Trust Operations
For business to be successful, constant investments in its development are required. While credit resources in banking sector are limited, looking for alternative sources of financing or restructuring debts of one’s own or related business becomes a highly important issue. Savings often are used as a source of such financing, and they need to be invested as efficiently as possible.
Trust operations (fiduciary transactions) are supposed exactly for solving those tasks. Trust operation is an agreement on managing available customer funds, following the customer’s instructions. Each transaction is tailored to the needs of a particular customer, thus allowing achievement of best possible results in terms of risk/return ratio.
Using trust operations (fiduciary transactions) your benefits are:
Safety of your assets — investing funds by employing trust operations means higher level of investment safety, compared to direct financing.
Confidentiality — performing transactions is delegated to the bank.
Return — according to the Republic of Latvia legislation, revenues derived from trust operations are not subject to taxation. Also, the bank competitive rates and charges, combined with tax advantages on the side of investment subject, allow achieving optimum ratio of return on invested capital.
Example of using trust operations:
Suppose, a bank customer is a co-founder of a Russian company engaged in producing and selling garments (like sheepskin coats, coats, and fur coats). There is a need to increase the company turnover, but the customer’s co-owners are unwilling to equally participate in capital increase due to lack of free funds. Our customer is ready to invest funds in the business, provided repayment, making a profit, and increasing joint responsibility of the company founders to the investor. The customer’s savings, which may be used for increasing turnover, are held in our bank.
In such a case, using trust operations allows AB.LV to fulfil all the customer’s requirements, ensuring that the capital is preserved and increased.
For executing trust operation, the following requirements apply:
- — trust operation is possible only provided participation of the bank customer;
- — the documents, confirming legal origin of funds placed under management, should be present;
For more information on trust operations (fiduciary transactions) and for tailored solutions, please contact your private banker.
