Latest figures show that the value of deposits held by banks in Guernsey grew by £1 billion (about $1.65 billion) or just under 1 per cent during the second quarter of 2011 to £113.9 billion .

But contraction over the second half of last year means that deposits have fallen by £2.9 billion (2.5 per cent) compared to the end of June 2010.

In addition, the latest figures show that while Swiss fiduciary deposits increased by £2.1 billion during the three months to reach £40.4 billion by the end of June, during the same period other “core” deposits fell in value by £1.1 billion to reach £73.5 billion at the end of the second quarter.

In a separate development, last week Yorkshire Guernsey announced that it is winding down its operation on the island as a result of UK regulatory changes. This includes a requirement for the parent (Yorkshire Building Society) to hold an equivalent amount of liquid assets against any deposits that are placed with it by a subsidiary (Yorkshire Guernsey).

The GFSC has said that Yorkshire has been particularly affected because it had employed a traditional upstreaming model where the bulk of the assets were lent to the parent and it does not anticipate other subsidiaries in Guernsey being affected in the same way because they employ different business models.