Depositors Compensation Scheme in Jersey

Deposits with Bank of Scotland plc and Bank of Scotland International Limited in Jersey would not be covered by the UK's Financial Services Compensation Scheme. However, recent high profile cases in the UK have been dealt with beyond the limits of that scheme and in those cases the UK government has extended protection to depositors in UK offshore jurisdictions. There is, of course, no guarantee that this precedent would be followed in any future intervention, although other European governments have announced very recently measures to reassure and protect their banks' depositors.

There is presently no depositor protection scheme in Jersey, although the introduction of such a scheme is the subject of active debate.

Jersey banks are subject to the supervision of the Jersey Financial Services Commission, under the provisions of the Banking Business (Jersey) Law 1991. A guiding principle of the Commission's supervisory approach is the reduction of risk to the public of financial loss. To this end, the Commission aims to ensure that all registered banks meet appropriate fit and proper criteria and operate within internationally accepted standards. It does this by way of monitoring financial reports submitted to the Commission and maintaining appropriate oversight, including by way of on-site examinations and regular meetings with senior management.

Banks incorporated in Jersey are required to meet higher than average standards relating to balance sheet strength and are also required to provide confirmation of support available from their parent organisations. The latter are required to be members of the world's top 500 banks by capital size.

The banking regulatory regime operated in Jersey is considered to be conservative in nature and one that has avoided the Island suffering bank failures seen elsewhere. Comment by many international observers has reflected a view that Jersey conforms with relevant international standards, most particularly the Basel Core Principles for Effective Banking Supervision.

Naturally, the Commission continues to monitor all banks for possible adverse exposure to current market events but does not comment on individual institutions.

Deposit Protection Guarantee announced 3 Oct 2008 - Jersey Residents

The Chief Minister and the Ministers for Treasury and Economic Development have agreed that in the face of the ongoing global financial crisis, there is a need for further assurances for Island residents who are understandably concerned about the safety of the deposits they have placed with banks in the island.

With this in mind, and based upon their confidence in the strength of the banking system in the island, they are, subject to the final approval of the States, giving a guarantee that residents’ deposits will be fully protected.

The confidence of the Ministers is based upon the fact that the banks which operate in Jersey are all branches or subsidiaries of parent banks that are in the world's top 500.

It is further strengthened by the fact that over 90% of Jersey resident deposits are with banks in the world’s top 100 whose home countries, almost without exception, have pledged to support them.

The Financial Services Commission is approaching the home countries concerned, to seek to ensure that the support offered to banks extends to the Jersey branch or subsidiary.

To cover the possibility, highly unlikely though it is expected to be, that the comfort of the parent bank and its home country is not forthcoming, the Ministers are to recommend to the States that the bank deposits of island residents should be fully protected.

As far as more general depositor protection is concerned, the Economic Development Minister has already announced an urgent, comprehensive review, in which the finance industry and the Financial Services Commission will be fully involved. The authorities will await the outcome of this review before deciding what kind of protection would best suit Jersey in the long term.

The Ministers are determined that both now and in the future, the States will take whatever steps are necessary to maintain confidence in Jersey as a sound and safe international finance centre, and to protect the people of Jersey.

Question and Answers from the States of Jersey

Depositors Compensation Scheme in Isle of Man

Deposits made at Isle of Man branches of Bank of Scotland plc and Bank of Scotland International Limited are covered by the Depositors' Compensation Scheme contained with the Compensation of Depositors Regulations 2008 (as amended). 

The scheme  compensates people who have money in current and deposit accounts in the Isle of Man with up to a maximum of £50,000 of net deposits* per individual depositor per licensed deposit taker.  This means that a maximum of up to £50,000 compensation is payable per individual depositor per licensed deposit taker, irrespective of which country they live in.

Isle of Man Branches of bank of Scotland plc and Bank of Scotland International Limited are separately licensed deposit takers. They are both members of the scheme.

* Net deposits: Loans may be netted off against any deposits you have with the same deposit taker.

Please note that accounts in the Halifax International name are deposits with Bank of Scotland International Limited, Isle of Man Branch.

The amended scheme now provides protection to non-individual depositors (including trusts, charities and businesses) to a maximum of up to £20,000.

Further information in relation to the compensation scheme can be found at http://www.gov.im/fsc/investor/dep_comp.xml

Important Press Release by the Isle of Man Treasury 7th October 2008 regarding the Isle of Man Depositors Compensation Scheme.

Further press release by the Isle of Man Treasury on 23 October 2008 regarding a further amendment to the Isle of Man Depositors Compensation Scheme

http://www.gov.im/infocentre/ViewNews.gov?page=lib/news/cso/tynwaldapprovesr.xml&menuid=10160

Depositors Compensation Scheme Hong Kong

Bank of Scotland plc, Hong Kong Branch is a member of Hong Kong Deposit Protection Scheme. Eligible deposits taken by the Hong Kong Branch of Bank of Scotland plc are protected by the Scheme.

The Government announced on 14 October 2008, the use of Government Exchange Fund in Hong Kong to guarantee the repayment of all customer deposits (both personal and corporate) held in Banks in Hong Kong, following the principles of the existing Deposit Protection Scheme. The guarantee applies to both Hong Kong dollar and foreign-currency deposits with Banks in Hong Kong, including those held with Hong Kong branches of overseas institutions. It will cover the amount of deposits in excess of that protected under the Deposit Protection Scheme.

For further information please refer to the Deposit Protection Board website - http://www.dps.org.hk

Press Release by the Financial Secretary in Hong Kong on 14 October 2008 http://www.info.gov.hk/hkma/eng/press/index.htm

General

Deposits made in Jersey, Hong Kong and the Isle of Man are not covered by the UK Financial Services Compensation Scheme