Yorkshire Guernsey Shuts Shop

by Jason Gorringe, Tax-News.com, London

15 August 2011

Formed in 1990, Yorkshire Guernsey, the offshore subsidiary of Yorkshire Building Society, is to be wound up after it was deemed the structure was no longer viable, the company's chief executive attributing the decision to conflicting regulation in Guernsey and the United Kingdom.

Explaining the decision, Chief Executive Iain Cornish said that the company had been in discussions with the Guernsey Financial Services Commission to gain permission to restructure as a branch to resolve the issue.

Rules laid down by the UK Financial Services Authority stipulate that a society must hold at least equal funds to that deposited in an offshore subsidiary. Meanwhile, Guernsey regulations required that a significant porportion of capital is kept within the island rather than being transferred to the parent society.

The requirement to maintain high cash levels in the UK, as well as problems with adhering to the Guernsey rules under its current structure, made the Guernsey structure financially unviable, Cornish said, due to the lower interest yields available in the UK.

Yorkshire Guernsey had 6,000 island and off-island clients, with a deposit level of around GBP800m (USD1.3bn).

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