The British Crown Dependency on the coastline of Northern France has long been a domicile for the European - and particularly, UK originated - fund industry. While tourism and some agriculture contribute to Jersey’s economy, it’s financial services that maintains the island’s wealth and position in the global economy - over half the dependency’s income comes from financial and legal services.
The British Crown Dependency on the coastline of Northern France has long been a domicile for the European - and particularly, UK originated - fund industry. While tourism and some agriculture contribute to Jersey’s economy, it’s financial services that maintains the island’s wealth and position in the global economy - over half the dependency’s income comes from financial and legal services.
The original attraction of the island was the tax status. Often criticised in the past as a tax haven, the island has a range of attractive taxation schemes, which attracts both wealthy individuals and investment funds to the region. But it’s not just that - the geography of the islands mean they are in the same time zone as Europe - although not part of the European Union - with the start of the business day coinciding with Asia and the end at the start of the American business day. And as a major employer, it has a well-educated, internationally-minded workforce that is experienced in dealing with all aspects of the funds industry.
Jersey’s finance industry showed stable overall growth in the second quarter of 2011, with the value of funds administered in the island reaching its highest level for two years and the value of funds under management increasing by 4.2 per cent.
Geoff Cook, chief executive of Jersey Finance Limited, saw signs of stability for Jersey in a persistently volatile global environment, highlighting that company formations, a good indicator of the health of an economy, were up for the third quarter in succession.
There was positive news for the funds sector, which recorded an increase in the net asset value of funds being administered in Jersey for the fourth consecutive quarter to stand at £196.7 billion, reflecting a 10.5 per cent year on year increase. The figure does not include funds established under the Unregulated Funds Regime, of which there were 136 by the end of the period – an 8.8 per cent increase on the previous quarter. The alternative asset classes also reported net asset value growth of £2.3bn (1.6 per cent) to £145.2 billion.
Whilst bank deposits held in Jersey showed a slight quarterly decrease, deposits originating from the Far East and Middle East remained impressive, standing at £8.7 billion and £20.4 billion respectively. This continues to represent a combined total of around 18 per cent of Jersey’s level of deposits and reflect the value of recent promotional activity in Hong Kong, Greater China and the United Arab Emirates.
The statistics, collated and prepared by the Jersey Financial Services Commission, are for the three month period ending 30th June 2011. The headline figures were:
The net asset value of funds under administration increased by £2.1 billion (1.1 per cent) from £194.6 billion to £196.7 billion during the second quarter of 2011. The JFSC authorised 25 new regulated funds during the second quarter of 2011, reflecting a 25 per cent increase over the quarter.
The total number of unregulated funds increased by 11 (8.8 per cent) to 136 during the second quarter of 2011.
The value of funds under investment management increased by £0.9 billion (4.2 per cent) compared to the previous quarter from £21.3 billion to £22.2 billion.
The total number of live companies on the register increased by 118 from 32,998 to 33,116 during the second quarter of 2011.
Banking deposits decreased by £1.5 billion (one per cent) during the second quarter of 2011 from £166.5 billion to £165 billion.
“There continues to be very positive news for the funds sector, which saw an increase in the total net asset value of funds under administration and management,” says Cook. “New business instructions were up 25 per cent and, subject to markets stabilising, we expect to see improvements in new funds numbers in the coming months. The investment management sector, meanwhile, reported growth of two per cent in its client base and the net asset value of funds under investment management grew by 4.2 per cent.
“Although the banking sector saw a slight decrease in deposits, the reduction amounted to just one per cent and was driven by a decrease in deposits from other banks. In fact, if we drill down into the figures, customer deposits were up £1.2bn during the period, whilst weaker sterling added a further £0.9 billion to the value of foreign currency deposits.
“Given most economies did not recover at the rate economic forecasters were predicting for the second quarter of 2011, these latest figures demonstrate a stable position with improvements in company formation numbers and investment management being sustained.’’
In September, it was announced that Jersey has climbed two places, and retained its position as the highest rated offshore international finance centre according to the latest Global Financial Centres Index (GFCI).
Overall, Jersey is placed 21st in the competitive rankings, which are published every six months, ahead of Guernsey in 31st, the Isle of Man (40th), Cayman Islands (46th) and Malta (70th).
In addition, Jersey climbed into the top 10 locations in the world for wealth management and private banking services, being named in eighth position, and is the fifth highest ranked location overall in Europe, only behind major city centres London, Zurich, Geneva and Frankfurt.
Jersey has also moved from being categorised as a ‘transnational specialist’ to a ‘global specialist’ centre, becoming the only offshore to achieve a ‘global’ profile, listed alongside centres such as Beijing, Dubai and Geneva. The Index also scores Jersey well in terms of stability and as the 16th highest ranked centre globally in terms of reputation - the only offshore centre to appear in the top 20 centres by reputational advantage.
Noting that confidence amongst financial professionals has risen since the last index for virtually all centres, the report comments that Eurozone centres, such as Dublin, Luxembourg and Malta, have suffered in the rankings. It also states that offshore centres ‘are now recovering’ as respondents ‘recognise the contribution these centres can make to global finance’, and that ‘Jersey and Guernsey are working to change perceptions and to ‘rise above’ the status of offshore specialist centres by being seen as more diversified’.
London was named as the number one centre overall in the rankings again, marginally ahead of New York and Hong Kong.
When the index was published, Cook commented: “Jersey has performed extremely well in this latest Index, holding on to its position as the top offshore centre, which it has now held for five consecutive Indexes. To be listed ahead of major European centres such as Paris, Munich and Luxembourg, confirms that Jersey is incredibly well regarded on the global stage.
“This is particularly pleasing when you consider that Jersey is one of the only offshore centres to have improved its global ranking and is now referred to as a global player and one of the top centres worldwide for wealth management services. That Jersey’s stability is also emphasised is extremely positive in the current climate, whilst the fact that the Index recognises Jersey’s reputation is testament to the hard work that goes in to promoting Jersey both at home and in key foreign markets.
“It is interesting that the Asian centres are continuing to consolidate their position in the rankings. Both Hong Kong and Shanghai remain in the top five, emphasising how important it is that Jersey continues to maintain its marketing efforts with overseas centres like Hong Kong and Greater China in order to drive Jersey’s future success.”
