Guernsey has released its report on banking activity during the second quarter of 2009, showing that total deposits held with Guernsey banks at the end of June 2009 decreased by GBP18.3bn from the end of March 2009 level of GBP142.9bn, down to GBP124.6bn, representing a 12.8% decrease over the quarter, but a lesser 3% decrease over the year.
Total assets and liabilities decreased by GBP20.5bn to GBP144.4bn representing a 12.4% decrease over the quarter, the GFSC revealed, although they are still 1.1% higher than the level at the same time a year ago.
The Commission also suggested that this quarter’s figures, reported in Sterling, are all materially affected by the strengthening of Sterling against the major currencies.
It went on to explain that:
"One reason for the large fall in deposits was the 22.8% contraction in Swiss fiduciary deposits in the quarter, down from GBP61.4bn in March 2009 to GBP47.4bn, given the declining attractiveness of this product in a low interest rate environment continuing during 2009. Swiss fiduciary deposits now represent 38.1% of all deposits with 10 banks in Guernsey currently active in this area of business."
The overall currency mix showed some changes in the proportion of deposits in individual currencies, with the proportion in Sterling increasing to 23.3%, and the US Dollar proportion increasing to 45.3%. The proportion in Euro deposits fell to 25.5%, meanwhile, and the proportion in Swiss Franc deposits fell slightly to 3.1%, the Commission stated.
No new banking licences were issued during the second quarter of the year, and none were surrendered.
Philip Marr, Director of Banking commented:
“The Bailiwick saw a significant rise in bank deposits following the crisis of October 2008 as a part of a global flight to safety, but with the financial markets beginning to recover and with the continuation of low global interest rates, it is apparent that adjustments have now been made to the proportion of wealth management portfolios which are held in bank deposits with a consequent downward effect upon the overall deposit base.”
“The reduction was most evident in the lower level of Swiss fiduciary deposits which remain unattractive as a private banking product. However a significant part of this quarter’s reduction in sterling terms was as a direct result of the recovery of the sterling exchange rate against the major currencies after its severe weakening in the wake of the financial crisis last year,” Marr concluded.
A comprehensive report in our Intelligence Report series, analysing the situation on the ground in each of the main offshore banking centres, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report3.asp
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