The net asset value of total funds under management and administration on the island grew by almost 40% in the year to the end of December, according to figures released by the Guernsey Financial Services Commission and posted on its website.
Fueling this growth was a £41.9bn, 87% growth in the value of non-Guernsey schemes "for which some aspect of management, administration or custody is carried out" in Guernsey.
The GFSC attributed this leap to "the large number of non-Guernsey schemes that entered into service level agreements with local licensees during the second quarter of 2010".
Bank deposits fell by 5.4% over the year in Guernsey’s 38 licensed banks, however, in what Guernsey director of banking Philip Marr noted was a “continued ultra-low interest rate environment”.
The pattern mirrors that of Jersey’s financial services businesses last year, which as reported, also saw investors switching out of banks and into investments.
The year also saw two Guernsey banks surrender their licences: Northern Rock (Guernsey) Ltd, which completed its orderly wind-down plan in 2010, and Landsbanki Guernsey Ltd, which the Royal Court of Guernsey last year agreed to allow to liquidate, following its collapse in 2008 and subsequent period in administration.
Some contraction in Guernsey’s corporate and interbank deposits also contributed to pushing total deposits in the bailiwick down to £111bn at year end, from £118.7bn at the same point a year earlier. The 2010 figure is still 37.5% higher than the 2005 total (see chart, below).
“With low interest rates and global deleveraging it is difficult to avoid a scenario of contracting deposit levels,” Marr said.
“However, continuing issuance of non-deposit paper has supported the total liabilities and total asset figures which were only 1% down on the level a year ago.”
Peter Niven, Chief Executive of Guernsey Finance, the promotional agency for the Island’s finance industry, noted that the effects of exchange rate movements also affected the 2010 bank deposit figures, as they were "all pushing in the same direction" – higher relative to sterling – and therefore had "a depreciative impact on the value of deposits expressed in sterling terms".
Swiss fiduciary deposits
Swiss fiduciary deposit levels – an important component of Guernsey’s total bank deposits, and one that fell significantly in 2009 – fell by £2bn to £37.4bn as of the end of December, as “underlying customers felt more inclined to move out of cash and take on securities,” according to a statement issued by the Guernsey Financial Services Commission which accompanied the end-of-year results.
Nevertheless, it noted that Swiss fiduciary deposits – a tax-efficient product offered by banks that enable Swiss taxpayers to take advantage of European trust arrangements – now represent 33.7% of all deposits, down from 35.6% a year ago, with seven banks in Guernsey active in this area.
|
As at 31/12/2010 |
As at 30/09/2010 |
% increase/decrease over 3 mos; 1 yr |
As at 31/12/2009 |
As at 31/12/2005 |
% in-crease/ |
|
Overall total bank deposits |
£111.0bn | £116.0bn | -4.3%; -5.4% |
£118.7bn | £80.7bn | +37.5% |
Total funds under mgmt: NAV of schemes |
£167.5bn | £159.4bn | +5%; +23.1% |
£136.1bn | (na) | (na) |
NAV of open-ended schemes |
£57.9bn | £53.5bn | +8.2%; +14.2% |
£50.7bn | (na) | (na) |
NAV of closed-ended schemes |
£109.5bn | £105.9bn |
+3.4%; |
£85.3bn | (na) | (na) |
