THE island should use a review of its situation as an offshore territory and finance centre to demonstrate how well run it is, according to the Guernsey International Business Association.
Chancellor Alistair Darling (pictured) revealed in his pre-Budget speech last month that the UK Government was going to launch a review of the role as finance centres of offshore areas for which it is responsible, such as the Crown Dependencies.
Giba chairman Steve Le Page said the chancellor’s announcement should not alarm the finance industry in Guernsey or the rest of the island’s economy that has a close relationship with it.
‘Guernsey has always been open about the way business is conducted in the island and we should welcome the interest from the UK Government in the same spirit – as an opportunity to demonstrate what a well-run and well regulated jurisdiction we are. It will be good for the UK authorities to see this at first hand.’
Chief Minister Lyndon Trott, who attended a meeting at HM Treasury in London on Thursday, said the review would be a collaborative exercise but the exact terms of reference were still not known.
However, Deputy Trott did give the assurance that it would exclude constitutional issues and would not in any way impinge on Guernsey’s fiscal autonomy or ability to set its own tax rates.
Mr Le Page said that periodically over the last two decades or so, outside agencies had visited the island to take a close look at the finance sector and how it operated and this would be no different.
‘The findings of the most thorough and significant of these from the IMF, the Financial Action Task Force and also that which led to the Edwards report have all been positive.
‘That’s not to say that we are complacent, but rather that we should welcome the initiative as a jurisdiction that has plenty to be proud of.
‘Guernsey’s robust regulation of its financial industries has ensured that the island receives positive reports when external investigations are undertaken. Increasingly, wealthy corporations and individuals from across the globe have also been encouraged to bring business to Guernsey because they too are reassured by our high standards of regulation.’
Article posted on 2nd December, 2008 - 2.30pm
10 Article Comments
“…how well run it is”? Are you kidding us, Mr Le Page? If it really was well run it would never have permitted a little-known Icelandic bank to purchase safe Cheshire BS savings.
And what about the long delay in implementing a deposit compensation scheme, which only happened AFTER Landsbanki Guernsey imploded – and even then took a further month and a half?
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Mr Ashbey – you overlook the fact that Landsbanki was ranked 177th in the world and was already approved as a regulated bank by the UK regulator. Hardly “little known” and in fact better known than the Cheshire Building Society to many ! Landsbanki did not fail because of the Guernsey regulator. It fell because of the collapse of Iceland’s entire economy and because of the “irregular” freezing of the Heritable Bank monies by the UK Treasury. Is that really Guernsey’s fault ?
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Mr Ashby
If Landsbanki was a little known Icelandic bank, why did so many of the former Cheshire BS members allow their many to remain in this bank?
I can see why the time bond holders remained but there were many who could have moved their funds elsewhere.
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David
By the GFSC’s own admission Landsbanki was nowhere near 177th in the world. According to their recent statement in the Guernsey Press, Landsbanki was much closer to 400th in the world.
I certainly had never heard of it when the GFSC permitted the sale of my savings to LGL. And, yes, it was my fualt for not immediately closing my account the moment my savings were transferred to a bank that I’d never heard of.
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It may have been ranked around 400 at the time of the Cheshire deal (but still in the world top which was seemingly an approved rating benchmark as far as the UK regulators and the IMF were concerned) before it rose to 177th at the time of the collapse (on the face of it vindicating the original decision).
If one takes the same view of Kaupthing then the UK authorities deemed it ok to acquire the age-old and very respectable Singer and Friedlander Bank.
I cannot see any way that the Guernsey authorities can be blamed for allowing the sale of Cheshire to Landsbanki based on all known factors and approved practices at that time.
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Yes, well said Mr Ashbey, I put some money into Landsbanki last year. To be on the safe side, I contacted the GFSC who gave the bank a glowing report, can’t do any more.
The question needs to be asked as to why Guernsey did not have a Depositor protection scheme in place, afterall the Island is a Major Player in the financial world. I believe this scheme was recommended many years ago, but fell on deaf ears
Although very annoyed, the GFSC cannot be made scapegoats; this banking collapse was caused by the recklessness of about 30 Traders in Iceland. This was well documented several weeks ago on BBC News night.
However Mr Trott and Co should now be chasing the Icelandic Authorities day and night till a solution is found, I do believe talks have taken place, however to no avail. Keep trying guys, we are counting on you to stand up to the Icelandic Authorities and not be pushed about, after all you were very accommodating to this bank in the first place the least they can do is sit around a table with you.
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David
The UK permitted Kaupthing to acquire a merchant bank with high-net-worth customers who can tolerate greater risks. I very much doubt whether the UK would have permitted Kaupthing to acquire the savings of a safe UK building society.
As regards Landsbanki-owned Icesave, it applied for its own banking authorisation in the UK and most certainly would never have been allowed to acquire safe building society savings.
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Mark – you are making some big assumptions there and I don’t believe you are correct. By your analysis only a building society-type operation would ever be allowed to acquire another building society and that has never been the case. Dozens of what were traditional building societies have been acquired by highly-commercial banks.
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Mr Ashbey
I find it difficult to accept your reasoning on the circumstances when the UK authorities would allow a bank to take over a building society and a merchant bank.
If there is any criteria it certainly wouldn’t be on the basis that clients of a merchant bank are “high-net-worth customers who can tolerate greater risks”.
Even the hopeless FSA cannot be accused of that.
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David
You are right: that has never been the case.
However, it has been the case that the UK has only permitted safe buiding society savings to be sold to major UK banks (e.g. Woolwich taken over by Barclays; C&G acquired by Lloyds TSB), and we can be confident that the UK will not permit those UK banks to go under.
So permitting safe UK building society savings to be sold to a UK bank is one thing; but allowed their sale to a little-known Icelandic bank that was only ranked 397th in the world at the time of the sale set a dangerous precedent, as Guernsey and overseas savers have now discovered to their loss.
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