Extracts from GFSC Reports

1999. The island's regulatory authority reported another record year for the Finance Industry. Bank deposits reached £57billion for the first time and a record £23billion of Collective Investment funds were under management in 429 Funds. The number of banks licensed in Guernsey increased slightly to 79 whilst the number of Captive Insurance companies registered in the island also reached a new record 460. Director General Peter Crook commented that "these figures represent a forceful statement of confidence in the future of Guernsey."

The Commission pledged to continue its involvement and full co-operation in financial regulation and policing. "The Commission has always applied the highest standards of regulation. This remains its objective and there is every reason to believe it will continue to meet the highest standards" said GFSC Chairman Deputy Laurie Morgan. While Peter Crook commented " Guernsey has a part to play in the international community and in addition, long term prosperity will be achieved by ensuring that only high quality business flows into the Bailiwick". The GFSC had 597 contacts with foreign regulatory and law enforcement agencies last year.

2000.

Two banks surrendered their licenses during the fourth quarter as a result of the global trend to consolidation, mergers and take-overs which continued through the year and into 2001.

Total deposits held with Guernsey banks at the end of December 2000 increased by £2,796mn from the end of September level of £65,678mn to reach a new high of £68,474mn. We are aware that there were further significant volume increases in the quarter particularly from Swiss fiduciary deposit business. Total assets increased to £72,563mn.

The 4.25% growth in deposits was predominantly in the foreign currency element. Exchange rate movements had no influence on deposit levels: whilst the pound strengthened against the USD it also weakened against the other major currencies. The currency breakdown now stands at 31% sterling and 69% other currency deposits. The largest single currency type within the total deposits remains USD at 49%. The euro and the euro legacy currencies accounted for 15% of deposits at the quarter end.

Taking a longer perspective over the year as a whole, deposits rose by £11,415mn (20%) - the largest annual increase since 1993

Significant market corrections acted to slow the growth of Guernsey domiciled funds, particularly in the final quarter of 2000. Funds under management increased by 15% over the year to a total of £26.4 billion at end-December. Within that total, open-ended funds increased by 1% to £14.8 billion while closed-ended funds increased by 41% to £11.71 billion. The end-year figures were some 4% below end-September’s all-time peak.

It is worth noting that 95 new funds (37 open-ended and 58 closed-ended) were authorised during the year; 29 open-ended funds surrendered their licences during the period.

In December the regulators of Guernsey, Jersey and Isle of Man announced a joint initiative entitled 'Overiding Principles for a Revised Know your Client framework' which proposes key changes to the anti-money laundering regimes in all three islands. These are designed to further strengthen the already stringent requirements of these top Offshore Centres.

2001. On 5th January 2001, the GFSC announced the forthcoming appointment in May of Mr Peter Neville as the new Director General to replace Peter Crook who is retiring.

In April, the Police and Customs launched a new Financial Intelligence Service to replace the old Financial Investigation Unit. The new service will responsible for intelligence gathering around economic crime and will spearhead the island's strong anti-moneylaundering stance.

In the quarter ended Sept 2001, deposits had reached a record £76.16bn, a rise of 3% over the quarter. More than 70% is in foreign currency. This overall 3.0% increase in deposits was a result of a combination of factors during the quarter. The largest volume increases came from several banks taking Swiss fiduciary deposits but there was also a one-off effect of a significant increase in deposits at one large banking group re-structuring its Channel Island operations.

The net asset value of Guernsey-domiciled funds increased by £3.6 billion (12%) to a total of £33.2 billion at 31 December 2001. Within the total, the value of open-ended increased by £1.4 billion (10%) to a total of £15.7 billion and that of closed-ended funds increased by £2.2 billion (14%) to a total of £17.5 billion. Over the year as a whole, the value of open-ended funds increased by 6%, and the value of closed-ended funds increased by 50%, with the result that total funds under management increased by 26%.

As noted in the statement accompanying Guernsey's third quarter data, the figures for end September were strongly affected by the terrible events of 11 September. As markets recovered from those events, some rebound in fund values had been expected. In addition, there was continuing flow of new fund authorisations; at end-December the overall total and that of closed-end funds exceeded the previous highs recorded at 30 June, and the open-ended fund total fell only £340 million short of the June peak.

During the year a total of 87 new funds were authorised (2000: 95) along with 48 new classes of existing umbrella funds and protected cell companies (2000: 75).

The overall figures show that, despite very significant market set backs during the course of 2001, there has been a very strong net inflow of new business to the Bailiwick. The value of non-Guernsey open-ended schemes administered in the Bailiwick also increased, over the quarter by £80 million, and over the year by £1.2 billion

2002

Total deposits held with Guernsey banks at the end of December 2002 increased in sterling terms by £122mn from the end of the September 2002 level of £71,821mn to £71,943mn. Total assets and total liabilities decreased in the third quarter in sterling terms by £817mn to £74,760mn.

The net 0.2 % increase in deposits in sterling terms masks several different trends in the underlying currencies. When analysed in their underlying currencies there was a modest decrease in US Dollar deposits and a more significant decrease in Swiss Franc deposits but there were also modest increases in sterling and euro deposits which counter balanced the decreases.

During 2002, a small number of banks surrendered licences due to re-structuring and at the end of that year, 67 banks were licensed at the year end

The largest single currency type within total deposits remains the US dollar at 42.8% with the euro accounting for 19.8% of deposits at the end of December 2002. The proportion in sterling was up a little at 31.9%. When looking at the underlying business in euros over the last year, the value of euros on deposit fell from €22.6bn at 31 December 2001 to €21.6bn as at 31 December 2002.

