Total deposits held with Guernsey banks at the end of September 2010 decreased slightly in sterling terms by £0.8 billion from the end of June 2010 level of £116.8 billion down to £116.0 billion. This represents a 0.7% decrease over the quarter and a 3.5% decrease since the same time a year ago. However total assets and liabilities increased by £1.8 billion to £138.1 billion representing a 1.3% increase over the quarter. This reflected significant issuance of non deposit paper to assist parental funding.
Swiss fiduciary deposits increased a little to £39.3 billion in September and these now represent 33.9% of all deposits with 7 banks in Guernsey currently active in this area of business. With Swiss fiduciary deposits essentially stable the small overall decline was driven by activity in “other” deposits, down by £0.9 billion in sterling terms to £76.6 billion. However that was not a uniform decline since losses of deposits at some banks in the course of closing were offset by new deposits elsewhere.
The effect of exchange rate movements in the quarter was varied. Sterling strengthened against the US Dollar by 5.7% but weakened against both the Euro and the Swiss Franc by 4.9% and overall this had a negative effect on the level of deposits expressed in sterling. Looked at in their underlying base currencies, deposits in USD increased by 4.7% and deposits in Swiss Francs increased by 2.4%, but deposits in Euros decreased by 5.4% while deposits in Sterling decreased by 2.9%. This led to some movement in the overall currency mix: the proportion of deposits in Sterling decreased to 24.2% but Euros increased to 20.7% and that in Swiss Franc deposits increased to 4.3% while the proportion of deposits in US Dollars remained steady at 47.4%.
No new banking licences were issued during the third quarter but two were surrendered. C&G Channel Islands Limited – Guernsey Branch surrendered its licence on completion of the amalgamation of its head office bank (recently migrated to Jersey) with Lloyds TSB Offshore Limited itself a Jersey company. The Guernsey Branch of the Swiss bank EFG SA surrendered its licence following the conclusion of the transfer of its business to other parts of the Group. Northern Rock Guernsey Limited closed for business finally on 2 September following an orderly wind down plan which will in due course lead to surrender of its licence.
Kleinwort Benson (Channel Islands) Limited migrated to Guernsey from Jersey on 1 July to continue its private banking business under new ownership. The transfer of business and capital base is reflected in this quarter’s figures.
A table is available here
showing the level of the deposits and the number of licensed institutions since 1996.
Philip Marr, Director of Banking commented:
“There was a more or less stable picture between the second and third quarters but quite a bit of activity behind the figures. The surrender of two licences and the repayment of customer balances at Northern Rock Guernsey Limited put downward pressure on deposit levels particularly in sterling. However deposit business in US dollars was materially up. Overall total liabilities and assets were up more than 1% over the quarter reflecting issuance of non deposit paper. Swiss Fiduciary Deposit levels have now been stable at the same level for three quarters.”