performance."
As reported last November, STM also agreed to acquire the Malta based ROPS provider, Harbour Pensions Limited. This is subject to Malta Financial Services Authority approval, which STM said understood will be forthcoming “shortly”. “We expect the business, which currently generates in excess of £800,000 of recurring revenue, to be integrated into STM's Malta pensions business within six months of completion, thus allowing for some healthy efficiency gains,” it said.
The firm added it continues to seek other possible "bolt on" acquisitions where appropriate.