Guernsey Bank Deposits Dip In Q2

by Jason Gorringe, Tax-News.com, London

11 August 2008

Total deposits held with Guernsey banks at the end of June 2008 decreased in Sterling terms by GBP1.4bn from the end of March 2008 level of GBP129.5bn to GBP128.1bn, representing a 1.1% decrease over the quarter, the Guernsey Financial Services Commission has announced.

While that level of deposits was still 18.5% up on the level at end June 2007, the Commission said that total assets and liabilities fell by GBP1.7bn representing a 1.2% fall over the quarter to GBP144.4 bn. However, total assets and liabilities were 20.5% up on the previous year.

There was a 3.9% decrease in Swiss fiduciary deposits in the quarter, down to GBP52.6bn from the peak level of GBP54.8bn reached in March 2008. The decline was largely the result of a change at one bank where a block of Swiss fiduciary deposits was transferred out of the jurisdiction to another part of the group. Swiss fiduciary deposits now represent 41.1% of all deposits with 11 banks in Guernsey currently active in this area of business.

Sterling strengthened slightly against all the main currencies which led to a negative exchange rate effect and a slight depressing effect on the overall figures. Encouragingly there was a small amount of volume growth in deposits in Sterling and Euro but there was decline in US Dollar and Swiss Franc denominated deposits when analysed in their underlying currencies. The overall currency mix shows some slight changes with the proportion of US Dollars decreasing slightly to 43.9% and Swiss Francs down to 3.6%, while Euros increased to 22.9% and Sterling deposits were up to 26.4%.

There were no new Banking Licences issued during the second quarter and none were surrendered. Local inter-bank activity increased to GBP1,076mn.

Philip Marr, Director of Banking commented:

“Total deposit figures were down slightly by 1.1% from the peak achieved in March 2008 to GBP128.1bn. Total assets and total liabilities were also down by some 1.2%. However there continue to be positive signs. The decline this quarter was driven by Swiss fiduciary deposits which decreased 3.9% but other deposits continued to grow albeit modestly by nearly 1% and they reached their highest ever level of GBP75.5bn. In uncertain market conditions it may not be realistic to expect steady growth trends in Swiss fiduciary deposits and we may see further swings but it was encouraging that other deposits mainly in Sterling and Euro continued to move upwards”.

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