Global economic conditions hit Guernsey bank deposits
The value of bank deposits in Guernsey fell by £6.5bn (6.1%) in the first quarter of the year, taking their total value to £101bn at the end of March 2012.
The quarterly report on banking sector activity from the Guernsey Financial Services Commission (GFSC) ascribed the overall fall in value of deposits, which are down £11.8 billion (10.5%) from this time last year, to both declining volumes and exchange rate factors.
Fiona Le Poidevin, deputy chief executive of Guernsey Finance – the promotional agency for the island’s finance industry, said: “It is disappointing to see this further decline in the value of deposits held by banks in Guernsey.
“Some of the fall was due to exchange rate factors but there was also a material drop in volumes as a result of the global trend of banks deleveraging in the face of uncertainties surrounding the Eurozone, capital adequacy pressures and weak economic growth.
“Due to current conditions, we continue to experience an unprecedented low interest rate environment which has a significant negative impact on the attractiveness of having funds on deposit in a bank and as such, investors are moving capital into other higher yielding products.”