The main causes for the decline are known: it has been well
documented that two banks have restructured. As ABN Amro Bank
readies itself for a return to public ownership, it is retrenching
back to its home base and consolidating its overseas presence; the
HSBC Bank Middle East move from Jersey to Dubai reflects a natural
migration for regulatory purposes.
The departure of the banks (who are expected to return their
banking licences in the next quarter) has come in response to, and
at a time of, wider global factors.
Interest rates have been so low for so long that they have had
an impact on deposits. Globally, investors are withdrawing bank
deposits and investing the money in alternatives which offer a
The uncertainty following Brexit will stir into action those who
will always want to extrapolate a bigger malaise from these
figures. I would not be surprised if the media asked whether these
figures signalled a wider decline in Jersey's finance industry.
It is a standard question but, as Warren Buffet says, in the
business world, the rearview mirror is always clearer than the
I am not going to speculate on whether figures are going to rise
or fall in the future; Jersey is affected by global influences and
we are in a time of uncertainty. But I would say Jersey is a
strong, stable, and well-regulated international finance centre
which continues to attract business from around the world.
As an international finance centre, business in Jersey is always
going to be affected by international pressures such as Brexit, low
interest rates, and weakening exchange rates. Whilst these factors
may be reflected in short-term figures, that should in no way be
seen as an indication that Jersey's banking industry is in
decline. Jersey's banking model is stable and diversified, and
we are in the process of helping the sector to adapt to
technological and regulatory changes. Banking remains the
powerhouse of Jersey's economy, accounting for £900m (or
50%) of Jersey's GVA in 2015.
At the same time as the fall in banking deposits, there has been
a slight decline in the net asset value of funds business this
quarter compared to the previous one. But, at £223 billion,
it remains £5 billion higher than at the end of the same
quarter a year ago, an indication of the strength and stability of
our funds offering.
Indeed, we have seen the benefit of this renewed interest in
alternative investments in Jersey with a Brexit-driven surge in
real estate investment which has contributed to total assets under
administration in the jurisdiction of well over £1trn.
So can Jersey's finance industry be said to be in decline
just because of these figures? There is a lot of data about a
highly complex industry and a measurement that I think is a better
indication of the overall health of the industry is employment.
Firms won't hold or grow their headcount unless they are
confident of being able to sustain current business levels or
capture new business growth so, bearing in mind Mr Buffet's
comment, a better indicator of future trends might lie in the
employment figures rather than the banking statistics. Employment
within the industry is nearing an all-time high and, while there
has been a shift and staff who previously worked in banking have
been redeployed in other areas, it is still positive. The industry
added more than 800 new jobs in 2015 and 2014, net of any
reduction. In a survey we conducted in April 2016, our finance
firms projected that they planned to grow jobs over the next three
to five years, net of any planned reductions in headcount.
So while today's figures reflect the volatile nature of
global markets, overall the industry sectors are holding up well in
tough trading conditions.
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