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 on Wednesday.
The meeting's task was 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.
They will meet again next week and a report 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 not be retrospective. Furthermore, UK depositors in Landsbanki Guernsey are not 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.
Peter Niven, chief executive of Guernsey Finance, said it is too early to judge what lasting effects the issue will have on Guernsey's reputation. "What we can say is that Guernsey has come in for criticism from some quarters but its reputation is far from in tatters and this is particularly evident when you place everything in context," he said.
The scheme would cover approximately 14% of the £17.8bn held in clearing and deposit-taking banks. Therefore, 86% of deposits in Guernsey banks are wholesale deposits in other banks and would not be covered by a compensation scheme, said Niven.
Jersey's newly introduced compensation scheme is restricted to Jersey resident individuals. The Isle of Man recently raised the ceiling on its deposit compensation scheme from 75% of the first £20,000 to £50,000 for individuals.
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation