Guernsey Banks Warning!!!

[Glyn]

Anyone with money deposited in a subsidiary bank in Guernsey and seeking comfort in a 'Guarantee' from its parent to help out in times of trouble please note the following statement from the Guernsey Financial Services Commision which in affect states that any such 'guarantee' is not worth the paper it is written on:-

'All Guernsey subsidiary banks have letters of comfort in place which represent an expression of the intention of the parent to support the subsidiary. These letters of comfort can take several forms (ranging from general statements about “support” to references to guarantees).

However no subsidiary has a parental guarantee in the sense of a legally enforceable document and these letters do not necessarily ensure that the parent bank will support the subsidiary in times of severe crisis. Letters of comfort are statements of intent which are not legally binding.

Nevertheless they have value in concentrating minds at the parent particularly where the parent’s name is used in that of the subsidiary.

Despite this, there are reputational and legal reasons for making it clear that the subsidiary will not necessarily be protected by the parent during crises.'

[Doodle]

Taking Glyn's points that one step further one could argue what value a guarantee in this current climate. Even individual national state compensation schemes are only as good as the wherewithal that is available - and if you actually read some of the scheme details, some may be surprised to learn that there is a limit as to what will be made available & over what period! So several large collapses at the same time could theoretically mean very reduced levels of compensation for all- or nothing at all for some. Moral of the story as always is do not put all your eggs in 1 basket - spread it around.

[NickP]

That looks and  sounds like a lawyers pension fund booster, what ever happened to the plain English they promised us. The fourth paragraph might just as well be written in hieroglyphics

[mint]

At least hieroglyphics, once decifered, are perfectly comprehensible.

The real message is:  expect nothing and you won't be disappointed![;-)]

[NickP]

[quote user="sweet 17"]

At least hieroglyphics, once decifered, are perfectly comprehensible.

The real message is:  expect nothing and you won't be disappointed![;-)]

[/quote]

Absolutely Sweet, but being a simple soul all I ask for from my "betters" is fairness and clarity. Maybe that is why I'm simple?  [:(]

[Gastines]

When HSBC advised us to bank with Jersey or Isle of Man I noted on reading "Some" of the small print ,that only £15K is covered instead of the £50K from UK branches.

[Glyn]

I think you will find that with the IOM, upto 50k is covered, although they do not have any money to pay out if something were to happen.

As far as Jersey is concerned the amount covered is a big fat zero!

[Doodle]

Yorkshire Guernsey are now covered by the Guernsey Banking Deposit Compensation Scheme up to 50,000 per person - oh if only we were able to deposit 50,000 each ! Come on Ernie let's be seeing some winnings!

Chris

[dragonrouge]

Once in banking and when someone from then Poultry and at a rather higher level than I telephoned me and explained what a letter of comfort was. Essentially not worth the paper its written upon and he said I get my comfort from Gin and Tonics.

Then I had another lecture as to the values of guarantees. In banking parlance one values guarantees as being (FWW) for what worth! So there is nothing to stop a MD giving his guarantee to banks for a multitude of lending. But if the g'tees are called in then collectively he cannot meet his obligations and thus a fire sale takes place.

Comfort letters are not worth anything. Did you know that when let us say a major housing developers take on various sites they establish companies for the sites themselves so that the parent cannot be brought down by the failure of a subsidiary.

Still I have no money so why worry about Guernsey or Jersey of the Isle of Man.

[Glyn]

knee gel,

Look at the small print of the Guernsey compensation scheme. You will find that there is a limit to the total amount that will be paid if any bank gets into trouble. If more than this limit were to be required to compensate depositors in a failed bank or banks you will find that you would get nowhere near the 50,000 per depositor notional compensation that they quote.

Just another example of the double speak and spin that comes from the Guernsey authorities.

My advice would be to stay well clear of them.

[rt29781]

One of the reasons expats bank offshore is that it is very difficult to get a UK bank account once you are abroad......See this triggered by the collapse of the banks in the UK and IOM.

Report into the Banking Crisis

(printed 31 March 2009)

(http://www.publications.parliament.uk/pa/cm200809/cmselect/cmtreasy/402/402.pdf).

