The Guernsey Financial Services Commission fully understands the concerns of all Northern Rock depositors. As the regulator of Northern Rock's Guernsey subsidiary, we are very concerned to safeguard the interests of the customers of the subsidiary as far as we can. With this in mind we are continuing to work very closely with the UK authorities who are mainly responsible for Northern Rock's affairs. This is because the role of the Guernsey subsidiary was to take deposits and place them all up to the parent company which is based in the UK.
We very much welcome the statement by the UK Chancellor that the UK government is guaranteeing Northern Rock depositors. We trust that this statement will put depositors' minds at rest.
The Board of Northern Rock Guernsey and the Commission have been seeking confirmation that the Chancellor’s commitment extends to the depositors of Northern Rock Guernsey. As an outcome of these discussions, HM Treasury has informed the Commission that the deposit of Northern Rock Guernsey with its UK parent plc is included within the Chancellor's guarantee as an existing wholesale deposit and therefore the assets of Northern Rock Guernsey are covered by the Chancellor's commitment.
Northern Rock Guernsey, which is solvent, is therefore continuing to repay depositors who ask for their money back. There have, however, been some delays and difficulties simply because of the volume of requests. The problems have been caused by the number of repayment requests since Friday 14 September, the fact that the main method of instruction is through the post, and the fact that due diligence has to be carried out before repayment is made. We understand that Northern Rock Guernsey has significantly increased its resources, and that staff have been working overtime. We have also been advised that repayment is taking place on a first-come-first served basis. The Commission has been on-site at Northern Rock Guernsey several times to monitor developments first hand.
On a more general note, the public can be confident that Guernsey remains a safe place for depositors. There are no signs that other banks in Guernsey have been affected by the problems that have hit Northern Rock.
The episode has, however, focused attention on the fact that there is no deposit protection scheme in Guernsey. The Commission is of the view that having such a scheme in Guernsey would bring considerable benefits and we are taking the matter forward with the political authorities.