Offshore 2 Offshore

* Second quarter 2007 Banking Sector Activity







Total deposits held with Guernsey banks at the end of June 2007 increased in Sterling terms by £2.8 billion from the end of the March 2007 level of £105.3 billion to reach a new highest deposit level of £108.1 billion, a 2.7% increase on the quarter. Total assets and total liabilities increased by slightly more, up some £3.5 billion (2.9%) to reach a new highest level of £119.8 billion. The slightly bigger increase in total liabilities compared to total deposits was a result of a large increase in other liabilities at a single bank reflecting the local banks participation in a group capital raising exercise.

The first quarter had seen a major volume increase in deposits from financial institutions at a small number of large banks but the second quarter showed a resumption of more normal growth rates with business growth coming from a range of banks. Net new deposit business has come principally from financial institutions in Guernsey, corporate customers and Swiss fiduciary deposits. However growth in several of the underlying currencies was more buoyant than is reflected in the 2.7% overall increase because the figures expressed in sterling were restrained by the continued appreciation of the pound against the US dollar and other major currencies.

The further increase in Swiss fiduciary deposits, took the level 3.7% higher as a result of increased business at several banks with the total for these deposits reaching £40.9 billion, an all time high. These deposits now represent 37.9% of all deposits with 14 banks in Guernsey currently active in this area of business.

The overall currency mix shows some slight changes with the proportion of US Dollars falling to 43.3% while deposits in Euro fell to 20.2% and the proportion of sterling deposits rising a little to 31.5%.

There was one new Banking licence issued, to Credit Europe Bank (Suisse) S.A. – Guernsey Branch which was set up mainly to receive Swiss fiduciary deposits. The international acquisition of RBSI Securities Holdings Limited by BNP Paribas resulted in a new controller for RBSI Custody Bank Limited – Guernsey Branch which entity has subsequently become BNP Paribas Securities Services Custody Bank Limited – Guernsey Branch. No Banking licences were surrendered during the quarter.

Local inter-bank activity decreased to £850million. A table is available here showing the level of the deposits and the number of licensed institutions since 1980.

Philip Marr, Director of Banking commented:

“After the step change in deposits in the first quarter which it was never expected would be repeated, the second quarter increase, albeit at a more normal growth rate, was very encouraging as the volume increase outweighed the dampening effect of the continued strengthening of sterling. The increase this quarter was mainly driven by growth in Swiss fiduciary deposits which have become more attractive as interest rates have hardened but was supplemented by increased deposits from Guernsey financial institutions, principally funds with high liquidity levels and a batch of corporate deposits being recorded at the quarter end. Figures all predate the credit market turmoil of the last weeks in August and so give no indication of whether that would have any impact on the banking figures.