Gib Government Rejects Opposition's Banking Criticism

by Amanda Banks, Tax-News.com, London

16 July 2002

The Gibraltar government has hit back angrily at suggestions that it has 'supervised over the decline' of the jurisdiction's banking sector, made by Opposition leader, Dr Joseph Garcia last week.

In an interview with GBC, Dr Garcia alleged that: 'When they [the GSD government] came into office there were 26 banking licences issued to banks in Gibraltar. Over the years the number has declined steadily. In March last year the figures produced by the Financial Services Commission show that the number of banking licences was down to 19, and by November of last year it had gone down further to 18.'

However, in a statement released in response to Dr Garcia's accusations, the Gibraltar authorities have argued that far from presiding over the decline of the sector, the current administration has strengthened and developed banking on the Rock:

'In the first place, there has not been a reduction of 26 to 19 banks since 1996,' the government statement began.' Some banks have historically had more than one licence (for example the Republic Bank had three) so it is always misleading to focus on the number of licences rather than the actual number of banking institutions.'

The government release went on to explain that there were 22 banking institutions in Gibraltar in 1996, and although three banks announced that they would be ceasing operations in fiscal 1998-99, the number has remained constant at 19 since then.

The government also revealed that although Abbey National announced recently that it is scaling down its Gibraltar operations - the event which raised Dr Garcia's ire - there has been a new entrant to the sector this year, in the form of Banque Jacob Safra.

Observing that recent events in the wider world have taken their toll on the global economic situation, and that the jurisdiction has been under increased pressure as a result of the Anglo-Spanish talks, the statement concluded that:

'Of course the Government would like to see more banking institutions come to Gibraltar and it will continue its marketing drive to achieve inward investment across all sectors in financial services.'

It added that the state of the banking sector must be seen in the overall global context, and pointed to the fact that: 'the finance centre is strong notwithstanding the numerous pressures and challenges it has faced over the last two years.'

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