Guernsey: Guernsey Bank Deposits Up In Q2 But Still Down In 2012
Last Updated: 25 October 2012

The value of bank deposits in Guernsey grew by £2.1 billion (2.1%) in the second quarter of the year.

The new figures from the Guernsey Financial Services Commission (GFSC) show that the total value of deposits held by banks in Guernsey rose to £103.1 billion at the end of June 2012.

However, this represents a decrease of £4.4 billion (4.1%) since the turn of the year and a fall of £10.7 billion (9.4%) since the end of June 2011.

Fiona Le Poidevin, Chief Executive of Guernsey Finance - the promotional agency for the Island's finance industry internationally, said: "It is pleasing to see the growth in the value of deposits held by banks in Guernsey during the second quarter of the year. It is particularly positive to note that while some of the growth was due to exchange rate factors, there was also a notable material increase in the volume of deposits during the quarter.

"Having said that, this is just one quarter of data and in fact, overall, deposit levels have fallen during the last three years. This is in line with what is being seen in other similar jurisdictions and it is not surprising considering the global economic situation and in particular, the conditions for banks who continue to contract their balance sheets due to deleveraging. In addition, the low interest rate environment continues to have a significant negative impact on the attractiveness of having funds on deposit in a bank and as such, investors are moving capital into other higher yielding products.

"Indeed, the latest figures for our funds industry show that the value of business in Guernsey has grown during each of the two quarters of the year so far and is up nearly 60% in the last three years. Also, during the first seven months of the year, there has been net growth of 52 licensed international insurance entities, taking the total number to 739 at the end of July. This shows the great strength of having a diverse finance industry and it means that, in broad terms, it is performing strongly in what are difficult global economic conditions."

The quarterly report on banking sector activity from the GFSC said that the overall growth in value of deposits was the result of both a material increase in volumes, as well as exchange rate factors. In particular, Sterling weakened against the US Dollar and strengthened against the Euro and Swiss Franc, which had a positive effect on the level of deposits expressed in Sterling, adding to the material increase in the volumes of deposits during the quarter. The overall currency mix shows that the proportion of deposits in Sterling is 24.4%, US Dollars is 47.7%, Euro deposits 18.5% and Swiss Franc deposits 3.3%.

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