This Is Guernsey

By Tom Edwards

Landsbanki Guernsey managing director Steve Le Poidevin, left, and chief executive Mark Sismey-Durrant have warned islanders that the days of cheap credit are over and they will have to save before they spend. (Picture by Steve Sarre, 0603041)

SAVE before you spend is the advice to islanders from two bosses of an Icelandic bank. Landsbanki MD Steve Le Poidevin and chief executive Mark Sismey-Durrant said more caution was required in the face of the rising cost of living.

Since the global credit slump has taken hold, consumers have suffered from loans being withdrawn or made more expensive by lenders.

‘Don’t rely too heavily on credit and look around for the right deals,’ said Mr Sismey-Durrant. ‘It’s not difficult these days to get hold of information and choose the product that is right for you. Be sensible, keep an eye open and make informed decisions.’

The era of low interest rates could return one day, but the days of cheap credit were gone forever, Mr Sismey-Durrant said. ‘I don’t believe the banks will ever be caught out by the same mistakes again.

‘If you want something beyond your salary, the reality is that you’ll have to save for it. Just as banks have to learn to cope, so do consumers.

‘The chances are that if someone wants a mortgage now, for example, they’ll have to put 25% of the value of the house down to get one.

‘Even with house prices falling, that’s a considerable amount for almost anyone.’

On the flipside, people with savings are also suffering as a result of the credit crunch, said Mr Le Poidevin.

‘People need to change their attitudes and become less apathetic towards their savings. If £100,000 is the average amount in the deposits market, an extra one per cent really makes a significant difference.

‘When faced with a recession a saving culture normally develops, but this hasn’t happened because of the unprecedented level of debt that’s around and a general lack of realisation of how severe the situation has become.’

Landsbanki is owned by the National Bank of Iceland and is active in 17 countries.

It established the Guernsey subsidiary in September 2006 and runs the highly successful retail savings business, Icesave.

‘We’re relatively new to Guernsey, but we’re in good shape and very profitable having just announced some excellent first quarter results,’ said Mr Le Poidevin.

‘I think we’re leading the Channel Islands by offering some great rates and account types and we’re also rated in five out of eight Moneyfacts best buy tables.’

Mr Sismey-Durrant, who is also MD of Icesave and has significant experience of Iceland’s economy, said it differed greatly from the UK.

‘Iceland is a world leader in the production of geothermic energy and only uses 30% of its own energy resources, so there is an abundance of free energy. It also has plentiful fish stocks, which means that its two areas of strength are food and energy, which are also today’s two major global problems.

‘Consequently, the International Monetary Fund has described its medium- to long-term economy as extremely enviable.’

Article posted on 10th July, 2008 - 2.30pm