Offshore Accounts

Safe Banking?

Government Support

The Landsbanki Guernsey Fiasco

Government Finances

'Borrow or risk being left behind'
Guernsey Press,
2-Mar-09

1,100-a-head tax hit for all
Guernsey Press,
6-Mar-09

Treasury sticks to its guns over gloomy view
Guernsey Press,
16-Mar-09

How the States has squandered your cash
Guernsey Press,
26-Mar-09

Finally, the truth about States waste
Guernsey Press,
26-Mar-09

The promise needed to repair waste
Guernsey Press,
27-Mar-09

Borrow, because we tell you to
Guernsey Press,
11-Apr-09

Guernsey

Depositor Compensation Scheme

Guernsey has a depositor compensation scheme which protects deposits up to 50,000 per person.

Guernsey government Guernsey DCS Information Leaflet PDF

However, the total payouts from the scheme are capped at 100 million in any five year period, so if the claims on the scheme exceed that amount then the "compensation paid to depositors would be reduced so that the maximum total compensation in the period did not exceed 100 million." Guernsey DCS Information Leaflet

This means that even if your money is in a smaller bank it would be unlikely that you would receive the "headline" compensation, and if two banks went under within five years of each other, the depositors in the second one would receive nothing.

Total deposits held with the 48 Guernsey banks at the end of December 2008 stood at 157 billion, an average of 3,271 million per bank. Guernsey Financial Services Commission

Government Support

The Edwards Report for the UK Parliament, November 1998
"...such schemes are an element in good practice and the Jersey and
Guernsey authorities should consider introducing them.
"
Review of Financial Regulation in the Crown Dependencies, section S45

Guernsey Financial Services Commission,  January 2002
"...set up a Scheme by the end of 2002."
Introducing a Deposit Protection Scheme in Guernsey PDF

Despite a depositor compensation scheme having been recommended twice in the previous ten years 1,2 one wasn't introduced until November 2008, six weeks after the Landsbanki Guernsey collapse, when a DCS was set up post-haste and was specifically written to be non-retrospective and so not cover the depositors in Landsbanki Guernsey.

The Chief Minister of Guernsey was unambiguous from the start that the government would not assist Landsbanki Guernsey depositors: "our position has been clear from the outset that we would not propose the use of taxpayers' money to support any payout." Financial Times, 23-Oct-08

When the Administrators of Landsbanki Guernsey later proposed to the Guernsey government that they either provide a loan in order to get depositors at least some money back more quickly, or implement a "phantom" depositors compensation scheme (like but separate from the recently introduced non-retrospective DCS), the Guernsey government refused.  Indeed, they didn't even bother to give the Administrators a formal written response.

UK Parliament Uncorrected Transcript of Oral Evidence, 3-Feb-09 Q595

Landsbanki shock TV channelonline.tv, 29-Jul-09

The Chief Minister has continued to be insistent on Guernsey's stance, stating to the UK Treasury Select Committee Banking Crisis enquiry that "taxpayers should not bear the risks of banks failing". Statement to UK Treasury Select Committee, 3-Feb-09.  Indeed, a Freedom of Information request by depositors to the UK revealed that Guernsey had not even held any meetings with the UK to discuss the plight of Landsbanki Guernsey depositors.

Deloitte Update on Liquidation 1-May-13

The savers in Landsbanki Guernsey are, failing uncertain legal proceedings in Iceland, thus totally dependent on whatever recoveries the Liquidators will make from the assets of the bank for the return of their savings, which they have stated will be 91 pence in the pound.

State of Government Finances

Tribal Helm report for the States of Guernsey, February 2009
"The States is currently operating at a deficit and is being sustained only
by the depletion of reserves. These reserves will be exhausted by 2011.
"
States of Guernsey, Fundamental Spending Review, section 1.3.3 PDF

'Borrow or risk being left behind'  Guernsey Press, 2-Mar-09

1,100-a-head tax hit for all  Guernsey Press, 6-Mar-09

Treasury sticks to its guns over gloomy view Guernsey Press, 16-Mar-09

Borrow, because we tell you to  Guernsey Press, 11-Apr-09

How the States has squandered your cash  Guernsey Press, 26-Mar-09

Finally, the truth about States waste  Guernsey Press, 26-Mar-09

The promise needed to repair waste  Guernsey Press, 27-Mar-09

The Guernsey government have been very clear that they don't believe in helping savers in failed banks in their jurisdiction, but even if they had a change of heart in future, would they be able to?

Guernsey has a "black hole" in its finances – the government is spending more than it is taking in – and its politicians are in ongoing disagreement as to whether the government should cut spending, raise taxes, or borrow (for the first time in its history).   A recent review looking into government waste determined that the States have been "wasting taxpayers' money for years" and, if imperative action is not taken, Guernsey will be bankrupt. 3

  1. The Edwards Report for the UK Parliament, Review of Financial Regulation in the Crown Dependencies, November 1998, section S45: "...such schemes are an element in good practice and the Jersey andGuernsey authorities should consider introducing them."

  2. Guernsey Financial Services Commission,  Introducing a Deposit Protection Scheme in Guernsey, January 2002: "...set up a Scheme by the end of 2002."
  3. Tribal Helm report for the States of Guernsey, February 2009, section 1.3.3: "The States is currently operating at a deficit and is being sustained only by the depletion of reserves. These reserves will be exhausted by 2011."

Please see www.SafeOffshoreAccounts.com for further references.

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