THE governments of major European banking centres are to be asked if they will extend any savings guarantees to Jersey in order to protect the offshore finance industry on which the Island’s economy depends.
Financial authorities in the Island want to ward off problems arising from the global financial crisis and try to gain some security for the billions of pounds invested in Jersey. The unprecedented move follows the takeover, nationalisation or collapse of a number of high-street names in recent weeks, including Halifax Bank of Scotland, Bradford & Bingley, Northern Rock and, most recently, Icelandic bank Landsbanki.
Although Island residents have been assured that their deposits will be 100% covered by the States of Jersey, depositors who are non-resident have no such protection. Businesses, trusts and company structures are not covered by the Jersey scheme. The Island is therefore heavily dependent on the UK government to safeguard the deposits of the major British banks.
The director general of the Jersey Financial Services Commission, John Harris, has not confirmed which countries they will be targeting. He said: ‘We will be speaking to other authorities, but even for European banking groups London remains the place that is the key issue. We have to prioritise.’
Article posted on 11th October, 2008 - 10.00am
20 Article Comments
Forgive my cynicism, but isn’t a foreign guarantee exactly what the savers in Icesave enjoyed? What good has it done them?
Considering the revenue and mass profits these institutions have acquired then maybe they should consider very carefully before making any hasty desisions… duty of care has been forever flippant and it wont be long before people actually realise what duty of care actually governs over financial well being for everyone the same principle will also come into effect over the lending crisis as a lot of banks could actually be sued time and time over because of duty of care. People do your homework and make sure you know your rights
I do not find the Chief Minister’s reassurances reassuring. The collapse of Kaupthing Edge (IOM) involves over £30M of expatriates’ deposits from across the World - the overall total of UK individual and corporate deposits has yet to be determined. Extrapolating those figures to the potential deposits in Jersey suggests that the £600M “Rainy Day Fund” might be significantly stressed in providing any meaninful protection.
Or read this article
http://www.guardian.co.uk/money/2008/oct/11/savings-banks3
I wonder whether the UK depositors will be reading The Guardian or JEP?
As we are all being told; this crisis is a crisis of confidence. Articles like this in The Guardian do little for the confidence depositors will have in Jersey. I hope our Politicians will respond to the article - in the National Media (not just the JEP) to help alleviate concerns of UK depositors
And what quid pro quo will they demand of our Finance Industry for these guarantees? We do live in interesting times. Ho ho ho.
I doubt that Jersey can have it both ways.
I dont want to see anyone losing money or any company bust as eventually it comes down to some ones job !!!But here we are asking the UK to cover the money from the very people who are not paying tax on it, in the country where it was earned “so pays your money takes your chances” I dont think you’ll find much sympathy from people from outside the island in this regard,So Mr Harris wants Jersey’s money covered !Should the UK should forget the rest of our neighbours or IOM Gibraltar,and all other crown dependencies or is it just Jersey ?,then Mr Harris could ask the French President to cover the money in Monaco and Frau Merkil to cover the money in liechtenstein,The Question is ? Are offshore finance centers the solutions or part of the problem ?
Why should other countries extend these guarantees to their operations over here?
In our grubby self centered way, our politicians have said they will only protect the savings of local residents.
Politicians protect local savings,if payment had to be made they might say only 12 year residents to limit payout.Icannot see europe protecting tax havens,we await a jersey 100% guarentee like IRELAND,CYPRUS,NIGERIA AND RECENTLY AUSTRALIA AND NEW ZELAND.
Really our government cannot have it both ways, we actually take money from all the countries of europe for there citizens to avoid tax
Are we really going to have the brass neck to ask the same countries to bail us out
So much for our establishment wanting to make us independant
Would somebody be so kind to define which “residents” are protected in jersey. Every tax payer or those resident for 5 years or 12 years or whatever? As for non-resident investors: How stupid do you think these governments of major European banking centres are? Guaranteeing the safely for investors minimizing TAX in their own respective countries?
Now we are in trouble. UK Politician (the highly respected Vince Cable) demanding that Offshore Banks closed down. Is this the start of the end for our Finance Industry?
Forgive my complete cynicism but why would any onshore government want to extend protection to any offshore centre that has been sucking tax revenue out of their tax systems for decades? It seems to be wishful thinking (or complete desperation) to assume that they are going to come rushing to Jersey’s defence. Face facts offshore banking is dead because the risk premium attached to it has just got too high to pay. This is the perfect chance for onshore centres to sit back do nothing and watch us slowly die.
Phillip Ozouf stated, somewhat prematurely in my opinion that ‘we’ were well placed to weather the storm………………Mr Ozouf the storm is merely brewing the UK governments part nationalisation of HBOS RBE etc is a double edged sword. In UK terms it is highly visable rattle of the cage of Scottish independance and a firm knock on the door of Jersey, Guernsey and the Isle of Man. The times they will be a changing!
My local MP back in England was Vince Cable. As a professional economist he’s not stupid about the effect offshore finance centres have played in destabilising the worldwide bank sector by side-stepping onshore prudential capital requirements. Maybe the offshore finance centres will change voluntarily but I doubt it. The OECD had to coerce us to drop the blatant tax grab that was the Exempt company.
Our Finance industry is now making a great song and dance about our new “Unregulated Funds” structures. What unintended chaos could those structures cause in the future while we just think about the immediate administration and legal fee income? Shame on you lot.
Vince Cable is not calling for offshore banks to be closed down - only those branhces of the partly nationalised banks. Frankly its a ridiculous notion because having an offshore branch can only help the bank concerned and would therefore be in the interests of its shareholders including the govt. Closing them would force depositors to move to competitors of the nationalised banks. Not at all that clever really.
Offshore centres have had very little to do with the current banking crisis. It has been caused by the ratings given to badly repackaged and securitsed debt.
Welcometothejungle: Offshore centres have had very little to do with the current banking crisis. It has been caused by the ratings given to badly repackaged and securitsed debt.
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Yes. re-packaged debt just like those massive SIV’s that sucked all the good loans out of Northern Rock and left the UK taxpayer sitting on all the poor debts. Where were they based again? Hmmm ….. not that far from these shores. Granite 1 & 2 was it not?
I hope the UK doesn’t go outwith its remit and help bail out Jersey in any way. Why should my taxes help bail out people who go to every possible length to avoid paying tax in my country and instead let Jersey benefit from their millions?
On November 5th we will have someone else to contend with.
In a speech in Montgomery county, Pennsylvania on October 3, 2008, Obama said: “My opponent supports tax havens that let companies avoid paying taxes here in America - tax havens that cost $100 billion every year. But what will work is shutting those tax havens and closing corporate loopholes. My opponent supports giving tax breaks to companies that ship jobs overseas. But what will work is giving those tax breaks to companies that create jobs here at home.”
The question is who will win the power battle Obama or JFSC? I know who my money’s on.
So what is the JFSC doing to maintain the Finance Industry once Tax Havens around the world are forced to close?
Why on earth would an EU Government use its tax revenues to help a tax haven who has been instrumental in helping its residents avoid tax? Amazing that Jersey officials would even contemplate asking… just amazing.