South Africans seeking to diversify their assets are increasingly opting for the safe haven of Guernsey, a Channel Island state off the coast of France, whose regulatory regime — including near-zero corporate tax — is attracting wealth from around the world.
The island has a highly regulated financial services sector and has become an ideal destination for wealthy customers looking to invest offshore, says FNB, which has been operating an office offering foreign currency savings and transactional accounts on the island for the past 10 years.
Speaking at the opening of a new facility in Guernsey, FNB CEO Harry Kellan said they set up shop to service the international needs of South African-based customers and found the island attractive from a transparency and regulatory perspective.
“We looked around, and Guernsey, from a regulatory perspective and in terms of transparency — we didn't have to convince customers as to what it's about. The thinking was in simple terms to service our customers for their international financing needs,” he said.
We are pleased with that outcome given the product suite and foundations we have built
— Yashen Singh, CFO of FNB's private segment
The division has offered FNB the opportunity to extend international banking services to ordinary customers instead of only high-net-worth clients.
“We were looking at our customer needs, and if you look at 10 years ago, international banking in most cases was actually reserved for high-net-individuals, ultra-high-net individuals,” he said.
With a population of 63,000, including 3,000 South African expats, the island has become a popular home away from home for several local financial institutions.
Yashen Singh, CFO of FNB's private segment who previously served as CEO of Private Core Banking and FNB Channel Islands, said over the last decade the deposit book in FNB Channel Islands had grown to £1bn (R24bn) servicing 12 000 customers.
“We are pleased with that outcome given the product suite and foundations we have built,” Singh said.
In future, FNB aims to add credit to its offering on the island.
“That is the next frontier for us. You can see it’s almost like building a house, the foundation is in place, the walls are up and the roof is now on. [We are now] putting in the finishing touches. The opportunity base is out there,” said FNB private CEO Sizwe Nxedlana.
Aneesa Razack, CEO of FNB Guernsey, said wealth structuring requires investors to diversify geographically and have access to investment themes that are not necessarily found in South African or other African stock exchanges.
“A lot of our clients have their children living in other parts of the globe or have dreams to have their future beneficiaries living in other parts of the globe. So we needed to find a jurisdiction that could help our clients' structure. We are operating in a world-class jurisdiction, but also we want to make sure our clients can find a trusted partner on the other side of the globe. Wealth needs a relationship, not just a transaction,” she said.
Rupert Pleasant, CEO of Guernsey Finance — which promotes the island as an investment destination — said South African companies such as FNB have become a pillar of the financial services community there. Other South African companies operating on the island include Investec, NinetyOne and Momentum.
“There is a huge South African population here. For an island with 63,000 people, that is about 5% of the population. They brought friends, they brought families. It's diversity, an advanced skills set — it is basically globalisation, it's entrepreneurship.”
He said registered collective investment schemes in Guernsey invest almost R14bn into South Africa. There are also banking outflows of more than R18bn into the South African economy from the island, making South Africa one of its top 10 banking partners globally.
Guernsey's newly elected chief minister, Lindsay de Sausmarez, said the links between South Africa and Guernsey were deepening.
“We are particularly pleased that you have chosen Guernsey because of our strong regulatory environment. We have a growing bond in terms of business links, and we have a strong diaspora as well. The South African people are part of our community,” she said.
• Faku was in Guernsey as a guest of FNB
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.