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Digital era growth to balance reduced cash handling
In the first of a two-part report on progress of the jurisdiction’s banking sector, Ray Spencer finds availability of mortgages and to some extent other business finance has improved with the arrival of the government-owned Gibraltar International Bank
services] passporting rights, being a branch of RBSI in Jersey, a non-EU country”, she points out.
Lloyds Banking Group with 30 staff has a reduced Gibraltar presence, but still services “several thousand UK expatriate or international customers in Europe with current and savings accounts, foreign exchange and investments advice services”.
Barclays is “in the process of winding down its physical presence within Gibraltar, but will continue to provide a relationship managed service to some of our local current Gibraltar clients from several divisions of the Barclays Group on a remote basis, meaning those clients that have bank accounts in other jurisdictions”, as a Group spokesman explains.
Moves to digital and internet transactions across the board are being fuelled by rising operational
and financing costs that have put pressure on banking profits. In this report, we look at retail and full service banking, whilst in the following issue we look at how private investment and other banking on The Rock is expanding.
“The banking situation locally is healthy, with some competition, but also it is a difficult financial operating environment, because of negative interest rates in some of the main currencies”, explains Christian Bjørløw, chief executive in Gibraltar for 14 years of the Danish-owned Jyske Bank that handles some £1bn of assets locally and employs 100 staff.
“All of our currency exchange rates in Europe are with negative interest – currently minus 0.43% - and some corpo- rate clients are paying more for this situation, although we take some of the hit”, he reveals, adding: “There is no light at the end of the tunnel to see positive interest rates in the
foreseeable future – it is not a problem for private clients for the time being, but for corporate clients it is an issue. We can’t place their money on a 5-year basis, I have to pay them on demand, and even in Euros the 7-year Bond interest rate is negative.
Main income hit
Bjørløw points out: “These are areas where we make our main income. It will hit the bottom line for all banks in Gibraltar, because we will have assets that are Euro-based, and even the base rate in Sterling has been reduced after the Brexit referendum.”
This stark warning comes at a time when both retail and private banks are showing signs of making progress locally, despite a significant reduction in the number
of Gibraltar Financial Services Commission (GFSC) banking licences. There were 21 banks ten years ago and 12 today, including foreign exchange specialist, Moneycorps, that opened locally last summer.
Some 30 years ago Jyske Bank took over the jurisdiction’s oldest bank, the family-owned retail Galliano Bank which was founded in 1855. Four years ago Jyske took the strategic decision to extend beyond private client business to become a full service bank.
Whereas private clients accounted for 60-70% of the total, today around 95% is local business split to 40% corporate, 40% private accounts and 20% in retail banking – current accounts, mortgages, etc.
Jyske’s expansion deci- sion pre-dated by six months that taken by Barclays to with- draw from retail banking, leav- ing individuals and businesses with some 17,000 accounts to find an alternative home.
Shortage of mortgage providers brings “high concentration risk”: Amanda Eccleston, NatWest (Gibraltar) country head
Its decision was part of much wider restructuring by the UK bank parent and led members of Gibraltar Bankers’ Association to support govern- ment delivery of a long- promised locally-owned retail bank, the Gibraltar International Bank (GIB), which opened in mid-May 2015 after just a year’s planning.
The initial idea was that there would be an automatic seamless transfer to GIB of the Barclays accounts, but IT
A strategic move into retail banking: Christian Bjørløw, Jyske Bank (Gibraltar) chief executive
The initial fall-out from the surge of people seeking bank accounts was borne most acutely by the 116 staff at NatWest, which after a short while had to stop taking applications for new accounts and banking services due to the unprecedent- ed demand in the personal and business sec- tors and the impact it was having on NatWest operations.
Now claiming to be the largest holder of banking deposits locally, NatWest has taken on some 5,000, mostly personal accounts from former Barclays customers. Amanda Eccleston, NatWest [Gibraltar] country head since July, says only now is the bank considering lifting its applications pause on a staged basis.
“We are a local retail, corporate and commercial bank and do not provide services to customers in other EU member states, because we have no [financial
issues caused delays and most migrated to other banks. “The corporate entities in particular, such as traders in Main Street, could not, understandably, wait a year for us to open”, Lawrence Podesta, GIB chief executive, says. Even so, GIB opened with 60 staff and 3,500 mainly personal on-line accounts that has since grown to 8,600 accounts.
More proactive
For the past year, GIB has been more proactive. “We now are more in line with what is expected of a retail bank and we have time to dedicate to clients and market ourselves to business. We are encouraged by the results – the number and stature - with enquiries coming from top corporate entities in Gibraltar as well as individuals,” declares
Continued overleaf
Gibraltar International

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