Offshore 2 Offshore

Deposits held with Guernsey banks at the end of December 2005 were 4.2% higher than at the end of the third quarter of 2005 as total deposits reached a new high of more than GBP80 billion, the Guernsey Financial Services Commission announced on Wednesday.

According to the GFSC, deposits increased in Sterling terms by GBP3,270 million from the end of the September 2005 level of GBP77,458 million, meaning that total deposits stood at GBP80,728 million by the end of 2005 - an increase of 14.6% over the year.

The GFSC explained that the rise in deposits in Sterling terms was caused by two factors: increased volumes of deposit business, which accounted for about two-thirds of the new deposits; and exchange rate movements as Sterling weakened against the major currencies, and which accounted for the remainder.

Volume levels in the underlying currencies showed strong increases in US Dollar deposits (up 6.6%) and Swiss Francs (up 17.4%), a solid increase in Sterling deposits (up 2.4%) with only deposits in Euro decreasing (down 4%).

Swiss fiduciary deposits, particularly those in US Dollars and Swiss Francs, staged a recovery in the fourth quarter increasing by 14.5% to GBP32,194 million accounting for 39.9% of all deposits at the year end.

After declining earlier in the year Swiss fiduciary deposits regained some of their attractiveness following increases in interest rates in several currencies during the year, the GFSC said.

In the overall currency mix the proportion of US Dollar deposits increased to 38.9% while the proportion of Sterling deposits fell back to 33.4% with Euro deposits decreasing to 22.4%, according to the Commission.

One banking licence was surrendered during the quarter as the business of BSI (Channel Islands) Limited was amalgamated with BSI Generali Bank (CI) Limited.

One new licence was granted at the end of January taking the number of licences currently in issue to 51.

Commenting on the latest figures, Philip Marr, Director of Banking at the GFSC observed that:

“It was encouraging to see further volume increases in deposit levels in the fourth quarter helping the deposit figures to pass the £80 billion mark in December, rounding off a year of solid recovery and good results for banks."

"The strong end to the year was driven mainly by the growth in Swiss fiduciary deposits which regained their attractiveness following increases in interest rates in several currencies during the course of the year. The New Year got off to a good start with the granting of a new banking licence in January.”