Guernsey Financial Services In Good Health

by Amanda Banks, Tax-News.com, London

13 September 2010

Newly-released figures show that Guernsey’s finance industry is in good health, according to Peter Niven, Chief Executive of Guernsey Finance – the promotional agency for the Island’s finance industry.

The latest statistics from the Guernsey Financial Services Commission (GFSC) show that:

• The value of funds business in the island reached a record high of GBP224.2bn at the end of June this year – a rise of GBP26.8bn (13.6%) during the second quarter and an increase of GBP54.6bn (32.2%) year on year;
• The gross assets, net worth and premiums written by the island’s international insurance industry during 2009 were all up on the previous year and the first part of 2010 has seen a rise in the net number international insurance entities licensed; and
• The value of bank deposits in Guernsey reached GBP116.8bn at the end of June 2010 – a fall of GBP1.9bn (1.6%) during the quarter and down GBP7.7bn (6.2%) on the same time last year but the Swiss fiduciary deposit levels stabilized and Sterling deposits increased for the third quarter in succession.

Commenting on the figures, Niven said: “In the round, these figures show that Guernsey’s finance industry is in good health. We have not been immune from the impact of the global financial crisis but the island has benefited from the diversity of its finance industry, which has also proved to be extremely resilient. The general worldwide economic picture still remains fragile but these latest figures show that our finance industry is in robust shape.”

Guernsey-domiciled open-ended funds decreased in value by GBP2.8bn (5.1%) during the three months to reach GBP53.3bn, although this still represented an increase of GBP2.7bn (5.3%) year on year. The value of Guernsey closed-ended funds grew by GBP1.7bn (1.9%) to reach GBP94bn, a rise of GBP20.1bn (27.2%) over a full year and non-Guernsey schemes – for which some aspect of management, administration or custody is carried out in the Island – reached GBP76.9bn, up GBP27.9bn (57.1%) during the quarter and GBP31.9bn (70.9%) year-on-year.

“It is extremely encouraging to see this growth within Guernsey’s funds industry. There is still a degree of uncertainty in the markets but confidence is returning and it is very positive indeed that we have bounced back so strikingly from the turmoil of recent times to pass our previous record high from two years ago, “ Niven added. “The Island’s service providers are clearly capitalizing on our strong reputation as a leading center for the management, administration and custody of both Guernsey and non-Guernsey schemes”

During 2008 Guernsey’s international insurance industry had gross assets of GBP21bn, net worth of GBP7.1bn and premiums written of GBP3.3bn, in 2009 these increased to GBP23.4bn, GBP8.1bn and GBP3.4bn respectively. In addition, the net number of international insurance entities licensed in Guernsey has risen from 678 at the end of December 2009 to 686 at the end of July 2010. Within these figures, the decreased demand for more traditional captive vehicles has been more than offset by the net number of PCC cells licensed increasing from 323 at the end of December 2009 to 339 at the end of July 2010.

“I’m extremely pleased to see that our risk management sector has continued to grow during what have been very tough times in the international insurance market," Niven continued. "The increase in business volumes during last year and the rise in net number of structures licensed in the sector during this year maintain our status as the number one captive domicile in Europe and keep us firmly within the top four in the world. This is a position built over many years. Our experience and expertise, including with our innovation of the Protected Cell Company structure, continues to be internationally recognized.”

Deposits held with Guernsey banks fell by 1.6% during the second quarter to reach GBP116.8bn at the end of June 2010, partly due to deposits held in Euros being impacted by the recovery of Sterling, Guernsey Finance said. Deposits in Sterling actually increased for the third quarter in succession and following several quarters of contraction, the levels of Swiss fiduciary deposits stabilized to the extent that the total only fell marginally from GBP39.4bn at the end of March to GBP39.3bn at the end of June.

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