However, the £1.9bn increase, to £112.9bn, meant the total was 4.9% down on the same period a year earlier, as many savers continued to stay away from banks’ historically low interest-paying accounts, according to figures released by the Guernsey Financial Services Commission.
Total assets and liabilities grew slightly more, rising by 2.4% to £137.4bn in the quarter, though again this figure was marginally – 0.4% – below the same point a year earlier.
Swiss fiduciary deposits – an important component of Guernsey’s total bank deposits, and a segment that fell significantly in 2009 – increased by £0.9bn to £38.3bn at the end of March.
These deposits – a tax-efficient product offered by seven Guernsey banks – enable Swiss taxpayers to take advantage of European trust arrangements, and currently represent 33.9% of all deposits held in Guernsey banks, down from 35.6% at the end of 2009, the GFSC data shows.
Philip Marr, director of banking at the GFSC, noted that the first-quarter “story” of Guernsey’s banking industry was “of an increase in the volume of deposits” that was mostly reduced in sterling terms by foreign exchange effects.
“There were no clear cut trends, with mixed movements in balance sheets, including both contractions and expansions,” Marr added.
Peter Niven, Guernsey Finance chief executive, added that Guernsey officials were "hopeful that this is an indication of light at the end of the tunnel", but he noted that it would be wrong to overstate the gain, coming as it did after three consecutive quarters of contraction.
The end-of-March total deposit figure is 72% off the peak, reached by Guernsey’s banks at the end of 2008, of £157bn.
“The banking environment remains difficult with the general expectation that base rates will continue to be low for some time to come,” Niven said.
Deposits in IoM banks slid
The Guernsey banking data comes a week after the Isle of Man’s banking regulator reported deposits there fell by £2.1bn or 4.4% to £48.1bn in the first quarter and £3.96 bn, or 7.6%, in the year to the end of March. Jersey, the third British Crown Dependency island, has yet to release its first-quarter data.
Banks in all three Crown Dependencies have kept the level of protection available to individual depositors in the event of a bank failure at £50,000. In January, the coverage available to UK bank customers rose to £85,000 from £50,000, and in Europe to €100,000 from €50,000, which some observers at the time said could put the islands’ banks at a competitive disadvantage.
