It is the latest in a series of banks to pull out of the island, as challenging economic conditions force banks to concentrate their efforts on fewer, more profitable markets.
Nineteen employees will be affected by the closure, the bank said in a statement.
“Following a review of the business, Clydesdale Bank International will no longer take new deposits,” the statement said.
“The team will now work to manage the run-down of the existing customer book over the coming months, the completion of which is not anticipated before 2014.
“There is no immediate impact for existing customers as a result of this announcement, however, should any customer want immediate access to their funds, arrangements are in place regardless of any product restrictions.”
As reported, HSBC Bank International earlier this month said it had surrendered its international branch licences in both Guernsey and the Isle of Man at the end of December, and planned to consolidate all its international operations in Jersey. It is continuing to operate branches of HSBC in both Guernsey and the IoM for residents, as well as certain other banking and non-banking operations, including its Guernsey-based Channel Islands private banking business.
Clydesdale’s departure from Guernsey also comes around six months after the Bank of New York Mellon (CI) surrendered its licence, and less than 18 months after the Yorkshire Building Society announced plans to wind down its Guernsey subsidiary, in August 2011 – both also in the wake of strategic reviews.
The hard times for Guernsey’s banking sector began at the end of 2008, after a Guernsey subsidiary of Iceland’s Landsbanki collapsed – along with its parent – and left some 1,600 depositors out of pocket, as the island at that point did not have a depositors’ compensation scheme in place. (One has since been added, but its current compensation level is below that on offer in the EU and UK.)
Other banks that have left Guernsey in recent years have included Northern Rock (Guernsey) Ltd, which completed an orderly wind-down plan after surrendering its licence in 2010; the Guernsey branch of Switzerland’s EFG SA; and Ansbacher, which left both Guernsey and Jersey after 38 years in the Channel Islands in 2009, after its parent, Qatar National Bank, decided to refocus its private banking businesses out of offices in Doha and Geneva.
A new arrival to Guernsey, however, has been Kleinwort Benson, which came in 2010, from Jersey, after it was sold by Commerzbank to RHJ International.
In total, there are some 32 licenced banks on the island now, holding total deposits of around £96.9bn,compared with 48 institutions at the end of 2008, with some £157bn on deposit – the island’s all-time peak in terms of deposits.
Rules rewritten, and being rewritten
Although some of those who lost savings in the collapse of Landsbanki Guernsey would argue that savers have steered clear of the island because of concerns that another bank there might fail, banking industry experts say a major reason for the decline in deposits and departure of banks is changes in the regulations governing how deposits collected on the island may be "upstreamed" to the UK or elsewhere, and how much capital the banks are required to hold. This, explained one Channel Islands banking industry official, has meant that the value of upstreamed deposits, for the parent institution, is less than it was, and it is forcing the Guernsey banks to find a different use for the money they collect.
What is more, he adds, more changes are likely to follow, as the so-called Vickers Report – a document issued in 2011 by an Independent Banking Commission inquiry headed up by Sir John Vickers – has proposed further changes to the way banking is carried out in Britain, which are expected to affect banks in the Channel Islands, although precisely how has yet to be determined.
At the same time, he notes, all banks have been under pressure as governments and regulators call for them to "derisk their businesses" in the wake of the recent financial crisis.
"Generally what happens when you de-risk an industry or organisation, it does less than it did before for the same amount of resources, or requires more resources to do the same," he added.
Aimed at expats and those needing ‘offshore solutions’
On Guernsey, Clydesdale Bank International specialised in offering savings products designed for expatriates, residents of offshore centres, and what it called “those using tax structures who need flexible offshore solutions”.
Clydesdale Bank, which was founded in 1838 in Glasgow, is part of the National Australia Bank Group.
