From Alan Anderson.
WHILE the States have in principle agreed to protect Islanders in the event of a local bank failure, there is a lacuna which cries out for attention.

The Channel Islands Co-operative Society Ltd is both well managed and solvent and nothing I say is intended to cast a shadow on its financial status or probity.

However, hundreds of Islanders treat the society as a savings bank. When they open a share account they do not appreciate the technical significance that it is ‘risk capital’ in the same way as owning shares. That it is not transferable but withdrawable only adds to this misunderstanding.

Each shareholder may deposit up to £20,000 and many Islanders have large deposits (strictly share capital). If the society got into difficulties, many of these depositors would be shocked to learn that not only was there no States guarantee for funds in this very local entity but that in the event of a winding-up their deposits would be utilised towards the debts and liabilities of the society.

A further complexity which may cloud people’s perception is that the society has a specific exemption under Jersey banking law to take up to £50,000 per member by way of loan capital. Again this would not be protected under the States’ proposed guarantee.

The States should not be blinkered by a policy of limiting guarantees to banks. A pragmatic approach is needed to bring the society’s depositors under the banking protection umbrella.
Côtes de Rozel,
Mont de Rozel,
St Martin.