Guernsey Submits Evidence In Financial Crisis Exposure Investigation

by Robert Lee, Tax-News.com, London

12 February 2009

Guernsey Chief Minister Lyndon Trott has given evidence to the UK House of Commons Treasury Select Committee as part of its ongoing inquiry into the causes and consequences of the global banking crisis.

The Chief Minister’s evidence was wide-ranging and covered a number of aspects of the banking crisis – in particular issues for consumers, the economy and financial services regulation. He outlined how Guernsey’s financial services sector was remaining resilient in the face of the global downturn, and also explained how both the government of Guernsey and HM Treasury were working to help the Administrator to secure the best possible deal for Landsbanki depositors.

Deputy Trott said after the hearing: “This was an opportunity to discuss with an influential and highly knowledgeable group of MPs some of the key issues around the current banking crisis, and to discuss best practice for the future.”

“Our written submission to the Committee, as well as the oral evidence given today, also provided the opportunity to effectively champion Guernsey as a well-regulated financial services centre with a diverse and robust financial services sector – not just to MPs but to media and business audiences in the UK and beyond.”

The Chief Minister’s evidence covered a number of specific points such as the events that lead to the collapse of Landsbanki Guernsey; the role of the UK’s Financial Services Authority in the events that led to the collapse; how the new Depositor Compensation Scheme will work; and the international standards and benchmarks which the government of Guernsey and the Guernsey Financial Services Commission adhere to.

In his evidence Deputy Trott reiterated that the Administrator of Landsbanki Guernsey was expecting to make further payouts to depositors in due course.

He also outlined that Landsbanki Guernsey’s problems were no reflection of banking activity in the island, but rather a result of “contagion with its origins elsewhere. The reality is that there was no regulatory or government failure regarding the placing of Landsbanki Guernsey into administration,” he said.

Alongside the Chief Minister was Peter Neville, the Director-General of the Guernsey Financial Services Commission, who emphasised the importance of cross-border cooperation between regulators in dealing with potential banking crises.

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