Guernsey

Guernsey's financial services industry is not one industry, but a number of complementary specialist industries that together put Guernsey in the premier division of international finance centres.

Guernsey is Europe's leading captive insurance domicile, has seen sound growth in the value of funds under administration and continued expansion in its fiduciary sector. This is recognition of the high professional and regulatory standards and also the excellent infrastructure comprising of the island's banking, legal and accounting businesses. The island is also home to the Channel Islands Stock Exchange. Together, such specialist providers are able to offer a global service to corporate and personal clients worldwide.

This dynamic, innovative and service-oriented finance sector, is regulated by The Guernsey Financial Services Commission, a statutory, autonomous, non-governmental body, which ensures that business conducted in Guernsey meets international standards, yet with a degree of pragmatism that allows enterprising financial institutions to flourish.


Banking

Banks have played a key role in the development of Guernsey as an international financial centre. The first merchant bank was established in Guernsey in 1963 and today there are around 50 licensed banks in the island with deposits of around £105 billion. They 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, Iceland, Ireland, Netherlands, South Africa, Qatar and the USA.

Thirty-one per cent of deposits are in sterling, and most banks offer foreign currency deposits. The most recent growth in the deposit base of Guernsey banks has been in foreign currency. In fact, over 43% of currency deposits held by Guernsey banks are US dollar deposits and the euro makes up about 21% of deposits.

The range of services offered by banks in Guernsey is quite diverse. Some provide retail banking services essential to the local community. Others target the affluent expatriate market, primarily attracting their deposits. There are also banks offering "private banking" services attracting high net worth individuals who seek a total wealth management solution to their financial needs. Banks also support the other financial services businesses operating in Guernsey providing custody, foreign exchange and other banking services to the investment, fund administration, fiduciary and insurance sectors. There are also a number of European banks that specialise in providing banking services to the corporate market.


Fiduciary business in Guernsey

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.

The Bailiwick is 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). The relevant Law - The Regulation of Fiduciaries, Administration Businesses and Company Directors, etc. (Bailiwick of Guernsey) Law, 2000 ("the Fiduciary Law") - came into effect on 1 April 2001.

All those engaged in the provision of regulated fiduciary activities in or from within the Bailiwick must apply to the Commission for a licence authorising such activities. The provision of such activities without a licence is a criminal offence for which the penalty is a fine and/or imprisonment for up to 2 years.

Individuals and businesses involved in the provision of fiduciary services had to submit a licence application to the Commission by 31 May 2001. The Commission received a total of 179 applications for a full fiduciary licence and 70 applications for a personal fiduciary licence.

The consideration and processing of these applications is now virtually complete. The names of those entities/individuals granted licences are shown on this website under "Authorised Persons". The names of those individuals/entities whose applications are still being determined are also shown on this website. Such applicants are covered by the transitional provisions of the Fiduciary Law. These permit an applicant to carry on the provision of services pending the final determination of their application.


Investment Business in Guernsey

Collective investment funds have been established in Guernsey for almost 40 years and the Island is host to approximately forty fund managers, administrators and custodians. There has been steady growth in this sector of finance business and the Commission has witnessed an increase in the number of players and the number of funds over the years, as well as a large increase in the net asset value ("NAV") 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.

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 Investment Business Division provides firm but practical regulation and works closely with the Island's business community. The Division, through its Director and staff, is always prepared to meet potential promoters/sponsors, or their professional advisers, in order to discuss matters of policy and practice regarding proposed open or closed-ended funds.

The Investment Business Division also regulates non-fund investment business in connection with general securities and derivatives,


Closed-ended Funds

Guernsey’s introduction of a registered regime for closed-ended investment schemes has helped send the value of funds under management and administration in the Island to a new high of more than £140bn. Figures from the Guernsey Financial Services Commission (GFSC), show that the value reached £140.4bn at the end of March, an increase of £10.2bn (7.8%) from the £130.2bn recorded at the end of 2006 – the previous high – and a rise of £29bn (26%) year on year. The registered closed-ended investment funds regime has been in operation since 1 February this year and 8 such funds received consent in the two months to the 31 March, with a further 10 following suit so far in the period since.

Peter Niven, Chief Executive of the promotional agency GuernseyFinance, said: “These figures are good news for the Island’s fund industry. They clearly show that the registered closed-ended funds regime is proving very popular and as such it has enabled us to continue to experience the superb levels of growth that were the hallmark of 2006.”

The fact that the Channel Islands Stock Exchange (CISX) had just announced its 2000th security listing only added to the positive vibe surrounding Guernsey’s funds industry as the figures were released. A further breakdown shows that Guernsey domiciled closed-ended funds grew by £7.9bn (16.3%) over the quarter and £22.6bn (66.9%) year on year to reach £56.4bn, a new record.

Guernsey domiciled open-ended funds grew by £2.1bn (3.7%) over the first three months of the year and by £5.2bn (9.7%) over the year to reach a record total of £58.7bn. This took the combined value of these Guernsey-domiciled funds to just over £115bn. Non-Guernsey schemes, for which some aspect of management or administration is carried out in Guernsey, increased by £0.2bn (0.9%) over the quarter and by £1.3bn (5.4%) during the year since 31 March 2006 to a new high of £25.3bn.

“It is pleasing to see the success of the registered closed-ended funds regime because it is just the first part of a series of enhancements that are being made to Guernsey’s funds environment to encourage further increases in business flows into the Island,” added Mr Niven. The registered closed-ended funds regime that was introduced on 1 February 2007 has its origins in the root and branch review of investment sector legislation that was conducted by a working party under the stewardship of leading Guernsey advocate Peter Harwood.

Central to the subsequent Harwood Report, as it was christened, was the categorisation of funds into ‘regulated’ and ‘registered’ funds. It proposed that for ‘registered funds’ the focus of regulation should be on the licensed Guernsey administrator, reducing the number and scope of funds that would be regulated directly. The registered closed-ended funds that was introduced on 1 February regime shifts the burden of responsibility for reviewing the promoter and the investment manager and the prospectus or admission document from the GFSC to the proposed Guernsey licensed fund administrator. The remainder of the proposals emanating from the Harwood Report are set to come on-stream later in 2007 and into 2008.


Guernsey Insurance Industry

Guernsey has an outstanding reputation for innovation and professionalism in the world of international insurance. With our ability to continually develop new concepts in an environment of creativity, consultation and robust and flexible regulation, we have become a major force in the international insurance industry and the leading European captive domicile.

The expertise that the island has built over many years, together with 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 Financial Services Commission

The Guernsey Financial Services Commission is the regulatory body for the finance sector in the Bailiwick of Guernsey. The Commission’s primary objective is to regulate and supervise financial services in Guernsey, with integrity and efficiency, and in so doing help to uphold the international reputation of Guernsey as a finance centre.


Captive insurance industry

Guernsey’s captive insurance industry has successfully grown since the first captive was launched in the Island in 1922. This has developed experience, infrastructure and accumulated intellectual capital which ensures the Island remains at the forefront of international insurance centres.

Guernsey Finance Channel Islands Stock Exchange (CISX/Exchange) Guernsey Financial Services Commission

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