"Success and Stability: A Strategic Review of Guernsey's Banking Industry" has been published by Lord Hunt.
During March 2009 Lord Hunt was commissioned by the Island's Commerce and Employment Department to conduct a strategic review of Guernsey's banking industry to help develop a sustainable strategy for the future of the sector. It was in response to the global economic situation and its affect on Guernsey and specifically the banking sector.
During the investigations and interviews undertaken by the team, Lord Hunt stated that he found much to encourage him in thinking that Guernsey could expect a major contribution to its economy from banking for years to come.
On publication of the report this view was reiterated by Lord Hunt who said "the banking sector has made a significant net contribution to the economy of Guernsey. The report shows that the sector directly employs nearly 2,750 people and contributes 17% of all tax revenues and an estimated £200 million a year to the Guernsey economy."
The Hunt review goes on to illustrate how the indirect benefits are felt throughout the whole Guernsey community. The fact is that most Guernsey business and residents benefit either directly or indirectly from the banking industry.
The independent report highlighted that there were definitely opportunities to be researched and potentially exploited by the Guernsey banking sector but that the Island could not afford to be complacent. The report highlights threats and risks to be mitigated as well as the opportunities which must be addressed by the public and private sector in order to remain competitive.
Carla McNulty Bauer, Minister for Commerce and Employment, said: "Lord Hunt's report shows that Guernsey has a strong and diverse banking sector which is crucial to Guernsey's whole population. Many of the proposals are already being addressed and I look forward to continuing to focus our collective attention on the areas highlighted in the report so that Guernsey continues to have a banking sector with an enviable reputation."
The Minister added: "The announcement that Guernsey must once again review its corporate tax structure only reinforces the points raised by Lord Hunt. Opportunities and threats will continue and Guernsey has to continue to be dynamic and work hard to maintain competitive advantages in an international arena. This will be a collaborative effort by the public and private sector."
There are obviously challenges but C&E is already working on many of these initiatives and will continue to work with the States as a whole and industry wherever appropriate.
Steve Watts, Chairman of the Association of Guernsey Banks (AGB) said: "The Hunt Report has again emphasised that Banks are a vital part of the whole Guernsey economy. AGB notes the recommendations contained therein, acknowledges that the Banking industry is undergoing change on a global scale and that it is vital for the Island to continue to maintain its well established reputation for probity, effective regulation and transparency."
The report highlights the fact that Guernsey's success as an attractive place for people to live and do business is inextricably linked with the banking industry. Lord Hunt said "the disproportionate contribution from banking makes its success and closely related activities a key driver of Guernsey's prosperity." In addition to providing traditional banking services to the local domestic and business community, it was identified that most Guernsey banks offer core products to all other parts of the finance sector and that this also adds to Guernsey's infrastructure and general offering.
Private banking and the provision of all professional services, including banking, to the world's wealthy families, wherever they live, is an opportunity for Guernsey. The relocation of wealthy individuals to Guernsey who may bring part of their business to Guernsey was also identified as an opportunity. It was also felt that extra attention should be paid to repatriating Guernsey residents who have gathered experience overseas but who may be looking to return for lifestyle and family reasons. This would permit Guernsey to offer higher value services.
The deposit taking sector was scrutinised and the report concluded that although the risk presented by retail deposits is less than a year ago, risk remained which needed to be considered and managed.
Philip Marr, Director of Banking at the Guernsey Financial services Commission (GFSC), said: "Lord Hunt's Report on the current shape of the banking industry in Guernsey and his analysis of the principal business models operating here and the risks inherent in those models will be helpful to all stakeholders involved in the industry. We think it is wholly appropriate to consider whether those are reasonable risks for the Island to be taking in the current environment. We have already been addressing those risks, principally about upstreaming, for some time and will continue to do so in the future.
"Lord Hunt also addresses the challenges facing the sector as a result of regulatory changes brought on by the banking crisis. As always we stand ready to respond to those challenges which impact on banking business in Guernsey.
"We have noted his observations on reputational risk issues and will consider to what extent these should be mitigated. However it will be for the Department to assimilate the strategic and economic consequences of his recommendations on the structure of the industry."
The Hunt review is the culmination of significant work both on and off-Island, including a three month consultation period with stakeholders and interviews from Guernsey's banking sector; formal information and data gathering exercises as well as the comprehensive canvassing of views of international banking experts.
A full copy of the report can be found at:
For more information about Guernsey's finance industry please visit www.guernseyfinance.com .
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