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    INTERNATIONAL CORPORATE BANKING  |  3 POINT PERSPECTIVE

    Three trends driving demand for escrow

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    Jonathan Allatt, Roni Gannon, Nadia Moneva, Maisy Palmer
    30 Jan 2025

    Escrow is an age-old tool used to manage counterparty risk and safeguard funds. Our International Corporate Banking experts explore how a rebound in M&A activity, capital intensive energy projects and challenges in the real estate sector are underscoring the importance of escrow in 2025.

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    1. Increased M&A and leveraged finance activity 

    Global M&A activity experienced an initial recovery in 2024 according to our Global M&A team. This upward trend is driven by rising corporate confidence, expectations of a looser regulatory environment in the US, increased cross-border activity and more corporate spinoffs entering the market. Deal sizes are expected to grow supported by stabilising interest rates as inflation returns to target levels.

    As this activity picks up, Escrow accounts are once again playing a significant role in managing contingent payment obligations between buyers and sellers during the current wave of M&A transactions, both pre-closing and post-closing. These accounts are particularly effective when funds are held back to secure representations and warranties provided by the seller. Escrow accounts are back in use as a cost-effective alternative to representations and warranties insurance while providing more accurate disclosure schedules. Since sellers remain directly liable for breaches, escrow can enhance accountability and transparency.

    Meanwhile, a rebound in leveraged finance activity across the US and UK has prompted many corporate borrowers to refinance existing debt or raise new funds for acquisitions, further increasing demand for escrow services.

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    Following a period of subdued M&A activity, our M&A team expect deal volumes to increase in 2025 powered by three trends across markets, borders and structures.

    2. Financial risk and regulatory compliance for energy companies 

    Despite a more rate-friendly environment, providers and investors of large-scale energy projects face a common challenge: high upfront funding requirements for new projects and extended lead times between initial investment and revenue generation. 

    Escrow accounts have long served as a reliable mechanism for managing financial risks associated with capital intensive projects. These accounts allow investors to inject initial funding while retaining control over the release of funds, effectively mitigating downstream payment risks. 

    Looking ahead to the end of a project's lifecycle, regulators and planning authorities are placing greater emphasis on ensuring that energy and mining companies allocate sufficient resources to cover decommissioning and restoration costs. While these asset-heavy companies can choose from a range of solutions to manage these obligations, escrow accounts have become a preferred tool. Their advantages include accommodating regular inflows and familiarity among regulators. 

    In addition, alongside instant access deposits, escrow funds can be placed on Escrow Treasury Deposits, which allows the Escrow Parties to place escrow funds on fixed term deposits that can be matched to the planned drawdown schedule to provide additional options for generating yield. 

    3. Commercial real estate is evolving its risk management toolbox 

    The US commercial real estate market is currently experiencing significant volatility, with a rapidly increasing volume of CRE loans set to mature in the near term.  Sales activity remains sluggish due to oversupply in some markets, coupled with lower occupancy due to an increase in work from home leading to lower property prices and a limited pool of buyers.

    Escrow accounts continue to be important for ensuring the smooth operation of the corporate real estate market. Indemnity escrows can protect buyers against any oversights or actions by sellers, while performance holdbacks serve as a guarantee that specific obligations will be fulfilled.  

    In the UK, obtaining planning permission for commercial developments often depends on meeting Section 106 requirements, such as funding the construction of a school or other community facilities. In these cases, commercial developers frequently use escrow accounts to set aside funds, helping to facilitate discussions with planning authorities and move projects forward.

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    About the experts

    Jonathan Allatt

    Head of Escrow, UK

    Jonathan Allatt is the Head of Escrow – UK, International Corporate Banking at Barclays, based in London. Jonathan joined Barclays in 2016 and prior to joining the UK Escrow business managed a portfolio of Public Sector Foreign Exchange Clients. Jonathan graduated with a First-Class Honours degree in Economics and Management from the University of St Andrews.

    Roni Gannon

    Head of Escrow & Captive Insurance, US

    Roni Gannon joined Barclays in 2024 and is based in New York, Prior to joining Barclays, Roni served as Senior Vice President - National Sales Manager at UMB, Senior Vice President - Escrow at Citizen’s Bank, and a Director at Deutsche Bank, where he focused heavily on global transaction banking solutions for key clients in the United States, Europe, Asia, and Latin America.

    Nadezhda (Nadia) Moneva

    Vice President Escrow, US

    Nadia Moneva joined the US Escrow business at Barclays in 2018 and is based in New York. Prior to joining Barclays, she served as Escrow Relationship Manager at JPMorgan Chase. Nadia has over a decade of escrow experience, in both the US and UK markets.

    Maisy Palmer

    Assistant Vice President Escrow, UK

    Maisy Palmer joined Barclays in 2018 and is based in London. Prior to joining the UK Escrow business worked in the UK Corporate Bank. Maisy graduated with a BSc (Hons) in Banking Practice and Management from The London Institute of Banking and Finance.

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