Jersey Banking Deposits Fall

by Amanda Banks, Tax-News.com, London

15 September 2010

Banking deposits in Jersey fell by 6% during the second quarter of 2010, to GBP166.9bn. Jersey Finance, the promotional agency for the island’s financial services industry attributed the fall to ‘the challenging economic conditions that still prevail in the global markets’.

The statistics collated and prepared by the Jersey Financial Services Commission for the three-month period ending June 30, 2010, also show that funds under administration decreased by 2.5% to GBP175.9bn, though the number of unregulated funds has continued to rise compared to the first quarter. Company formations were also nearly 10% higher than the same period in 2009. The headline figures from the statistics are as follows:

• Banking deposits decreased by GBP10.7bn (6%) during the second quarter of 2010 from GBP177.6bn to GBP166.9bn;
• The Net Asset Value of funds under administration decreased by GBP4.6bn (2.5%) from GBP180.5bn to GBP175.9bn during the second quarter of 2010. The total number of funds decreased by 33 from 1,320 to 1,287. The total number of unregulated funds increased by 16 during the second quarter of 2010;
• The value of funds under investment management decreased by GBP0.9bn (4%) compared to the previous quarter from GBP21.1bn to GBP20.2bn; and,
• Company formations were up 9.9% compared to the second quarter of 2009. The total number of live companies on the register increased by 191 during the second quarter of 2010.

Geoff Cook, Chief Executive of Jersey Finance, believes that, with full economic recovery likely to take some time, Jersey will experience further peaks and troughs. He commented:

“The first quarter of 2010 showed the first signs of economic recovery, however, the second quarter, dominated by global austerity measures, saw a sharp fall in the performance of important financial markets indices. The FTSE100 was down by 13.43%, the FT World Index decreased by 12.03%, the MSCI World lost 13.26% and the S&P500 index was down by 11.86%.”

“It is against this background of difficult economic conditions that we need to interpret the latest statistics. Interest rates remained at low levels this quarter and much of the fall in banking deposits can be attributed to currency fluctuations and inter group balance sheet management as opposed to underlying customer activity. The net asset value of funds under administration in Jersey fell by 2.5% and the funds under investment management were down by 4% but have nevertheless outperformed the major market indices.”

“Such challenging business conditions emphasize the vital need to vigorously promote and market Jersey around the world in order to ensure that we capture new business flows. In this respect, provided we can sustain our promotional efforts, we expect to see increasing business volumes from emerging markets, particularly from India, China and Russia, which will provide further support to the business flows derived from more traditional markets.”

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