The banking division of the Guernsey Financial Services Commission revealed the 10.6% fall in sterling terms, to £86.7bn from £96.9bn, at the end of December 2012.
There was a significant decline in Swiss fiduciary deposits over the quarter, reducing by £6.4bn to £26.6bn in December.
Swiss fiduciary deposits are unattractive to customers in the continuing low interest rate environment, the banking division stated.
However the largest part of this reduction came as a result of the transfer of a book of business in a Guernsey bank to another group bank in another Crown Dependency for "reasons of achieving administrative efficiencies".
Swiss fiduciary deposits now account for 30.6% of all deposits with six banks in Guernsey currently active in this area. There was also a significant decrease in interbank deposits as part of the transfer of business.
Sterling strengthened against the US dollar and weakened against the euro and swiss franc. This had an overall negative effect on the level of deposits expressed in sterling, adding to the volume decrease from the transfer of business during the quarter.
Two banking licences were surrendered, namely Laiki Bank (Guernsey) – a small subsidiary of Cyprus Popular Bank Public Co – surrendered its licence in October and HSBC Bank International – Guernsey branch surrendered its licence in December.
But the impact on the aggregate statistics of these surrenders was "not material".
Philip Marr, director of banking said: “Overall the economic recession meant that underlying activity was subdued at the end of last year. However the fourth quarter figures were severely impacted by the transfer of a book of business of Swiss fiduciary and interbank deposits to another Crown Dependency which put additional pressure on the already declining trend in deposits, pushing them down by some 10% in the quarter.
He added that the issuance of other liabilities during the year has resulted in the total liabilities and total assets figures being more robust and these held up at £114bn: “The outlook is for little change in the short term with activity largely dependent on economic developments.”
By contrast the banking sectors in Jersey grew in the fourth quarter of last year, according to figures released by Jersey Finance.
To see the table showing the level of the total deposits and total assets and the number of licensed institutions since 2003, click here.