 

In the above report under

conclusions and recommendations point 13 of the report

states:

 

13.

We accept that there

is no specific regulation or law preventing the provision of

bank

accounts to expatriate

British citizens, but in practice the supply appears to have

been

extremely limited. As

such, many expatriates have been forced to deposit

their

money offshore,

outside the protection of the Financial Services Authority, and

the

Financial Services

Compensation Scheme, as a direct result of the way in

which

Financial Services

Authority regulations were interpreted in the UK. We

therefore

recommend that the

Financial Services Authority liaise with both the

Building

Societies Association

and the British Bankers’ Association, to identify why

provision

is so poor, and report

back to us on steps to be taken to ensure better provision in

the

future, whether by new

products, or greater access to existing products.

(Paragraph

101)

It would appear that the UK is the only country of 96

countries surveyed where it is common for their citizens to be refused an

onshore bank account in favour of an offshore one.  Considering what happened to

the Derbyshire building society customers when their parent company went into

liquidation in the Isle of Man and 100,000 UK citizens lost all their savings it is a wonder that Banks still actively try to force customers offshore once they leave the UK.  In our case HBOS tried to force us offshore recently when we wanted to open a new account to get a better interest rate.  We cpmplained to HBOS and that did no good.  We sent letters to the FSA and to the Treasury Select Committee(TSC) and after a lot of wrangling we finaly got HBOS to let us open a new account but not until we moved half of our savings to HSBC.  I have to say I was very impressed with HSBC and totally shocked at how HBOS treated us.  We have banked with Halifax and Bank of Scotland for many years.

[Doodle]

Glyn,

I do not need to read the small print as I quite understand having spent most of my working life working for one of these institutions however, what you say applies to any bank/building society mainland or offshore if the worst happens, but fortunately many people prefer to keep their money with one of these institutions rather than under the bed where there is no 'interest' to be gained whatsoever.

Chris

[Glyn]

Chris,

If you really think that your deposit with Yorkshire BS Guernsey is fully covered upto £50,000 by the Guernsey Depositor Compensation Scheme then you really do need to read the small print as you will find it is not necessaraly the case.

In the UK if several banks were to fail, as has happened in the not too distant past, depositors would be compensated upto 50k come what may, there is no cap on the total amount that can be paid out. In Guernsey, the maximum amount that can be paid out is 100 million in any 5 year period so if more than one bank fails you are unlikely to get even the 50k guaranteed.

So you see, despite your years of experience the Depositor Compensation Scheme in Guernsey does not provide the same level of cover as that on the UK mainland.

[AnOther]

[quote user="knee gel"]Come on Ernie let's be seeing some winnings!

Chris[/quote]Fat chance [:D][:D][:D]

Taxable in France BTW in case you didn't know [;-)]

Ernie

[Doodle]

Yep I know that but I'd rather win and pay tax than not win at all.

Chris

[Doodle]

Oh Glyn,

I really can't be bothered to carry on with this thread as you obviously don't read my posts.

Chris

[Sprogster]

GLVN, your statement that Jersey does not have a depositor protection scheme is incorrect as it introduced one last year and up to £50k is covered. Also worth knowing that Jersey has much tighter regulatory requirements than Guernsey, IofM or UK for that matter in granting banking licenses, in that bank must be within the top global 500 banks. Hence, Northern Rock or Icelandic banks were not allowed.

Link below gives details:

http://www.gov.je/Industry/InternationalFinance/Pages/DepositProtection.aspx

[Sprogster]

rt29871, I believe one of the main reasons UK banks prefer their expat customers to use their IofM, Jersey or Guernsey branches or subsiduaries, is a quirk of the UK tax system. In that if you are not UK tax resident, but hold savings in the UK, the bank will still deduct UK witholding tax on bank interest. The bank can at its own risk pay interest gross to expat customers with bank accounts in the UK, but if it turns out the customer is in fact UK tax resident the tax liability to HMRC lies with the bank. Understandably therefore most UK onshore banks are reluctant to provide banking facilities to expat customers, who generally want to receive interest gross.