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Fiduciary Banking: The Problems

Finance For Guernsey had spent a considerable amount of time speaking to the fiduciary sector as they appeared to be facing increasing difficulties. This anecdotal evidence was confirmed with the research as 90% of fiduciary respondents had experienced difficulties applying for financial services. 77% when applying for a current account with due diligence and a lack of interest to offer services common responses and 68% when applying for commercial mortgages with LTV restrictions mentioned.

Quotes on current accounts:

“Volume of CDD required from a licensed and regulated fiduciary and unnecessary questions required to be answered that we are not required to know under GFSC regulations.”
“Banks are so risk averse now, that it is extremely difficult to open accounts for our higher risk clients, especially Chinese clients.”
“Not prepared to bank businesses where there were no Guernsey residents if fiduciary not a director. Not prepared to bank online industry sectors or FinTech businesses. Difficulty in banks understanding new businesses and growth potential; most banks not interested unless account turnover is greater than £2m. or unless client is prepared to out at least £500,000 on deposit.”
“A recurring theme is the appetite of banks to take on new clients. Unless they can see a clear way to make a large profit from the business, they are not willing to assist.”

Quotes on commercial mortgages:

“Reducing LTVs available, increasing concern over lending to fiduciary structures.”
“Often unable to deal with UK and European regulated mortgages which restrict options, excessive additional security and LTV ratios.”
“Most banks will not consider lending unless they have other assets under management.”
“Challenging in terms of risk appetite and due diligence requirements delayed decisions, especially regarding local vs central risk committees.”
“Property outside of SW not wanted.”

What does this mean?

As with the Business Banking comments, there are potential problems here for the future in attracting new businesses to Guernsey. If new businesses can’t open bank accounts, then it will be very difficult for them to develop in Guernsey. Again local decision making will play a large part in helping improve on these problems.

"If new businesses can’t open bank accounts, then it will be very difficult for them to develop in Guernsey. Again local decision making will play a large part in helping improve on these problems."

Survey Results GUERNSEY CUSTOMERS

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