Two more banks depart Jersey: report
The number of banking institutions regulated in Jersey has fallen by two, it is being reported, although at least one of the two banks named as having left actually completed its pull-out earlier this year.
There are now 30 regulated banks in Jersey, down from 45 at the end of 2010 and 47 in 2009, as the challenges of offshore banking continue to take their toll.
As reported here in August, the number of banks in Jersey’s neighbouring financial services jurisdiction, Guernsey, stood at 29 at the end of June, down from 35 four years earlier, and 76 at the end of June, 1996.
HSBC Bank Middle East has moved its headquarters from Jersey to Dubai, while ABN Amro Bank, which is majority-owned by the Dutch government, is consolidating its business ahead of a return to private ownership, the Jersey Post is reporting.
It said the news had emerged in the latest quarterly statistics for the Island’s financial services sector to the end of June, which also showed a £20.6bn fall in total banking deposits over the second quarter of the year, to £107.8bn from from £128.4bn.
HSBC Bank Middle East (HBME), a wholly-owned subsidiary of HSBC Holdings, announced in June that it had completed its planned transfer of its place of incorporation to the Dubai International Financial Centre from Jersey, which was first unveiled in an official statement to the London and Irish stock exchanges in September 2015.
As a result of the transfer, which ended a 12-year stay in Jersey, HBME is now lead-regulated by the Dubai Financial Services Authority according to a statement on its website, and remains locally regulated in each of the countries in which it operates by the country’s central bank and its other regulators.
It said the move was undertaken in order to ensure that its head office was in “a place that has a close geographical connection with where it undertakes its business, and where its regional management team is located, ie, the UAE and, more widely, the MENA region”.
John Harris, director-general of the Jersey Financial Services Commission, said he was unsurprised by HBME’s decision to move its headquarters closer to its market, and noted that the fact that it was still in Jersey in 2016 was “kind of a historical anomaly”, given the emergence of Dubai as a Gulf financial centre over the past decade.
Thus, he added, its departure from Jersey could only be viewed as a logical and inevitable step, not as a poor reflection on Jersey’s attractiveness as a banking centre.
Likewise, he noted, ABN Amro’s decision was also a logical, one made in the context of its overall operational needs, rather than because of some short-coming on Jersey’s part.
“ABN Amro was a classic case in which it had a representation in Jersey and also representation in Guernsey, and was looking after a non-resident population, and, in choosing Guernsey, opted for the jurisdiction where it already had a modern computer system in place, rather than having to implement one, as it would have had to do in Jersey,” he said.
“It was a one-off decision of the type that banks often need to take. Some of those decisions go in our favour, some go against us, it is very bank- and issue-specific.
“But in general, Jersey’s banking industry has had a reasonable run since the financial crisis, [given that] banking worldwide has issues.”
As reported, a Guernsey-based entrepreneur named Geoff Miller has been consulting on that island to determine whether there is sufficient market demand on that island to establish a new, locally owned and run, bank, to provide basic, high-street banking services there.
In July, International Investment reported on the struggle jurisdictions “from the Isle of Man and Gibraltar to the Cayman Islands and Barbados” were engaged in as they fought to keep their banks, in the face of a perfect storm of challenges that have included historically-low interest rates, tax-evasion and tax-avoidance crackdowns by countries like the US and UK, and the lingering effects of the 2008 global financial crisis.