RTS28 Qualitative & Quantitative Reports
The second Markets in Financial Instruments Directive ("MiFID II") came into force on 3 January 2018. MiFID II introduces new requirements for EU authorised investment firms that execute client orders. Firms are required to publish annual reports for each asset class in respect of which they owe a duty of best execution. The reports must set out the top five venues (by trading volume) where client orders were executed, must be split out into professional and retail client trades, and must contain certain other metrics where relevant. Firms are also required to produce reports summarizing the quality of execution obtained from the execution venues used. These reports must be published by 30 April each year to cover the preceding year. The reports for Citi Private Bank's advisory business effected through Citibank Europe Plc are attached below.
The London Interbank Offered Rate (LIBOR) is subject to ongoing global regulatory reform and is likely to be discontinued at the end of 2021. In addition, other Interbank Offer Rates (IBORs) are subject to significant reform and potential cessation in the future.
IBORs are widely used interest rate benchmarks and are reference rates for a vast number of financial instruments and products, including certain cash and derivative products offered by Citi.
We encourage you to review the below resources for further information on this industry event, and discuss any impact to your personal situation with your independent professional advisor as appropriate.
Regulatory Tax Compliance
Common Reporting Standards (CRS)
CRS requires natural persons that control the accounts be identified, irrespective of whether they are direct account holders (individual accounts) or controlling persons behind structures or companies that are not transparent for tax purposes (entity accounts). Entity clients are also required to complete CRS Self-Certification Forms. Please review Citi Private Bank's CRS At a Glance to help answer some frequently asked questions related to CRS. Below are Citi's CRS Forms which clients may be required to complete in compliance with these rules:
Translated versions of select forms may be available in Portuguese and Spanish. Please contact your Private Banker or Banker Team to assess if a specific form is available in a language you may prefer.
Foreign Account Tax Compliance Act (FATCA)
FATCA is a US tax law aimed to reduce or elimate US tax evasion by US taxpayers who maintain financial accounts outside the United States or invest offshore through non-US entities. Please review Citi Private Bank's What is FATCA? At a Glance to help answer some frequently asked questions related to FATCA.
FATCA related resource available for Citi Private Bank clients:
- W-8BEN-E and FATCA Classification Guide: This guide is geared for non-U.S. entity clients required to complete a W-8BEN-E and to determine their FATCA Classification.
- U.S. Tax Form Information: Provides an overview of the various U.S. tax forms with embedded links to the forms and instructions on the IRS website.
IRS approved Tax forms: These forms are accessible from the IRS website, www.irs.gov by clicking the direct links below for the repsective form:
Translated versions of select forms may be available in Portuguese and Spanish. Please contact your Private Banker or Banker Team to assess if a specific form is available in a language you may prefer. This information is made available for general reference only. It does not constitute legal or tax advice. Citigroup Inc. (Citi), its affiliates, and its employees are not in the business of providing tax or legal advice to any taxpayer outside of Citi and its affiliates. These materials are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Citi and its affiliates comply with applicable laws and regulations. We encourage you to seek third-party professional advice regarding your personal tax situation. Citi and its affiliates make no representation, recommendation or warranty, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information contained herein.
Payment Services Directive (PSD2)
The original Payment Service Directive ("PSD") was adopted in 2007. This legislation provided a legal framework for the EU's Single Euro Payments Area ("SEPA"). The main objective of PSD was to unify the EU e-payment market by creating rules and guidelines for payment institutions within the EU and to make cross-border payments as easy and efficient as local payments. PSD2 aims to widen the scope of the regulatory framework of PSD to cover new services and players (including payment initiation service providers and account information service providers) and additional geographies and currencies. It attempts to fix legal uncertainties and to enhance customer protection and payment services and to provide customers and retailers with effective, convenient and secure payment methods within the European Union. PSD2 comes into force on 13 January 2018.
Shareholder Rights Directive
We set out below the Engagement Policy of Citi Investment Management (‘CIM’), acting through Citibank N.A., London Branch, published in accordance with Article 3g1(a) of the Shareholders Rights Directive (2007/36/EC) as amended by Directive (EU) 2017/828.
Integration of shareholder engagement in our investment strategy
CIM’s portfolio management team are continuously monitoring companies and holdings to ensure that they remain appropriate and aligned with their investment mandates. The team may engage with management or investor relations of investee companies, but not other stakeholders, as we do not hold significant positions. Meetings may be held with companies to discuss specific results or events as well as more informal dialogue incorporating site visits and other research initiatives. These meetings may cover a range of topics from corporate strategy, risk management, corporate governance, board composition and remuneration issues.
Third party managers utilised in investment strategies may engage on matters relating to environmental, social and corporate governance (ESG) developments; enhancements or clarifications to company analysis or process improvements.
