Mixed fortunes for Guernsey bank deposits, latest figures show

Latest figures show that the value of deposits held by banks in Guernsey grew by £1 billion, some 0.9%, during the second quarter of 2011.

The increase means that the total value of Guernsey bank deposits reached £113.9 billion at the end of June 2011. However, contraction over the second half of last year means that deposits have fallen by £2.9 billion, 2.5%, compared to the end of June 2010.

In addition, the latest figures show that while Swiss fiduciary deposits increased by £2.1 billion during the three months to reach £40.4 billion by the end of June, during the same period other ‘core’ deposits fell in value by £1.1 billion to reach £73.5 billion at the end of the second quarter.

Overall, there was a modest decrease in volumes but this was outweighed by the foreign exchange rate effects which meant that there was a growth in the value of deposits when expressed in sterling terms.

‘Whilst overall there was growth in the total value of deposits, this was the result of an increase in value of Swiss fiduciary deposits and it is disappointing to see that core deposits decreased in value during the quarter. This was partly due to the exchange rate effect caused by the weakening of sterling against other currencies but nevertheless, it is a development which will need to be monitored closely going forward,’ said Peter Niven, chief executive of Guernsey Finance.

‘Of course, the figures pre-date the sovereign debt crisis of the last month so these international events, combined with the expected continuation of low base rates, will need to be kept in mind when analysing the third quarter figures,’ he added.

The totals were significantly impacted by sterling weakening against the other main currencies and there were also modest decreases in the volume of deposits but the figures for the underlying base currencies show that the picture was not uniform. This led to some movement in the overall currency mix: the proportion of deposits in Sterling decreased to 23.6% and deposits in US Dollars decreased to 47.1%, while Euro deposits increased to 21.2% and Swiss Franc deposits increased to 4.4%.

No banking licenses were surrendered during the second quarter but as part of a restructuring, one new license was issued to Bank Sarasin & Co. Ltd, Guernsey Branch in May to operate alongside the subsidiary Bank Sarasin (CI) Limited which will surrender its banking license once its business has been transferred to the Branch.