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Guernsey’s finance industry in good health, says Guernsey Finance

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Newly released figures show that Guernsey’s finance industry is in good health, according to Peter Niven, chief executive of Guernsey Finance, the promotional agency for the island’s finance industry.

The latest statistics from the Guernsey Financial Services Commission show that the value of funds business in the island reached a record high of GBP224.2bn at the end of June this year – a rise of GBP26.8bn (13.6 per cent) during the second quarter and an increase of GBP54.6bn (32.2 per cent) year on year.

The gross assets, net worth and premiums written by the island’s international insurance industry during 2009 were all up on the previous year and the first part of 2010 has seen a rise in the net number international insurance entities licensed.

The value of bank deposits in Guernsey reached GBP116.8bn at the end of June 2010 – a fall of GBP1.9bn (1.6 per cent) during the quarter and down GBP7.7bn (6.2 per cent) on the same time last year but the Swiss fiduciary deposit levels stabilised and Sterling deposits increased for the third quarter in succession.

Niven says: “In the round, these figures show that Guernsey’s finance industry is in good health. We have not been immune from the impact of the global financial crisis but the island has benefitted from the diversity of its finance industry, which has also proved to be extremely resilient. The general worldwide economic picture still remains fragile but these latest figures show that our finance industry is in robust shape.”

 
Overall growth of 13.6 per cent during quarter two resulted in the total net asset value of funds under management and administration in Guernsey reaching a new record high of GBP224.2bn at the end of June 2010.

Within these figures, Guernsey domiciled open-ended funds decreased in value by GBP2.8bn (5.1 per cent) during the three months to reach GBP53.3bn, although this still represented an increase of GBP2.7bn (5.3 per cent) year on year.

The value of Guernsey closed-ended funds grew by GBP1.7bn (1.9 per cent) to reach GBP94bn, a rise of GBP20.1bn (27.2 per cent) over a full year and non-Guernsey schemes – for which some aspect of management, administration or custody is carried out in the island – reached GBP76.9bn, up GBP27.9bn (57.1 per cent) during the quarter and GBP31.9bn (70.9 per cent) year on year.

Ben Morgan, partner at law firm Carey Olsen, says: "These results show new business continuing to flow into Guernsey, which we predicted would be the case from the previous quarter. We are however seeing increased diversification in the industry with fund managers from different parts of the world using Guernsey as a domicile in order to access investors (resident inside Europe and outside) with an increasing interest in establishing Guernsey investment vehicles for listing on AIM and the main market. There is also greater interest in using Guernsey’s service providers for non-Guernsey domiciled funds."
 
During 2008 Guernsey’s international insurance industry had gross assets of GBP21bn, net worth of GBP7.1bn and premiums written of GBP3.3bn but in 2009 these increased to GBP23.4bn, GBP8.1bn and GBP3.4bn respectively. In addition, the net number of international insurance entities licensed in Guernsey has risen from 678 at the end of December 2009 to 686 at the end of July 2010.

Within these figures, the decreased demand for more traditional captive vehicles has been more than offset by the net number of PCC cells licensed increasing from 323 at the end of December 2009 to 339 at the end of July 2010.

“I’m extremely pleased to see that our risk management sector has continued to grow during what have been very tough times in the international insurance market. The increase in business volumes during last year and the rise in net number of structures licensed in the sector during this year maintain our status as the number one captive domicile in Europe and keep us firmly within the top four in the world. This is a position built over many years, including the innovation of the PCC and we can see that our experience and expertise with these types of structures continues to be internationally recognised,” says Niven.

Deposits held with Guernsey banks fell by 1.6 per cent during the second quarter to reach GBP116.8bn at the end of June 2010, partly due to deposits held in Euros being impacted by the recovery of Sterling. Deposits in Sterling actually increased for the third quarter in succession and following several quarters of contraction, the levels of Swiss fiduciary deposits stabilised to the extent that the total only fell marginally from GBP39.4bn at the end of March to GBP39.3bn at the end of June.

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