Where any material issues occur, either financial or non-financial, we would review the investment thesis to see if this has affected our investment rationale.
Monitoring of investee companies on relevant matters (including strategy; financial and non-financial performance and risk; capital structure; social and environmental impact and corporate governance)
Where direct stocks are selected, analysis is carried out on these companies including the financial and non-financial performance, risk, capital structure and corporate strategy. We use a wide variety of sources including company meetings, company reporting, broker research, industry reports and in-house research. The portfolio management team monitor the public statements of investee companies through financial information platforms like Bloomberg and Factset, financial statements and regulatory announcements, reports and accounts. Citi Investment Management’s portfolio managers access to a specialist research provider for environmental, social and governance (‘ESG’) issues, is the main tool for monitoring these risks.
When we appoint third party managers in our investment strategies, they monitor investee companies on their strategy, capital structure, financial and non-financial performance and risk. We review the third party managers’ research process, portfolio construction, sell discipline and risk management process to ensure that these processes incorporate monitoring of investee companies’ strategy, capital structure, financial and non-financial performance and risk. Third party managers are assessed and researched by Citi Investment Management’s Global Manager Research Group and approved (for use in discretionary portfolios) by the Forum for the Review and Approval of Managers.
Our approach for third party managers in relation to ESG is to add, via Citi Investment Management’s Global Manager Research Group, what we believe are best in class ESG-oriented or focused strategies, by asking associated ESG questions during our due diligence process.
The responses to these questions are a key consideration in ESG manager searches. We also ask these questions in non-ESG orientated manager searches although the related responses are not a critical decision parameter in these cases. We believe that incorporating ESG considerations in a manager’s approach is likely to enhance returns and reduce risk in addition to producing better outcomes for society and the planet.
Conducting dialogue with investee companies and communicating with relevant stakeholders of the investee companies
We assess the information third party managers gather to make their investment decisions, its quality and depth and the judgement the managers use in making investment decisions. This may include dialogue with the investee companies depending on the nature of the investment strategy, number of holdings and structure of the manager.
We do not currently liaise directly with other stakeholders because CIM does not currently hold significant positions in any companies. However, we do support the principle of collaborative engagement. Where stakeholders’ rights are likely to have a significant impact on the fortunes of investee companies such factors are taken into account via our ESG analysis.
Exercising voting rights and other rights attached to shares, cooperation with other shareholders and management of actual and potential conflicts of interests in relation to the firm’s engagement
Institutional Shareholder Services is retained for the management of the voting process and acts as the voting agent for the securities held in portfolios managed by CIM.
This allows us to take advantage of the extensive research carried out by ISS and our default instruction gives ISS consent to vote on our behalf in line with their expert recommendation.
Find more information about ISS here.
Where CIM does exercise its discretion to vote for or against a particular proposal or co-operate with other shareholders, it will be in a manner consistent with its relevant underlying clients’ best interests and when not in violation of anti-trust or any other laws or CIM policies. Any actual or potential conflict of interest that may arise would be managed in line with Citibank N.A., London Branch’s conflict of interest policy and standard, which is updated on an annual basis.
UK FRC Stewardship Code 2020: Principles for asset owners and asset managers
The Financial Reporting Council’s Stewardship Code 2020 (‘the Code’) requires that a firm, other than a venture capital firm, which is managing investments for a professional client that is not a natural person must disclose clearly on its website, or if it does not have a website in another accessible form:
- the nature of its commitment to the Code; or
- where it does not commit to the Code, its alternative investment strategy.
The Code took effect on 1 January 2020.
Citi Investment Management (‘CIM’), acting through Citibank N.A., London Branch provides portfolio management services and operates a global investment decision making process. CIM is not a signatory to the Code given the small number of professional clients that are not natural persons which it offers its services to, as well as the small volume of transactions, however we have assessed the set of 12 Principles for asset owners and asset managers and have determined that some of the principles can be meaningfully applied to CIM as set out in the attached.
CSDR Settlement Discipline - Citi Private Bank NAM
Third Party Client Asset Accounts
In the exceptional event that Citibank Europe Plc. identifies a shortfall and is required to set aside an amount of its own funds in a segregated account to cover the shortfall, these funds will be held in a designated third party client asset account with the following institutions
|Credit Institution Name|
|JP Morgan SE, Frankfurt (Germany)|
|Barclays Bank Ireland PLC Frankfurt Branch|
Client Asset Key Information Document
We have a regulatory obligation to provide clients with Client Assets Key Information Document (CAKID) that explains certain key aspects of the regulations that apply to the safeguarding of client’s assets, outlines information on the arrangements in place to ensure that client’s assets are protected and highlights certain risks relating to provisions of investment services provided by us (Citibank Europe Plc) to our clients.