Guernsey: Guernsey Maintains Its Position At The Top Of The Class

Last Updated: 6 April 2011
Article by Peter Niven

Most Read Contributor in Guernsey, November 2017

Originally published in Global Assets Online, March 2011.

Writing in this publication at a similar time last year, I provided an overview of Guernsey's development as an international finance centre during the preceding twelve months. It was rather like a school report which read that there had been significant success in meeting the challenges that came our way and we would be looking for similar progress in the future.

Looking back over the last year then it is a case of more of the same. We have not been completely immune from the global financial crisis but the Island has to a large extent remained resilient in the face of the economic downturn. In addition, perhaps the most significant fallout from the crisis has been the increased international focus on so-called 'tax havens' or 'offshore' centres and we are pleased to say that Guernsey is being consistently recognised as within the very top tier of international finance centres.

In short, Guernsey has maintained its position at the top of the class.


The Island has been impacted by the financial crisis but we have been sheltered from the most severe elements. Our finance industry has remained resolute and is now showing signs of recovery. This is not uniform across the different facets of the industry but in fact its broad-based nature means that while some sectors continue to be more adversely impacted by the economic downturn, others have seen an upswing or identified new prospects.


Total deposits held by banks in Guernsey stood at £116bn at the end of September 2010 – down 0.7% during the third quarter of the year and 3.5% year on year. It was disappointing to see the slight fall in the value of deposits held by banks in Guernsey but this was less than 1% during the third quarter and in fact the picture is more complex than it might seem at first glance.

We have seen downward pressure on deposit levels, particularly in Sterling, as various banking groups continue to reorganise themselves in the wake of the financial crisis. However, Kleinwort Benson's migration of its Channel Islands operation from Jersey to Guernsey earlier last year, so that it could continue its private banking under new ownership, has offset some of this impact and is an extremely encouraging development in the longer term.


The picture for Guernsey's funds sector is more positive. The value of funds under management and administration in Guernsey was up 6% in the final quarter of last year. This is the sixth consecutive quarter of growth and takes the total to a new record high of more than £257bn at the end of December 2010. It also means that the value of business increased 40% year on year. These figures show that our funds industry has bounced back very well from the global financial crisis and we have clearly outstripped some of our closest competitors.

It is also very positive to see strong growth split across both Guernsey open and closed-ended funds and also the non-Guernsey schemes where some aspect of management, administration or custody is carried out in the Island. A significant increase in the number of these non-Guernsey funds entering into service level agreements with local licensees earlier in 2010 has notably boosted these figures but our Guernsey closed-ended funds also continue to attract a lot of interest, especially from promoters in alternative and niche asset classes and where there may also be a demand to raise money through capital markets.

Indeed, data direct from the London Stock Exchange (LSE) shows that at the end of December 2010 there were considerably more Guernsey incorporated companies listed on its markets – UK Main Market, Alternative Investment Market (AIM) and Specialist Fund Market (SFM) – than there were entities from any of our competitor jurisdictions. In addition, a new survey from Private Equity News / State Street has found that more than three-fifths (61%) of chief financial officers chose Guernsey as their jurisdiction of choice for private equity outsourcing, principally fund administration.

I believe that Guernsey has benefited from the greater certainty provided by the agreement for the framework of the EU's Alternative Investment Fund Managers (AIFM) Directive. There is much work still to do in relation to the Directive but the continuing efforts of government, industry and regulator mean that the Island is well positioned. Guernsey's funds industry has a very positive story to tell and this is something we are looking to harness, not least at this year's Guernsey Funds Forum which takes on Wednesday 11th May in London. It is a half day conference and exhibition hosted by TV news anchor Alastair Stewart and featuring speakers such as Jon Moulton, Chairman of Better Capital.


From an insurance perspective, it has been a period of consolidating our position as the market leader. Guernsey is the largest captive insurance domicile in Europe and number four in the world. In addition, approximately 40% of the leading 100 companies on the LSE with captives have them domiciled in the Island. It is reassuring that despite the maturity of our captive industry and the prevailing soft market conditions, we have continued to see growth in this sector.

The number of insurance licenses issued in the Island last year was slightly up compared to during 2009. There were 47 new insurance licenses issued in 2010, comprising 12 international insurers – pure captives, Protected Cell Companies (PCCs), Incorporated Cell Companies (ICCs) and ICC cells – and 35 PCC cells. This took the number of international insurers to 341 and total international insurance entities to 675 at the end of 2010. Additionally, the Island's international insurance sector has seen the value of business increase markedly over the last few years so now there are gross assets of £23.4bn, a net worth of £8.1bn and premium written of £3.4bn.

Importantly, early this year, the government and regulator jointly announced that Guernsey has no plans to seek equivalence with Solvency II. We have carried out a thorough evaluation of Solvency II and believe that, as things stand, seeking equivalence would not be right for our insurance market which is a world leader in captive insurance. Indeed, the treatment of captives under Solvency II remains uncertain and so we will be keeping a close eye on this and Solvency II as a whole to assess progress and how it might impact our market in the future. In any event, we remain committed to meeting internationally accepted regulatory standards as set by the International Association of Insurance Supervisors (IAIS) and endorsed by the G20.

