The States of Guernsey is working on a plan aimed at encouraging the creation of a new “‘savings and loans’-type institution” on the island, in the wake of the withdrawal in recent years of a number of commercial lenders, according to Guernsey treasury minister Gavin St Pier.
Such an institution “could facilitate a new lender in the market and, I am sure, would also be welcomed by local savers,” St Pier told a Chamber of Commerce gathering earlier this week.
The reduction in the number of lenders coupled with more restrictive lending policies over the last few years have created an “economic headwind” in the form of reduced credit available to Guernsey’s economy, St Pier told his audience.
In addition to impacting the number of transactions taking place in Guernsey’s property market – “with a direct impact on government revenues and an indirect impact on the multiplier spending which inevitably follows a property purchase” – the lack of available credit on the island has also impacted the credit available to businesses, particularly smaller and medium-sized ones, St Pier said.
In his speech, St Pier didn’t provide details as to who would own the new bank, or run it.
Gibraltar Govt in banking biz
The revelation that Guernsey is to look into establishing a locally-owned, state-sponsored lending institution comes months after the government of Gibraltar formally opened its own bank, for similar reasons.
The Gibraltar International Bank (GIB), which is wholly-owned by Gibraltar’s government, was created specifically to fill a need in the marketplace that was becoming urgent towards the end of 2013, after Barclays, the UK-based lending giant, announced plans to scale back its Gibraltar presence.
The Gibraltar bank was also envisioned as offering depositary services to Gibraltar’s funds industry, in order, the Gibraltar Government said in December 2013, when it approved plans to go ahead with GIB, to ensure that the sector’s Gibraltar-based entities would be “able to meet the requirements of the Alternative Investment Fund Managers Directive (AIFMD)”.
The AIFMD was implemented by the European Union in 2011 in an effort to boost the regulation of the bloc’s alternative investment fund management sector, in the wake of the global financial crisis of 2008.
In announcing the plans to look into creating a state-owned savings-and-loan entity, St Pier said the States of Guernsey’s Treasury and Resources department was actively working with its Commerce and Employment arm “to explore what viable options may exist for us”.
He didn’t mention the possibility of such an institution offering services to Guernsey’s funds industry. Questions on that point, put to a States of Guernsey media representative, weren’t immediately answered.
Among the banks that have left Guernsey’s high street in recent years have been Yorkshire, Bank of Ireland, Clydesdale, Northern Rock, EFG, Ansbacher and the Co-operative Bank.
Another, the Guernsey arm of Iceland’s Landsbanki, collapsed in 2008 when its parent went under. HSBC has cut back some of its ex-pat focused operations, but remains a locally-active lender and offers private banking services.
Despite this, St Pier said banking deposits on the island, which had been “in gentle decline since 2009”, had stabilised in 2015, “and the most recent figures show a slight increase”.
Firm to clawback $174m from executives