GUERNSEY bank deposits fell by £14.1bn in the first quarter of this year.

The 9% decline is thought to be mainly due to the impact of low interest rates.

But while deposits totalled £142.9bn at the end of March, that figure is still £13.4bn up on the same time last year – representing growth of 10.3%.

GuernseyFinance chief executive Peter Niven (pictured) said the main reason for the first-quarter fall was Swiss fiduciary deposits contracting by 14.5%, from £71.8bn to £61.4bn.

‘This product has reduced in attractiveness as a result of very low interest rates and private client investors have responded accordingly,’ he said. ‘This is something we identified during the final quarter of last year but at that time it was more than offset by volume growth elsewhere and the impact of sterling weakening, which resulted in significant growth in the value of deposits. The first quarter of 2009 has seen more-settled foreign exchange markets so the effect of the falling demand for Swiss fiduciary deposits has been more evident.’

Mr Niven said the more positive news was that the steepest decline was in the first two months of the quarter and movements in the third month were more benign.