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Global woes hit Guernsey bank deposits PDF Print E-mail
News - Latest
Friday, 08 June 2012 13:53
The value of bank deposits in Guernsey fell £6.5 billion (6.1%) in the first quarter of the year.

This took the total value of deposits held by banks in Guernsey down to £101 billion at the end of March 2012, which is a decrease of £11.8 billion (10.5%) year on year.

Fiona Le Poidevin, deputy chief executive of Guernsey Finance, the promotional agency for the Island’s finance industry, said: “It is disappointing to see this further decline in the value of deposits held by banks in Guernsey. Some of the fall was due to exchange rate factors but there was also a material drop in volumes as a result of the global trend of banks deleveraging in the face of uncertainties surrounding the eurozone, capital adequacy pressures and weak economic growth.  

“Due to current conditions, we continue to experience an unprecedented low interest rate environment which has a significant negative impact on the attractiveness of having funds on deposit in a bank and as such, investors are moving capital into other higher yielding products.

“However, on a more positive note, there have recently been more inquiries from banks which have expressed an initial interest in establishing operations in Guernsey. It is still very early days but it is encouraging news and of course, comes in the wake of the announcement by HSBC that it will be consolidating its Channel Islands private banking operations in Guernsey.

“In addition, one of the great strengths of Guernsey’s finance industry is its diversity. Latest figures show that the value of investment funds being managed or administered in Guernsey was up nearly £9 billion in the first three months of the year. Also, during the first four months of the year, there has been net growth of 44 licensed international insurance entities, taking the total number to 731 at the end of April. Therefore, we can see that, in broad terms, Guernsey’s finance industry is performing robustly in what are difficult global economic conditions.”

The quarterly report on banking sector activity from the Guernsey Financial Services Commission said that the overall fall in value of deposits was the result of both declining volumes and exchange rate factors.
 

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