UK residents with bank deposits in offshore centres such as Guernsey and Jersey face uncertainty on whether they can recover lost savings caused by a bank bust, which is an embarrassing headache for jurisdictions that have heavily marketed themselves in recent years.

In the Isle of Man, meanwhile – in which the now-defunct Icelandic bank Kaupthing had a subsidiary – depositors, including foreigners, will be protected for up to £50,000.

The issue has prompted investors to lobby the UK government to extend a protection scheme for onshore investors to holders of accounts at affected banks with subsidiaries in The Channel Islands. However, critics have argued that holders of offshore accounts which typically enjoy tax advantages should not get bailed out by the UK taxpayer.

In both Guernsey and Jersey, non-residents with locally registered bank accounts cannot claim compensation from these islands’ governments if banks go bust. In Guernsey, one of the banks registered on the island is the stricken Icelandic bank, Landsbanki.

Guernsey politicians are due to meet today to discuss the issue and are expected to follow their meeting with a statement, Peter Niven, chief executive, GuernseyFinance, told WealthBriefing.

“It is too early to tell what lasting effects this issue will have on Guernsey’s reputation and we are watching that very closely.”

“Guernsey’s standing as an international finance centre, however, is not based on its banking industry alone but on the totality of its financial services business which in addition to banking covers investment funds, captive insurance, investment management and fiduciary and trust services,” he added.

In Jersey, chief minister Frank Walker said the UK authorities have told the island that they “confirmed their confidence in and their full support for the continued commercial operations of the UK banks that have offices in Jersey”.

He added: “We are not aware of any problems arising from the local operations of any banking branch or subsidiary here in Jersey. As you would expect, however, in current conditions, there has been and continues to be intensive monitoring of this by the Island’s Regulator.”

In Jersey, none of the Icelandic banks, such as Landsbanki or Kaupthing, had registered bank subsidiaries. At present, non-residents do not get any protection although the issue is under review, according to a government website.