Jersey Finance Sector Racks Up Healthy Gains

by Jason Gorringe, Tax-News.com, London

14 March 2005

The Jersey Financial Services Commission has issued its quarterly report for the period 1 October 2004 to 31 December 2004, showing healthy levels of bank deposits, funds under management and company incorporations.

• Bank deposits increased by £8.9 billion during 2004 to £158.1 billion;
• The value of collective investment funds managed in the Island ended 2004 at £104.1 billion, an increase of £1.6 billion over the 2003 year-end figure;
• The number of collective investment funds and COBO funds rose during 2004 from 602 to 833;
• The total value of funds under management (Class B of the Financial Services (Jersey) Law 1998) stood at £34.4 billion as at 31 December 2004. The increase in funds under management during 2004 was £3.3 billion (10.6%).
• Company incorporations for the whole of 2004 totalled 2439, an increase of 13.1% over 2003.

There was a decrease in Jersey bank deposits during the quarter of 0.64% (£1.0 billion). The main reason for this was a drop in the reported sterling equivalent of the foreign currency on deposit with Jersey banks. Although during the quarter there was actually an increase in the amount of foreign currency placed on deposit, the aggregate reported sterling equivalent fell due to a substantial weakening in the US Dollar during the quarter (the majority of the Island’s currency deposits are in US Dollars).

During the last quarter of 2004, the number of banking licences dropped from 55 to 51. The drop is a reflection of consolidation in the banking sector.

The year-end fund figures showed an overall Net Asset Value (“NAV”) increase of 7.5% for the quarter. While all types of funds had increases in the quarter, it was the specialist type funds, such as Venture Capital, Real Property and Hedge Funds, which have shown the largest gains. As a percentage of the NAV of all funds in Jersey, specialist type funds now account for 45% compared to 26% at the end of 2003. Thus, while Jersey’s biggest sector, by value, continues to be Equity Funds, Venture Capital, Real Property and Hedge Funds grew significantly in 2004. This demonstrates Jersey’s growing importance in these niche markets.

Company incorporations for the whole of 2004 totalled 2439 an increase of 13.1% over 2003. The increase was primarily due to changes in UK legislation relating to stamp duty which came into force during the year, and increased business activity in the Island. The number of ‘fast track’ incorporations for the quarter was 258 and the number of normal company incorporations was 362.

David Carse, Director General of the Commission, commenting on the quarterly statistics said: ”The increase in business volumes in all sectors during 2004 reflects the improving global economy and the continuing confidence that investors and financial services businesses have in Jersey.“

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