THE States finally agreed last week to provide a guarantee of up to £50,000 for customers of Island-based banks – just in case they should go bust.

The guarantee is no more and no less than that offered in the UK, Guernsey and the Isle of Man, who all made their decisions much earlier.

It has taken Jersey’s Council of Ministers longer to decide partly because advisers have been telling us for years now that banks based in this Island are so unlikely to go bust that there is little point in having a compensation scheme.

So far, thankfully, the Jersey Financial Services Commission’s requirement of only allowing the ‘top 500’ banks to take deposits here has been proved a safer maxim than that employed by, for instance, Guernsey, where the crash of the Icelandic bank Landsbanki left depositors high and dry without a paddle. Even now, we are told, Guernsey savers remain unsatisfied with the deal they have managed to broker so far.

But just because a major banking crisis has not yet happened in Jersey does not mean to say that it cannot happen in the future. Landsbanki, for instance, was officially listed in the top 500 banks, but according to the JFSC this is not the only critieria they look out for when weighing up whether or not to allow an institution to take our money. The main one is the willingness of the home government to shore up a bank, if it should start to fail.

If the UK government had not been inclined to help RBS and Lloyds, for example, there could have been significant repercussions for thousands of customers, both Island residents and expatriates, who use the services of the offshore divisions of those banking groups.

The other key objection to a depositor compensation scheme was the old familiar one – who would be paying. Now we know that the States will be asked to cough up a maximum £35 million and that the banks – who have been lobbying behind the scenes to make sure that they got the best deal possible – will be asked to pay a levy to cover the remainder to bring the total available to £100 million. That should be enough, the authorities estimate, to pay each depositor up to £50,000 of their lost revenue.

No doubt the proposals would have taken even longer to come through, had not the International Monetary Fund made it clear that they would be rather more comfortable if Jersey followed its fellow Crown dependencies and made sure that the minimum depositor guarantee was provided for.

Until last week it was difficult for Island residents to know where they stood – even though the Chief Minister had hinted that the emergency measure established by his predecessor, to cover all locally based depositors in full, was still in place. Now, at least, those who wrote to the JEP wondering whether or not their life savings were safe will be able to put their queries to rest.