Guernsey's intention to introduce a depositors' compensation scheme with a ceiling of £50,000 is a s...
Guernsey's intention to introduce a depositors' compensation scheme with a ceiling of £50,000 is a step closer, following a second technical group meeting to consider an analysis of the deposit base of all banks in Guernsey, essential in assessing the cost of the scheme.
Group chair and Treasury and resources minister Charles Parkinson said the group, including representatives of the Commerce and Employment Department, the Guernsey Financial Services Commission (GFSC) and the Association of Guernsey Banks (AGB), has made 'significant progress' towards introducing a scheme, a report on which will be considered by Parliament on 27 November.
"We are considering schemes already in use in other small jurisdictions and also introducing some of our own thinking," he added.
It is agreed the proposed scheme should cover non-residents as well as Guernsey residents, protecting retail depositors, but not companies and corporate deposits. Compensation would also be due in respect of each licensed bank, while joint account holders would both be eligible.
Since Landsbanki was placed in administration on 7 October, the scheme has progressed quickly. The island currently has no deposit compensation scheme but any future scheme would be retrospective. Furthermore, UK depositors in Landsbanki Guernsey are covered by the UK compensation scheme.
However, the administrator will make an interim payment of 30p for every pound with a 'strong possibility' of further repayments, as Landsbanki Guernsey's assets exceed its liabilities, said Parkinson.
The scheme would cover approximately 14% of the £17.8bn held in clearing and deposit-taking banks. The balance is wholesale deposits in other banks and would not be covered by a compensation scheme.
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