That the policy was under review was contained in a single paragraph on the 16th page of a 24-page policy framework document published last week.
As reported, the document set out what the Government sees as the key principles for supporting and developing the island's financial services industry, in addition to outlining policies "deemed vital to its future," the Government said, in a statement accompanying the Policy Framework.
Jersey's "top 500 rule" was based on accepting "only large, systemically important banks". According to Geoff Cook, chief executive of Jersey Finance, the rule "stood us well as a policy for many years", and may have been one reason that the island had "no banking failures or issues of any significance throughout the financial crisis".
"However, the concept of systemically important banks that would stand behind a subsidiary and, in turn, with governments that would stand behind the parent has been overtaken by events," he adds.
Thus Jersey has moved to accept banks in the "top 1,000" in practise", while also doing a "through analysis of the business model" of each one, Cook says, with the result that each bank is being treated individually.
"We have always done this, but the aspect of size has been de-emphasised, and we are focusing much more on the quality of the operating model, the client base, the assets, liquidity, regulatory capital strength and risk profile."
Policy Framework document
According to the Policy Framework document, "previously, Jersey's policy on banking regulation was that only those banks within the world's top 500 and that met a number of other criteria were eligible to be licensed in Jersey. As a result of the changing structure of international banks following the financial crisis, this policy is currently under review".
The paragraph goes on to add, "This anticipated change in policy does not mean that Jersey intends to lower its standards for those banks looking to have a presence on the island. However, it does demonstrate that the government and the regulator understand the changing banking environment and the need for alternative licensing approaches that facilitate additional opportunities without exposing the island to undue risk."
To read and download the Policy Framework document, click here.
