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Guernsey Finance Industry

The Island's major industry

			The Finance Industry in Guernsey - an article by Peter Neville, March 2005
Le Truchot	Regency Court	RBS Building

The Finance Industry is now the island's major industry having grown significantly since the early 1980's. It contributes over 55% of the island's Gross Domestic Product and employs around 7,000 staff in many different sectors. Tourism now takes second place and Horticulture third. This is a vast turn around in fortunes after the disastrous oil price rises in the 1970's led to a major decline in horticulture, in particular the growing of tomatoes.

Banking

It was in 1963 that the first Merchant Bank set up in Guernsey and in 2005, the number of banks exceeded 50, although it was as high as 72, and deposits top £70billion. Banks here represent a range of countries with concentrations of banks with head offices in the UK and Switzerland. Other banks are from Bahrain, Bermuda, Canada, Cyprus, France, Germany, Greece, Hong Kong, Ireland, Italy, Netherlands, South Africa, Qatar and the USA. Significant new office buildings have been built over the past six years to house the expanding industry. Deposits with Guernsey banks reached a new all time high of £119.2bn, up 29% in the 12 month period.

Collective Investment Funds

Collective investment funds is the fastest growing sector and have been established in Guernsey for over 40 years with around forty fund managers, administrators and custodians operating in the island. There has been steady growth in this sector in the number of players and the number of funds during this period and a large increase in the net asset value of funds under management.

The international market place for Guernsey open and closed-ended funds is illustrated by the fact that funds are promoted/sponsored by leading institutions in over 38 countries. Guernsey is ideally suited geographically for the provision of fund management and administrative services being within the European time zone and conveniently placed between the US and Far East time zones. The advantage has been recognised by many leading financial institutions which use the Island as a base for their fund management activities.

Funds under management by 31 December 2006 had reached a total of £130.2 billion. Over the year as a whole, values increased by £30.2 billion, an increase of 30.2%. Within these totals, Guernsey domiciled open-ended funds grew by £8.4 billion (17.5%) over the year as a whole to reach a new record total of £56.6 billion. The Closed-end fund sector also saw significant growth, with increases of £17.4 billion (55.8%) over the year as a whole, to reach £48.5 billion, also a new record. 2007 was another record year with Funds reaching £178bn, up 37%.

Fiduciary Business

Guernsey is a major centre for the provision of international trust and corporate services. The industry is large and long established, and benefits from Guernsey's sophisticated professional infrastructure.

In 2001 the island was one of the very first jurisdictions in the world to introduce a comprehensive system for the regulation and supervision of trust and corporate service providers (including company directors).

Insurance

Guernsey has an outstanding reputation for innovation and professionalism in the world of international insurance and a major force in the international insurance industry and the leading European captive domicile.

The expertise that the island has built over the years and the strength and breadth of the financial services industry on the island will ensure that Guernsey maintains its position at the forefront of the insurance world.

The Guernsey insurance sector covers

domestic insurance

international insurance - captive insurers, protected cell companies and life assurance companies who arrange contracts of insurance from within Guernsey, covering international risks.

Channel Islands Stock Exchange

The Channel Islands Stock Exchange ("CISX") was established in 1998 as a joint venture between Guernsey and Jersey to complement the existing range of services already available locally. The CISX is based in Guernsey and regulated by the Commission.

The CISX was established in 1998 as a joint venture between Guernsey and Jersey to complement the existing range of services already available locally.

As of December 2006, the number of securities listed on the Exchange had increased to 1,489 up from 5891 in 2004.

It is a member of the International Federation of Stock Exchanges as a corresponding market, a member of the International Securities Market Association, the European Securities Forum and is recognised by the Australian Stock Exchange.

CISX Page

Strong upward growth in bank deposits which peaked in March 2002

The island's Finance industry has developed a first class reputation internationally and is in the top tier of offshore centres. This was evidenced in the UK Government's Review of Financial Regulation in the Crown Dependencies 1n 1999 which described the island as being in the "top division of offshore finance centres". More recently the Financial Stability Forum (FATF) categorised Guernsey as a Group 1 offshore centre in recognition of the island's up to date anti-money laundering legislation and practices. In November 2002, the IMF carried out a ten day review of the island's system of regulation and its report published in November 2003 concluded that Guernsey had 'a high level of compliance' for each of the international standards against which the Bailiwick was judged - the Basel Core principles for Effective Banking Supervision; the Insurance Core Principles of the International Association of Insurance Supervisors (IAIS); the Objectives and Principles of Securities Regulation of the International Organization of Securities Commissions (IOSCO); and the Financial Action Task Force (FATF) 40+8 Recommendations. In the final quarter of 008, the IMF will carry out a follow up visit.