Guernsey Bank Deposits Recovering

by Robert Lee, Tax-News.com, London

04 June 2010

Guernsey banking deposits increased marginally during the first quarter of 2010, but remain down 17% year-on-year.

Deposits increased in the first quarter by GBP1.3bn (or 1.1%) taking the total level of Guernsey bank deposits to GBP118.7bn.

Peter Niven, Chief Executive of Guernsey Finance – the promotional agency for the island’s finance industry, said:

“This is the first time in fifteen months that I have been able to report growth in the value of banking deposits during the previous quarter. It is encouraging that we have seen this increase – albeit small – during the first three months of this year, [reflecting] greater stability in the banking sector at the moment.”

“It is also important to look at the underlying trends, which provide more revealing information. For example, the returning confidence in the investor markets and a sustained low interest rate environment has resulted in a continued decline in Swiss fiduciary deposits, with a fall this quarter of nearly 6%. Other deposits – excluding the Swiss product – increased moderately to a level 5% higher than the crisis period of October 2008. These figures have been buoyed to some extent by the weakening of sterling against other currencies but having said that, those already held in sterling and therefore unaffected by exchange rate movements did increase slightly for the second quarter in succession.”

Analysis of the figures from the first quarter of the year shows that Swiss fiduciary deposits contracted by GBP2.4bn (5.7%) from GBP41.8bn at the end of December 2009 to GBP39.4bn at the end of March 2010.

Overall, other deposits – excluding Swiss fiduciary deposits – increased by GBP3.7bn (4.8%) from GBP75.6bn at the end of December 2009 to GBP79.3bn at the end of March 2010.

The effect of exchange rate movements in the quarter was significant and this has also impacted on the overall currency mix where sterling deposits decreased very slightly to 23.8% of the total deposit base, Swiss franc deposits fell to 3.4%, US dollars rose to 46.7% and euros dropped to 22.8%.

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