Guernsey Financial Services Commission Third Quarter 2003 Banking Sector Activity

Total deposits held with Guernsey banks at the end of September 2003 decreased in Sterling terms by £640mn from the end of the June 2003 level of £71,935mn to £71,295mn. Total assets and total liabilities decreased by a lesser figure in the Third Quarter in Sterling terms falling by £528mn to £74,657mn.

There was a 0.9% decrease in deposits in Sterling terms, with a large part of this decrease reflecting volume movements from two bank branches running off their Swiss fiduciary deposit books and transferring them overseas prior to closure as a result of group restructuring. The impact of exchange rates effects over the quarter has been neutral with an underlying volume decrease in US Dollars being almost offset by underlying volume increases in Euros and Swiss Francs. The amount of Swiss fiduciary deposits declined in Sterling terms to stand at £27,937mn representing 39% of the total.

No banking licences were issued and there were no formal surrenders during the third quarter, but formalities for the surrender of the two banks transferring their books is expected to be completed in the fourth quarter.

The largest single currency type within total deposits remains the US Dollar at 39.4% with the Euro accounting for 21.6% of deposits its highest ever level at the end of September 2003. The proportion in Sterling was up a little at 33.2%.

Local inter-bank activity was down £34mn to £1,407mn.

Philip Marr, Director of Banking commented:
"Deposit levels were down slightly in the third quarter reflecting some volume decline in US Dollar deposits and the transfer to other jurisdictions of balances at two banks in the process of closure as a result of group rationalisation decisions. This represented a large part of the fall in Swiss fiduciary deposits which were also affected by switching into other investments following the improvement in outlook in securities markets during the summer."

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