As First National Bank celebrated its 10-year milestone in Guernsey and unveiled a new office this week, dignatories and senior FNB executives gathered to highlight the importance of offshore banking, the growing private wealth in Guernsey and the increasing link with South Africa.

Africa’s financial future will always be international, according to Harry Kellan, chief executive officer of First National Bank (FNB), a South African bank and a division of FirstRand. He highlighted the benefits of Guernsey’s trusted regulatory system. “Our commitment to Guernsey stays,” Kellan (pictured right) said at an event at the Old Government House this week.

This was echoed by Guernsey’s new chief minister Lindsay de Sausmarez (pictured centre right) who emphasised the strong South African link with Guernsey. “FNB’s role has never been so important in these uncertain and volatile times,” she said.

“The link between Guernsey and South Africa goes back many years,” Rupert Pleasant, chief executive of Guernsey Finance, continued at a roundtable event later that day. Guernsey Finance is a joint government and industry initiative whose remit is promoting and connecting Guernsey as an international financial centre. “South African firms are an integral part of Guernsey. We offer access to international markets. South Africa is a key market for us, as well as North America and Asia,” Pleasant said.

Guernsey is a popular domicile for South Africans seeking offshore structures, including trusts, funds and insurance solutions, and it is a well-known jurisdiction for South African high net worth individuals seeking a suitable location where their assets can be managed. The connection is facilitated by Guernsey’s legal and regulatory framework.

“The bank’s main strategy is to increase its South African clients and to extend its reach to the rest of Africa,” Sizwe Nxedlana (pictured centre left), chief executive officer at FNB private segment (South Africa), told WealthBriefing. He highlighted how the firm creates segregated portfolios invested in South African assets, from equities to fixed income and alternatives. “We still like equities which have been undervalued. We are overweight in South African equities. Bond markets are also looking attractive,” Nxedlana said. He highlighted the benefit of Regulation 28 which enables South Africans to invest a maximum of 45 per cent offshore.

“Guernsey offers clients a trusted and credible regulatory environment and good offshore capabilities,” Nxedlana continued. “We chose Guernsey due to its long history with South Africa. It’s also helpful that there aren’t inheritance and capital gains taxes here.”

Travel
FNB Channel Islands offers a sterling current account with a debit card facility to enable clients to transact online and when travelling. “A majority of our clients use their global accounts for travel and for investing in currencies. FNB clients can also book their flights via our portal, for instance,” Aneesa Razack (pictured left), chief executive officer of FNB Fiduciary and managing director of FNB International Trustees Limited (Global Solutions), said at the roundtable. It is also important for estate planning.

Although many of their clients bank online, Kellan said that the human touch is still needed for wealth management and advice. “Wealth generation was reserved for high net worth individuals but clients do not have to be HNWIs to start operating at FNB to create wealth. Our customers are mainly South African-based but also international,” Kellan continued.

Guernsey’s largest industry is financial services, followed by tourism and agriculture. Financial services, such as banking, fund management and insurance, account for about 37 per cent of GDP, employing around 21 per cent of its workforce. A light 20 per cent income tax, coupled with zero inheritance and capital gains tax, make Guernsey a popular offshore banking sector. Banks began setting up operations on the island from the early 1960s onwards in order to avoid high onshore taxes and restrictive regulation. The industry regulator is the Guernsey Financial Services Commission.

Gill Mabbett, relationship manager at Locate Guernsey, told WealthBriefing that private wealth is increasing in Guernsey. With recent hikes in IHT in the UK, she receives about 10 enquiries a day, as well as from places such as Hong Kong. “It has a buoyant, trusted financial services sector with favourable tax rates,” she said  

A report carried out by Frontier Economics, commissioned by Guernsey Finance in 2024, highlights that Guernsey-based funds channel assets worth £57 billion in the UK, supporting investment into the UK economy. In the second quarter of 2024, the total net asset value of Guernsey funds increased by £3.2 billion ($4.25 billion), reaching $295.7 billion, representing a 1.1 per increase over the quarter.

There has been a rise in the number of new private-banking centres in Guernsey, most recently a newly-minted offshore bank in Guernsey, Bank Aston, which has secured authorisation from the Guernsey Financial Services Commission. Bank Aston will serve offshore trustees, investment funds and family offices. The offshore market is huge. In the Channel Islands alone, there are more than £800 billion of assets under management and another £250 billion in bank deposits, according to the bank.