Guernsey: Diversification Is The Key To Continued Progress Through Rough Seas

Last Updated: 4 June 2012
Article by Fiona Le Poidevin

Most Read Contributor in Guernsey, November 2017

Originally published in FSC Report, May 2012

The global financial crisis initially came to a head in 2008, yet more than three years later we continue to see the wave of repercussions, particularly in the eurozone but also through an ongoing worldwide economic downturn. Guernsey, as a leading international finance centre, cannot be completely immune from these worldwide issues however, the Island has proved extremely resilient, says Fiona Le Poidevin, Deputy Chief Executive of Guernsey Finance.

The recovery is not uniform across the different facets of our 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.

Latest statistics

The value of deposits held by banks in Guernsey fell 5.8% during the final quarter of last year to reach £107.5 billion at the end of 2011, which is down 3.1% compared to the previous year. Currency movements continue to have an impact on the figures expressed in sterling terms but the banking sector also faces broader challenges in terms of the unprecedented low interest rate environment and the sovereign debt crisis in the Eurozone.

Indeed, uncertainty in the Eurozone and the upheaval in the international markets are also impacting the Guernsey investment funds sector. The value of investment funds under management and administration in Guernsey fell 3.7% in the final quarter of last year, taking the total value of funds business to £261 billion at the end of 2011. However, this is an increase of 1.6% year on year and, in particular, we have seen strong growth in alternative and niche funds, especially private equity.

One of Guernsey's great strengths is the ability for its vehicles to list on the local Channel Islands Stock Exchange (CISX) – which now has more than 4,300 securities listed – as well as Euronext Amsterdam, the stock exchanges in Toronto, Australia and Frankfurt, among others, and the London Stock Exchange (LSE). Data from the LSE to the end of December 2011, shows that there were more Guernsey-incorporated companies and securities listed on its markets than from any other competitor jurisdiction.

In March 2011, Guernsey received approval for its companies to list on the Hong Kong Stock Exchange (HKEx). We are also in discussions with the equivalents in Singapore, Shenzhen and Shanghai to facilitate the listing of Guernsey companies on those exchanges in the future. Guernsey's non-fund investment sector, the asset managers and stockbrokers, have also continued to see growth, with gross assets under management reaching £87.3 billion.

Captive insurance

Guernsey has consolidated its position as the largest captive insurance domicile in Europe and number four in the world. During 2011, 72 international insurance licences were issued, which is up more than 50% on the previous year and took the total number of licensed entities to 687.

There is strong evidence to suggest that this success is, at least in part, a result of our decision at the start of 2011 not to seek equivalence with Solvency II, which is the EU's proposed regulatory regime for insurance and reinsurance entities. Guernsey will continue to meet the standards of the International Association of Insurance Supervisors (IAIS) but its proportionality principles mean that we will provide a more attractive environment for captive owners and other niche insurers.

Fiduciary sector

The fiduciary sector boasts more than 150 licensed providers which together hold more than £350 billion worth of assets in trust and company structures.

This heritage has been a significant factor in the island becoming the location of choice for Qualifying Recognised Overseas Pension Schemes (QROPS) and related products. Data from the UK Revenue showed that during the first half of 2011 there were more UK pension transfers into QROPS in Guernsey than any other jurisdiction globally. The Island also took the lead by introducing a code of practice for QROPS providers during 2011.

We are now looking to unlock the potential from other niche areas such as providing the financial infrastructure around films and cleantech.

Diversification – products & markets

The government has agreed to establish a registry for aircraft belonging to local residents and those held through fiduciary structures on behalf of clients and, in September 2011, the Guernsey parliament approved a policy letter proposing the creation of the world's first Image Rights Register. This would enable registration of a registered personality right, a property right, which would also provide rights in the registered personality's associated images.

Drafting time was estimated at about four months and it is hoped the legislation will be in place before the London Olympics in 2012.

The government has further been consulting on draft foundations legislation and I'm hopeful that a local foundation structure will be made available during 2012. We expect the foundation will be especially attractive to clients based in civil law jurisdictions in Europe and also in emerging markets such as China, Russia and Latin America. In particular, it is hoped that foundations will provide a vital addition to the Guernsey environment that will enable it to become a hub for philanthropic clients.

Diversification – geographical

The traditional sources of the UK and Europe are being supplemented by new business from Russia, the Middle East and Asia. We are working with the Guernsey Government, regulator and industry to build key relationships and raise awareness of our offering in these regions so that we have access to a further pool of potential new business flows in the future.

Towards the end of 2010, the government signed a Memorandum of Understanding (MoU) for exchange and cooperation with the Shanghai Municipal Financial Services Office and a Tax Information Exchange Agreement (TIEA) with China's central government tax authorities. The Guernsey Financial Services Commission (GFSC) has also now signed a statement of cooperation with the Chinese central banking regulator, the China Banking Regulatory Commission (CBRC).


In January 2011, the IMF published six evaluation reports which commended Guernsey's high standards of financial regulation, supervision and stability along with its robust criminal justice framework. Guernsey scored the highest of any jurisdiction so far assessed.

Later that same month, the OECD's Global Forum built on its 'white listing' of Guernsey at the G20 summit in London in 2009 by issuing a Phase 1 Peer Review of Guernsey, which found that a satisfactory legal and regulatory framework was in place in respect of international standards of tax transpatency and exchange of information. A Phase 2 review is scheduled for the second half of 2012.

Indeed, Guernsey has now signed TIEAs with 34 jurisdictions globally and, as of 1 July 2011, it moved to automatic exchange of information as part of equivalent measures adopted by Guernsey in respect of the EU Savings Tax Directive.

Another positive note is that the US government has scrapped its jurisdiction "black list". Although this has now been replaced by the Foreign Account Tax Compliance Act (FATCA), it does at least create a level playing field across jurisdictions.

'Zero-10' corporate tax regime

Finally, the zero-10 corporate tax systems of the Crown Dependencies have come under European scrutiny.

The Guernsey Government expects to be able to finalise our position in the middle of this year, however, it has already made clear that Guernsey is committed to retaining a regime which is both compliant and competitive i.e. the zero product and tax neutrality for Guernsey's international client base will remain.

The waters ahead are unlikely to make for plain sailing but we will take the necessary steps to ensure that the conditions remain in place for Guernsey to continue as a leading international finance centre well into the future.

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