Guernsey's banking sector is in a more positive position
than a continuing decline in deposit levels might suggest,
according the head of the promotional agency for the Island's
Figures from the Guernsey Financial Services Commission (GFSC)
show that the value of Guernsey bank deposits fell by 2.3% during
the final quarter of last year. This took the total value of
deposits to £177.4bn at the end of December 2009 –
a 25.2% decrease from twelve months previously.
However, Peter Niven, Chief Executive of Guernsey Finance,
believes that the sector is better placed than the top-level
analysis initially seems to indicate.
Mr Niven said: "What we can see is that a year ago the
global financial downturn and an associated flight to quality were
pushing deposit figures to a peak. Since then, there has been a
decline in the deposit base as a result of returning confidence
within the investor markets coupled with a very low interest rate
"Indeed, it is within this context that we have seen a
consistent fall of Swiss fiduciary deposits in particular. The
performance of this one product, especially more recently, has been
driving the decline in overall deposits and in fact, has to some
extent been masking wider improvements in the sector. For example,
within this last quarter of 2009, other deposits –
excluding Swiss fiduciary deposits – actually increased
in value albeit only slightly.
"Therefore, the picture is more positive than it might
first appear and in fact what we have seen during the last two
quarters is increased stability of deposit levels which now sit at
more sustainable levels."
Analysis of the figures from the final quarter of last year
shows that the main reason for the fall in deposits was the
continued contraction of Swiss fiduciary deposits, down from
£44.8bn at the end of September 2009 to £41.8bn at the
end of December 2009.
Overall, other deposits – excluding Swiss fiduciary
deposits – increased slightly from £75.3bn at the
end of September 2009 to £75.6bn at the end of December
The reported total deposit figures were impacted to some extent
by the strengthening of sterling against the major currencies. This
exchange rate effect also led to some differences in the overall
currency mix with Sterling deposits increasing to 23.9%, Swiss
Franc deposits up to 3.8%, US Dollars stable at 46.3% and Euros
decreasing to 23.3%.
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