NEARLY 300 staff at Fortis had only to look at yesterday’s headlines – the Daily Telegraph’s Staring into the Abyss was typical – to see how fortunate they were that a £9bn rescue package had secured their jobs and future.
And if they were breathing a sigh of relief, so too should the island as a whole.
The prospect of 270 people being thrown onto the jobs market at this time really does not bear thinking about. Yes, there is talk of 800 local vacancies and the labour market is tight and needs labour. But many institutions have imposed recruitment bans and that number of job seekers simply could not be absorbed overnight.
What the Fortis situation does, however, is to highlight the island’s dependency on one sector and the current fragility of the global financial services network of which Guernsey is an inextricable part. The seriousness of the meltdown is emphasised by the fact that it took the combined actions of three European governments to mount the rescue and that nations across the globe are facing at least the possibility of having to shore up national financial institutions or risk them collapsing and bringing down the system.
While these are world events, Guernsey’s place in the international markets brings them to our door.
Landsbanki, which operates locally and has been winning customers with interest rates of more than 7%, yesterday saw its credit rating downgraded. While a technical matter, it is an expert agency’s opinion on the relative ability of an entity to meet financial commitments such as interest payments and the return of investments. The move, in response to the government of Iceland, through the country’s central bank, providing another bank there with a 600m. euro rescue package, does not mean Landsbanki or its customers are at risk. But it represents further damage to confidence in the entire financial system.
Without exaggeration, the situation is now the unthinkable – one in which normal, sensible people are seriously asking whether their money is safe in the bank.
But perhaps the biggest fear for islanders and everyone else is just how much worse things will become before it gets better.
Meltdown poses hard question
NEARLY 300 staff at Fortis had only to look at yesterday’s headlines – the Daily Telegraph’s Staring into the Abyss was typical – to see how fortunate they were that a £9bn rescue package had secured their jobs and future.
And if they were breathing a sigh of relief, so too should the island as a whole.
The prospect of 270 people being thrown onto the jobs market at this time really does not bear thinking about. Yes, there is talk of 800 local vacancies and the labour market is tight and needs labour. But many institutions have imposed recruitment bans and that number of job seekers simply could not be absorbed overnight.
What the Fortis situation does, however, is to highlight the island’s dependency on one sector and the current fragility of the global financial services network of which Guernsey is an inextricable part. The seriousness of the meltdown is emphasised by the fact that it took the combined actions of three European governments to mount the rescue and that nations across the globe are facing at least the possibility of having to shore up national financial institutions or risk them collapsing and bringing down the system.
While these are world events, Guernsey’s place in the international markets brings them to our door.
Landsbanki, which operates locally and has been winning customers with interest rates of more than 7%, yesterday saw its credit rating downgraded. While a technical matter, it is an expert agency’s opinion on the relative ability of an entity to meet financial commitments such as interest payments and the return of investments. The move, in response to the government of Iceland, through the country’s central bank, providing another bank there with a 600m. euro rescue package, does not mean Landsbanki or its customers are at risk. But it represents further damage to confidence in the entire financial system.
Without exaggeration, the situation is now the unthinkable – one in which normal, sensible people are seriously asking whether their money is safe in the bank.
But perhaps the biggest fear for islanders and everyone else is just how much worse things will become before it gets better.
Article posted on 1st October, 2008 - 2.30pm