The value of bank deposits held in Guernsey dropped to £96.9 billion ($155.2 billion) at the end of September, a 15.1 per cent drop on the same period a year ago, hit by the difficult economic conditions at the time and an appreciation in sterling.

The fall in the value of deposits was the result of both a material decrease in volumes, as well as exchange rate factors. In particular, sterling strengthened against the dollar, euro and Swiss franc, which had a negative effect on the level of deposits expressed in sterling, adding to the material decrease in the volume of deposits during the quarter.

“While it is disappointing to see the value of deposits held by banks in Guernsey fall during the third quarter of the year, it should come as no surprise considering the difficult global economic situation and in particular, the conditions for banks who continue to contract their balance sheets due to deleveraging. In addition, the low interest rate environment continues to have a significant negative impact on the attractiveness of having funds on deposit in a bank and as such, investors are moving capital into other higher yielding products,” Fiona Le Poidevin, chief executive at Guernsey Finance, the island’s promotional agency for finance, said.