Guernsey: Europe’s Leading Specialist Finance Centre

Last Updated: 14 October 2011
Article by Peter Niven

Most Read Contributor in Guernsey, September 2018

Originally published in The Banker, October 2011

The foundations of Guernsey's modern finance industry can be traced back to the early 1960s when a clutch of merchant banks established operations on the island. In the years since then, Guernsey has established itself as a leading international finance centre.

This position has been reinforced by the latest rankings of specialist finance centres published in this supplement by The Banker. Guernsey has been ranked second only to the Cayman Islands globally, making it the leading specialist finance centre in Europe. We have moved up two places from last year by leapfrogging both Bermuda and Jersey, which now lie eighth and fourth, respectively.

Another of our closest comparables, the Isle of Man, has dropped a place from sixth to seventh. These rankings substantiate what we have thought for some time; that Guernsey has proved more robust in the face of the global financial crisis and its aftermath than many of our competitors.

What is more, The Banker rankings are based on a consistent data set supplied by each centre and principally statistics for the value of each sector of the finance industry to the end of 2010. Since the turn of the year, we have seen several positive developments in Guernsey's finance industry meaning that our position is probably even stronger now than these rankings suggest.

Latest figures

Guernsey has been impacted by the financial crisis, but we have been insulated from the most severe elements. Our finance industry has remained resolute and is now showing signs of recovery. This is not uniform across the industry, but 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.

For example, the Guernsey banking sector has been through a period of consolidation and restructuring during the past decade, which has seen the number of licensees fall from nearly 80 to fewer than 40 in recent years. This figure has now stabilised, reaching 39 at the end of June 2011.

During the decade, the value of deposits held by Guernsey banks continued to grow from £50bn to a high of more than £150bn until the global financial crisis brought about a reduction in values. Deposits have also now stabilised, reaching £114bn at the end of June 2011. This represents growth of 0.9% during the second quarter of the year yet, contraction of 2.5% year on year. This is a situation we will be monitoring going forward, particularly considering the difficult conditions in the global banking environment.

However, what we are now seeing is the possibility of attracting new entrants from emerging markets such as China, India and the Middle East, who are looking to use Guernsey as a base where they can service the needs of expat clients living in Europe and particularly London. This would provide additional diversity to a sector that already includes a wide variety of institutions, ranging from Swiss banks, building societies, retail banks, private banks and those offering custody services. Indeed, the banks also provide important services to the other sectors of the island's finance industry: fiduciary, funds and insurance.

It has been a period of consolidating our position as the largest captive insurance domicile in Europe and number four in the world. Despite the maturity of our captive industry and the prevailing soft market conditions, we have continued to see growth in this sector. In addition, we have seen increased inquiries this year following our decision not to currently seek equivalence under the EU's proposed regulatory regime, Solvency II.

The fund sector has seen a tremendous fightback since the global financial crisis. The value of fund business in Guernsey was up 4% in the second quarter of this year. This was the eighth consecutive quarter of growth and takes the total to a record high of more than £274bn at the end of June – up 22.5% year on year. The private equity and venture capital sector has seen particularly strong growth and the island's reputation for excellence in this asset class has been reaffirmed by a Private Equity News/State Street survey, where 61% of chief financial officers said that Guernsey was their preferred destination for private equity outsourcing.

Guernsey funds also remain extremely popular for alternative asset classes, particularly where there is demand to access capital markets. Guernsey vehicles can list on the local Channel Islands Stock Exchange, which has more than 4000 securities listed, the Euronext Amsterdam or the London Stock Exchange (LSE). Data from the LSE show that there are more Guernsey-incorporated companies and securities listed on its markets than there are entities from any other competitor jurisdiction. In addition, earlier this year, Guernsey companies were given the green light to list on the Hong Kong Stock Exchange.

Emerging markets

This development reflects a growing trend of supplementing business sourced from the traditional introducer centres of the UK and Europe – and in particular, the City of London, which remains our principal source of new business – with new streams from the 'emerging' markets, such as China, India and Russia where there are increasingly significant pools of both corporate and private wealth.

This is not exclusive to the investment sector, but also Guernsey's fiduciary industry where there are more than 150 full corporate licensees who together hold more than £350bn worth of assets in trust and company structures. A niche but developing area for many Guernsey fiduciaries is Qualifying Recognised Overseas Pension Schemes. Another product coming to market shortly is the Guernsey foundation.

Draft foundations legislation has been published for consultation and we are hopeful that our practitioners will be able to offer Guernsey foundations to their clients from early 2012. The introduction of foundations will provide another tool for practitioners to meet the needs of clients. In particular, we expect the foundation structure will be attractive to clients based in civil law jurisdictions in Europe and also further afield in the emerging markets such as China, Russia and Latin America, where the trust concept is less familiar in common law countries such as the US, Canada, India and the UK.

High standards

Guernsey Finance is working with government, industry and the regulator to maximise our returns from the potential opportunities in the emerging markets.

One of our central messages to key decision makers in these regions is that Guernsey is a leading international finance centre offering a range of financial products and services to a global client base to the very highest standards.

Certainly our position has been reinforced by two reports published at the start of this year. The International Monetary Fund commended Guernsey's high standards of financial regulation to the extent that the island scored the highest of any jurisdiction so far assessed; and the Organisation for Economic Co-operation and Development built on its white listing of Guernsey by endorsing the island's commitment to tax transparency and exchange of information – indeed, we have now signed 29 Tax Information Exchange Agreements.

As you can see, there are plenty of reasons to be encouraged about the state of Guernsey's finance industry. There are a number of challenges still to be met, such as EU scrutiny of the corporate tax regimes of the Crown Dependencies (Guernsey, Jersey and the Isle of Man) and finalising details of the EU's Alternative Investment Fund Managers Directive. However, the Guernsey authorities are working together closely to ensure that we are appropriately represented to achieve outcomes that are positive for the future of Guernsey as a leading specialist finance centre.

For more information about Guernsey's finance industry please visit www.guernseyfinance.com.

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 Mondaq.com.

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
GuernseyFinance
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
GuernseyFinance
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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