This Is Guernsey

By Tom Bradshaw

TOTAL deposits held with Guernsey banks have topped the milestone £100bn. They increased sharply in the first quarter by £13bn to reach £105.3bn.

The Guernsey Financial Services Commission’s latest statistics also reveal that total assets and liabilities increased by £15.7bn to reach a new high of £116.3bn.

The first quarter saw an exceptionally large increase in deposits from financial institutions at a small number of large banks. Director of banking Philip Marr said that was in part accommodating liquidity from the funds industry, which fluctuates widely from day to day.

There are currently 20 large banks - those with total assets of more than £1bn.

Mr Marr said more business was being done by fewer but larger banks.

GuernseyFinance chief executive Peter Niven said: ‘Passing this milestone is a superb achievement and to do it sooner than anticipated, with deposits rising by 14% in the first quarter of the year, makes it particularly special. This once again endorses the fact that Guernsey is at the forefront of international banking centres.’

In addition, a change in the way group business is done in North America had had a significant impact locally.

Mr Marr said bank finance from that source was likely to be a stable addition.

Volume levels in the underlying currencies showed the biggest increase was in US dollars, up by 34%, with sterling up 12%. Euros and Swiss francs each declined by 7%.

A further 8.5% increase in Swiss fiduciary deposits took the total to £39.5bn, an all-time high in absolute terms. However, given the overall expansion of the total deposit book, these now represent 37.5% of all deposits - lower than the position a year ago, when they represented 39.6%. In part, this business had been given a boost at the end of 2006 as a result of group restructuring at two banks which increased their involvement in Swiss fiduciary deposits.

There are 13 banks active in this area in Guernsey.

No new banking licences were issued during the quarter but Landesbank Baden Wurttemberg’s Guernsey branch surrendered one.

Local inter-bank activity increased to £940m.

Mr Marr said: ‘The fortunate coincidence of exceptionally large volume increases in deposits from financial institutions meant that Guernsey was able to withstand the exit of one large bank and at the same time record a significant increase in deposits overall.

‘These events underline that the figures are mainly influenced by the swings and trends in the business done at the large banks and that changes in activity at those banks materially affect the figures quarter by quarter.’

Mr Niven said the statistics reflected the buoyancy of the finance industry as a whole.

* Articles reflecting on activity in different sectors of the finance industry in 2006 will follow in the business pages.

Article posted on 23rd May, 2007 - 12.00am