Total deposits held with Guernsey banks at the end of March 2012 decreased 6.1% in sterling terms by £6.5 billion from the end of December 2011 level of £107.5 billion, down to £101 billion. This is 10.5% lower than the same time a year ago. Total assets and liabilities decreased by £5.3 billion to £128.3 billion representing a 4.0% decrease over the quarter and this was 6.6% lower than the level a year ago. The lower levels of figures reflected both volume and exchange rate factors.
Volume reductions were significant as Swiss fiduciary deposits decreased by £4 billion to £33.7 billion in March. These now represent 33.4% of all deposits with 7 banks in Guernsey currently active in this area of business.
Sterling strengthened against the US Dollar and Euro but weakened against the Swiss Franc. This had a negative effect on the level of deposits expressed in sterling, adding to the material decrease in the volume of deposits during the quarter. The figures in the underlying base currencies show that deposits in US Dollars decreased by 5.0%, deposits in Euros decreased by 9.3%, deposits in Swiss Francs decreased by 9.0% but deposits in Sterling decreased by just 0.7%. This led to some movement in the overall currency mix; the proportion of deposits in sterling increased to 25.7% while and deposits in US Dollars decreased to 47.2%, Euro deposits decreased to 19.1% and Swiss Franc deposits decreased to 3.3%.
No new banking licences were issued during the quarter and none were surrendered.
A table is available here showing the level of the total deposits and total liabilities and the number of licensed institutions since 1996.
Philip Marr, Director of Banking commented:
“The trend of declining volumes seen in the second half of 2011 continued into the first quarter of 2012 as uncertainties around the Eurozone, capital adequacy pressures, and economic recovery strains led to more deleveraging by global banks. This was transmitted through to a further contraction in the balance sheets of banks in Guernsey. A decline in Swiss fiduciary deposit levels was most evident this quarter as the continuation of the historically low interest rate environment reinforced the current lack of attractiveness of this product. Some large banks continued to issue short term paper so that the decline in total liabilities and assets was not as steep as the decline in deposit levels.”