This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.  
 

Financial Crisis Hits Jersey Finance Industry Profits

Thursday, May 10, 2012

The Jersey government's latest statistical report shows a significant decline in the profitability and size of the nation's financial services industry since the start of the financial crisis, putting pressure on Jersey tax receipts. Recent figures for 2011, however, show modest signs of improvements.

The Gross Value Added (GVA) of the financial services sector declined nominally in 2011, accounting for 40.5% of the Jersey economy, against 41% in 2010.

Banking deposits have declined from a peak of GBP219.5bn (USD353bn) in 2007, to GBP167.3bn in 2011, slightly higher than the GBP167.2bn recorded in 2010.

The total value of collective funds administered from Jersey grew between 2001 and 2008, reaching GBP239.9bn, but declined by almost a third in the year 2009 alone, to GBP163bn. This figure has since increased to GBP193.7bn in 2011. The number of funds administered from Jersey has more than quadrupled over the last decade.

The number of investment business clients declined by more than 1,000 between September 2008 and September 2009. September 2011 reported an increase in the number of clients of 200 (1%) compared with 2010. This increase was reflected in the value of funds managed (up 1% on 2010). Meanwhile, the average asset value per client has remained at a similar level to 2010.

Despite the challenging environment for many sectors, the report says Jersey is becoming a key low-tax jurisdiction for corporate registrations, with 33,194 live companies on the register as of September 30, 2011.

Despite slow improvements in the financial services sector as the global economy recovers, the total net profit (on which Jersey tax is levied) of Jersey's financial services sector in 2010 was estimated to be GBP605m. This total represents a fall of a quarter (25%) compared with 2009, which itself had seen a fall of almost a half (-47%) compared with 2008. Thus, the total net profit of Jersey’s finance industry, has fallen by 60% in the two years to 2010, and consequently affected the sector's contribution to the government's coffers.

Profits in the banking sub-sector fell by almost a third (-32%) in 2010 to GBP350m. Three-fifths (60%) of companies engaged in banking activities recorded a fall in profits on an annual basis. Over the two-year-period since 2008, banking profits have declined by 70%.

Profits recorded by the fund management sub-sector fell by about a fifth (-20%) to GBP70m in 2010. The trust and company administration and accountancy subsectors recorded similar declines in profit, each down by 19% on an annual basis.

Although the decline in profits recorded by fund management reflects the volatile nature of global markets in recent years, it is the first time in eight years that the trust and company administration sub-sector has reported a fall in annual profits. Estimated profits for trust and company administration (excluding legal activities) declined to GBP117m in 2010, with more than two-fifths (42%) of such companies reporting a reduction in profits compared with 2009. This sub-sector had previously experienced ongoing growth in profits each year since 2002.

The legal sub-sector was the only area to report growth in profits in 2010. Annual net profits for this sub-sector were estimated to have risen by more than a third (34%) compared with 2009, to approximately GBP50m.

Profit per employee across the finance sector in 2010 was GBP51,000 per full-time employee, a fall of a quarter (25%) on 2009, reflecting the large decrease seen in total profits in 2010.

Taxes in Jersey comprise 69% from income taxes, 11% from Goods and Services Tax (GST), 4% from stamp duty, 9% from impots duty, and 7% from other taxes and income. Total income tax revenue in 2010 was GBP394m, GBP114m less than in 2009. The share of contributed by GST revenues is expected to almost double by 2012 with the increase in the headline rate from 3% to 5%.

Mailing List

Click here to manage your mailing list preferences, or view our privacy statement.


The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




Latest News

BVI Financial Firms Need To Develop New Niches
13/4/2017
BVI Finance, the financial services industry promotional agency, has said the industry must actively adapt to target new opportunities and promote new offerings internationally.

ADGM Revises Pooled Fund Capital Req's
11/4/2017
Abu Dhabi Global Market, the low-tax international financial center, has revised the capital requirements applicable to managers of collective investment funds, with effect from April 10, 2017.

ADGM Consults On Allowing REITs
6/4/2017
Abu Dhabi Global Market, the low-tax international financial center, is consulting stakeholders on plans to allow the establishment of private real estate investment trusts.

Gibraltar To Offer Foundations
4/4/2017
Gibraltar's Parliament recently passed a bill permitting the establishment of Private Foundations.

Gibraltar Acts To Preserve QROPS Status
3/4/2017
Gibraltar has made new pension regulations to maintain its attractiveness as a jurisdiction from which to transfer UK pensions.

Australia Consults On Taxation Of Stapled Structures
30/3/2017
The Australian Treasury has launched a consultation on the tax consequences of the re-characterization of trading income derived through the use of stapled structures.

Australian DPT Legislation Passes Senate
27/3/2017
The Australian Senate has passed legislation to introduce a diverted profits tax from July 1, 2017.

Guernsey Funds Sector Grew In 2016
27/3/2017
The total value of funds business in Guernsey grew by more than GBP28bn (USD32.5bn) last year.

New Zealand Explains Foreign Trust Disclosure Changes
27/3/2017
New Zealand has published guidance on the increased disclosure requirements for foreign trusts with New Zealand-resident trustees.

Canadian Budget Focuses On 'Tax Fairness'
23/3/2017
The tax measures contained in Canadian Finance Minister Bill Morneau's second Budget are focused on closing loopholes, cracking down on tax evasion and improving tax reliefs for the "middle class."

Jersey Regulator Issues AML/CTF Funds Guidance
16/3/2017
Jersey's financial services regulator, the Jersey Financial Services Commission, has issued new anti-money laundering and countering the financing of terrorism guidance for Funds and Fund Operators.

More Tax Hikes For UK Taxpayers In 2017 Budget
9/3/2017
The UK Budget, released on March 9, 2017, featured tax measures to, among other things, hike taxes on self-employed workers, further close avenues for legal avoidance, and defer mandatory digital tax reporting until April 2019.

ACOSS Submits Recommendations For Australian Budget
2/3/2017
The Australian Council of Social Services has urged that the Government abolish ineffective tax concessions, introduce a sugary drinks tax, and scrap its company tax proposals.

MEPs Call For Wider Access To Beneficial Ownership Data
1/3/2017
EU citizens would be able to view information in registers of beneficial ownership without having to demonstrate a "legitimate interest," under proposed amendments the Anti-Money Laundering Directive.

New Zealand Tax Changes Enter Into Force
28/2/2017
A Bill including provisions to simplify New Zealand's tax processes, reduce compliance costs for smaller businesses, and tighten foreign trust disclosure rules received Royal Assent on February 21.