Guernsey Financial Services Commission Fourth Quarter 2002 Banking Sector Activity

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.

Bank Hofmann (Guernsey) Limited surrendered its licence on 7 November 2002. Barclays Finance Company (Guernsey) Limited and Woolwich Guernsey Limited surrendered their licences with effect from 12 December 2002 and their business was amalgamated into a new entity Barclays Private Clients International Limited - Guernsey Branch.

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.

Local inter-bank activity was up by £113mn to £1,092mn. A table is attached below showing the level of the deposits and the number of licensed institutions since 1980.

Philip Marr, Director of Banking commented "Although we will report that deposits fell nearly 7 per cent over the whole of 2002 the movement in the last quarter was very minor. Indeed deposit levels at the end of December could be regarded as broadly the same as at the end of September. This is encouraging but we will need to monitor the trends in 2003 to see if there are any movements in response to the continuing uncertainties in the financial markets and the additional uncertainty caused by the EU Savings Directive Proposals."

To read the press release in full, please visit the press section of www.gfsc.guernseyci.com