At this time of year, many private banking institutions begin to look back on the last twelve months and look forward to the next twelve. Guernsey Finance, a leading international fiduciary centre, is no different. Patrick Brusnahan sits down with chief executive of Guernsey Finance, Fiona Le Poidevin, to discuss their future outlook for one of the world’s leading offshore tax heavens.
In Guernsey Press’ 2013 Finance Review, Le Poidevin described the year as a ‘mixed bag.’ While certain arms of Guernsey Finance have flourished in the past year, some have declined, particularly deposits. A heavy cost has been an increase in legislation upon private banking, which has taken up a lot of expense and time. The number of hoops needed to jump through has become a ‘burden’ and a consequence of this is that it starts to affect the consumer, which in turn, diminishes the faith the clientele have in Guernsey.
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One of the main hindrances for Guernsey is the reputation that off-shore banking receives. Due to many critics condemning the morality of tax avoidance schemes such as off-shore banking, institutions like Guernsey have to be ‘whiter than white’ in the way they handle their business. This reputation is something that has continued to be very difficult to escape. Moreover, Le Poidevin feels that, often, sectors like hers are used as a ‘scapegoat’ for larger problems in the financial world. In fact, Guernsey has been one of the most transparent private banking institutions for many years. They have been registered with the European Union Savings Directive (EUSD) since 2005 and recently signed FATCA agreements with the UK with similar agreements with the US not far off. On whether the business is moral or not, Le Poidevin puts forward the question; ‘How do you legislate for morality?’ However, one advantage is that Guernsey has always maintained a good level of transparency in comparison to some countries in the EU which had to backtrack on previous secrecy policies. In addition, Guernsey has recently been commended by the Organisation for Economic Cooperation and Development (OECD) for its transparency as it has now signed its 50th Tax Information Exchange Agreement (TIEA).
Despite these recent setbacks, the Crown dependency of Guernsey looks set to strengthen its position in the near future. Later this month, a delegation from Guernsey is travelling to China to offer and reinforce their financial services to prospective and current clients respectively. This emerging market is one that Le Poidevin finds interesting and hopes to attract Tier 1 and 2 clients from the mainland. She considers it be a mutually beneficial arrangement as Guernsey’s profile is raised and China’s banks can gain an experienced and knowledgeable contact which can help raise their private banking arms to something above ‘red carpet retail.’ Other areas of great interest to Guernsey Finance are the Middle Eastern and US markets. Due to the banks already having locations within the United Kingdom, they feel that linking with Guernsey is merely the next stage in the process.
In summation, La Poidevin said that despite all the inconveniences and struggles of the last few years ‘one would hope we have reached a turning point.’
Currently, Guernsey holds £96 billion in deposits spread over 32 licensed banks. It is the second highest ranked offshore financial centre, behind only Jersey, and is ranked 36th worldwide.
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