2003

Total deposits held with Guernsey banks at the end of December 2003 decreased in Sterling terms by £1,592mn from the end of the September 2003 level of £71,295mn to £69,703mn. Total assets and total liabilities decreased by a greater figure in the fourth quarter, falling in Sterling terms by £1,806mn to £72,850mn.

There was a 2.2% decrease in deposits expressed in sterling terms, with the bulk of this decrease reflecting the impact of exchange rates effects over the quarter. In the main the decline was caused by the further strengthening of sterling against the US dollar and the Swiss franc. Indeed there were even some volume increases in the underlying base currencies. The amount of Swiss fiduciary deposits declined again in Sterling terms to stand at £25,701mn, representing 37% of the total.

During the fourth quarter no banking licences were issued, but the following five banks all surrendered their banking licences: ING Banque Bruxelles Lambert (Suisse) Limited - Guernsey Branch, Coutts (Guernsey) Limited, Saudi International Bank (Guernsey) Limited, BSI AG - Guernsey Branch and BNP Paribas Guernsey Limited. These closures were all the result of group rationalisation initiatives. There was little impact on the deposit figures in this quarter although the subsidiaries did transfer a modest amount of capital out of the Bailiwick.

The largest single currency type within total deposits remains the US Dollar at 38.0% with the Euro accounting for 22.9% of deposits, its highest ever level. The proportion in Sterling was up a little at 34.0%.

Further record levels for the value of Guernsey and non-Guernsey funds administered in the Bailiwick were reported at 31 December, taking the value under management and administration over £55 billion for the first time. Total sums under management increased by £4.3 bn over the quarter to reach £56.4 bn.

The value of Guernsey open-ended funds reached £22.2 billion by end-December, an increase of 7.6% over the quarter and a remarkable 39.8% over the year as a whole. Closed-ended funds, reached a value of £19.6 billion at end-December. Although this showed limited (+0.4%) growth over the quarter, there was nonetheless substantial (+14.4%) growth over the year as a whole. Taken together, the open and closed-ended sectors reached an end-year value of £41.8 billion, an increase of 26.6% over the year and 4.1% over the quarter.

Some of the growth noted above reflects improved capital values as markets recovered during the year. It is also, however, a reflection of the attractions of Guernsey as an international fund centre. Despite weaker markets, 26 new open-ended funds, and a remarkable 108 new classes of existing open-ended funds, were authorised during the year, compared with 17 new funds and 75 classes in 2002. Thirty-one new closed-end vehicles received consent compared with 36 in 2002.

2004

Total deposits held with Guernsey banks at the end of December 2004 increased in Sterling terms by £1,778 million from the end of the September 2004 level of £68,648 million to £70,426 million. On the same basis, total assets and total liabilities increased by £1,683 million to £74,948 million.

The 2.6% increase in deposits was driven by an increase in volume, despite the strengthening of Sterling against the US Dollar. US Dollar deposits were up 8.6% in their underlying currency though Euro deposits were down 0.9% when expressed in their underlying currency. Sterling deposits were up 3.3% in the quarter.

Swiss fiduciary deposits increased in Sterling terms by 2.2% to stand at £25,702mn, representing 36.5% of the total. Short term paper issued increased by 16% over the quarter to stand at £1,454mn. The proportion of total deposits in Sterling was up a little at 36.5%, while the US Dollar remains at 36.2% with the Euro accounting for 22.6% of deposits.

On an annual basis total deposits expressed in Sterling were up 1% compared with the 3.1% decline the previous year. Total assets and liabilities at the year end stood at £74,948mn showing a bigger increase than total deposits over the year at 2.9% reflecting the increases in non deposit short term paper issued during 2004.

Total investment funds under management and administration in the Bailiwick increased by £4.5 billion over the quarter ended 31 December 2004. This represented growth of 6.5% over the quarter and 30.6% over the calendar year.

Within that total, open-ended funds grew in value by £2.1 billion to a total of £33.7 billion. This represented 6.7% growth over the quarter and a remarkable 52% growth over the calendar year. Closed-end funds also performed well, growing by £1.4 billion to £22.9 billion, representing 6.5% growth over the quarter and 16.8% growth over the calendar year. Overall the effect on Guernsey domiciled funds was therefore that they grew by £3.5 billion to a total of £56.6 billion, a 6.6% increase over the quarter and 35.5% growth over the calendar year. In addition, non-Guernsey open-ended funds for which some aspect of custody, management or administration is conducted in the Bailiwick also increased, in this case by £1 billion to £17 billion, an increase of 6.2% over the quarter and 16.6% over the year.

New investment funds were the main contributor to these growth figures. During the course of 2004, a total of 36 new open-ended investment vehicles where authorised, compared with 26 in 2003. Even more significantly, 139 new portfolios for existing PCC and umbrella fund structures were authorised during the year (2003:108), with the result that 175 new open-end structures were authorised during the year (2003:134). In the closed-end sector, 46 new investment vehicles received COBO consent during 2004 (2003:33) along with 11 new cells of existing closed-end structures (2003:3). Non-Guernsey scheme approvals were slightly down on the year, the total granted amounting to 42 (2003: 66).

Useful Links

List of Authorised Banks

Guernsey Chamber of Commerce: chamber.guernsey.net

CI Stock Exchange: www.cisx.com

Guernsey Finance: www.guernseyfinance.com

Useful contacts

Guernsey Financial Services Commission  Tel: +44 (0)1481 712706 E-mail:    info@gfsc.gg Website: www.gfsc.gg