This position not only provides certainty but ensures that we maintain and enhance our competitiveness as a domicile to captive owners and other niche insurers looking for an environment that meets the needs of their businesses. In fact, I have heard that some service providers are already receiving a number of inquiries from firms looking to establish reinsurance vehicles in the Island.


Guernsey's fiduciary sector has been a mainstay of the Island's finance sector over the last 50 years and today we play host to more than 150 licensed fiduciary providers, ranging from large multinational organisations to local, independent operations. Together they hold more than £300bn worth of assets in trust and company structures.

A niche but developing area for many Guernsey fiduciaries is pensions business and in particular, Qualifying Recognised Overseas Pension Schemes (QROPS). Our infrastructure and expertise has been a significant factor in Guernsey establishing itself as the leading jurisdiction for this and related products such as Qualifying Non-UK Pension Schemes (QNUPS). Well-regulated providers offer schemes with major advantages for clients. For example, Guernsey schemes provide the option to withdraw a lump sum of up to 25% tax free. The good news for clients is that the Guernsey Government, The States of Guernsey, has also recently agreed in principle for this to be increased to 30%. The detailed legislation has now been drafted and will come before the parliament during April. Assuming this is given final approval then the change will be backdated so that in essence it will have come into effect from 1st January 2011.

This comes at the same time as the publication of a draft code of practice for local QROPS providers. A committee of the Guernsey Association of Pension Providers (GAPP) has been working on the draft code and an exposure draft of a new code of practice has now been released on the association's website The draft will be reviewed in light of the comments received and it is intended that that final code will be issued by 31st March 2011. The move towards a voluntary code of practice emphasises the proactive nature of our sector in relation to best practice. Similarly, the Guernsey Income Tax Office takes a positive approach to ensuring that our schemes continue to retain HMRC approval. The security and stability which this offers is of significant comfort to clients and a major factor in the Island becoming the jurisdiction of choice for QROPS. There is also great potential in being able to specialise within other niche areas such as film finance and intellectual property (IP) as they develop over the coming years.

Latest developments

What we are also seeing is that the fiduciary sector is continuing to service existing business from the traditional centres of the UK and Europe but the maturity of these markets means that the major growth area for new business opportunities is further afield in the emerging markets of the Far East, the Middle East, India and Russia where there is increasing private and corporate wealth. Guernsey-based firms are increasingly seeking to take advantage of these opportunities. For example, fiduciaries Nerine Group and Louvre Group have established offices in Hong Kong, law firm Ogier is offering Guernsey legal advice from an office in Hong Kong and Guernsey-headquartered fund administrator International Administration Group (IAG) has also recently opened an office in Hong Kong. Indeed, there are potential opportunities within the emerging markets for a broad cross-section of Guernsey's finance industry.

Guernsey Finance is working with the industry to identify possibilities within the Middle East, India, Russia and the Far East and in particular China. We have had a representative office in Shanghai for more than three years now and the strength of the relationships we have built is highlighted by the fact that towards the end of last year, on behalf of the Guernsey Government, the Island's Chief Minister, Lyndon Trott, signed a Memorandum of Understanding for exchange and cooperation with the Shanghai Municipal Financial Services Office. In addition, during November last year, the Guernsey Government has also signed a Tax Information Exchange Agreement (TIEA) with the Chinese central government tax authorities.

The TIEA was the 19th such agreement that the Island has signed with another jurisdiction and since then, we have also signed similar agreements with Canada, Romania and South Africa, taking the total signed by the Island to 22. Guernsey was within the first wave of territories placed on the OECD 'white list' that was published at the G20 summit in April 2009 and our commitment to tax transparency and exchange of information has been endorsed by the OECD's Global Forum in a report published at the start of this year. The Guernsey Government has also announced that financial institutions have a window from 1st January 2011 to 1st July 2011 for moving to automatic exchange of information as part of equivalent measures the Island adopts in relation to the EUSTD.

In addition, during last year the IMF visited Guernsey to carry out an assessment and in January this year they published their evaluation reports which commended Guernsey's high standards of financial regulation, supervision and stability along with its robust criminal justice framework. As part of these reports, Guernsey was assessed as having a high level of compliance with the international standards against which it was judged – the 25 Basel Core Principles for Effective Banking Supervision; the 28 Insurance Core Principles of the International Association of Insurance Supervisors; and the Financial Action Task Force 40 Recommendations on money laundering and 9 Special Recommendations on terrorist financing. 

Guernsey has during its 50 years as a finance centre and particularly during the last decade or so faced scrutiny from the UK Government (the 1997 Edwards Report and the more recent Foot Report), the EU, the IMF, FATF and the OECD/G20. The Island has always cooperated in these processes and on each occasion been placed within the premier division of international finance centres.

The right conclusion

Guernsey never rests on its laurels though but is always looking to the future. We are currently facing challenges in a variety of guises, for example corporate tax rates and a revised EUSTD. Having said that, we have also been challenged many times in the past and the Island has always proved more than capable of adapting to survive. Now the Island has stepped up its representation within the corridors of power in both the UK and also the EU, where we have joined forces with Jersey to establish a Channel Islands Brussels Office (CIBO). In short, Guernsey is doing everything it can to ensure that the Island remains at the top of the class of international finance centres.

For more information about Guernsey's finance industry please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions