STATEMENT TO BE MADE BY THE CHIEF MINISTER

ON TUESDAY 21st OCTOBER 2008

Global financial conditions

I would like to make a short statement concerning a matter which I know will be at the forefront of all our minds at the current time - namely the current global financial conditions and the implications for our finance industry and, in particular, for our depositors both domestic and international.

These are difficult times and we are not alone in trying to steer a course in un-charted waters. It is a time to ensure that we all work in the long term interests of our island and everyone who lives here.

So firstly let me say that Jersey can be proud that it has managed to avoid any dislocation in respect of local deposits and that we can be, and are, increasingly confident about the prospects for our banking system as a result of the growing and concerted action by national governments across the globe. Our success in this regard is no accident. Jersey benefits from a banking system of unparalleled strength with banks only from the top 500 and all of the larger deposit taking banks being from the world's top 100 banks, which almost without exception benefit from the unqualified support of their national governments.

Jersey banks also benefit from some of the highest capital ratios anywhere in the world and are in the strong position of acting as a source of liquidity in the form of deposits that are passed upstream to the parent companies that need them and which are themselves amongst the strongest banks in the world.

It was with the strength of our banking system very much in mind that on the 3rd October I was confident in our ability to give assurances to Island residents that their deposits would be fully safeguarded. The confidence we had that the UK Government would not allow its banks to fail has been fully vindicated by subsequent events. We have been in touch with the UK authorities and they have confirmed their confidence in and their full support for the continued commercial operations of the UK banks that have offices in Jersey.

The UK government have delivered on their promise to do whatever it takes to ensure the continued strength of the banking system by pre-emptive action designed to give all their banks the support they need within a framework of continuing commercial freedoms to operate without the need for complete nationalisation and deposit guarantees as in the case of Northern Rock. This model has been and continues to be replicated by other governments in the US, Europe and elsewhere. This strong and positive action by the UK and other governments can be of great comfort to both resident and non-resident depositors with Jersey banks.

Let me be absolutely clear what this means -

As the banking operations in Jersey make a significant contribution to the liquidity and profitability of their parent banks, we can have every confidence that our banks are healthy and robust.Through the action taken by the UK and other governments the parent banks of the subsidiaries and branches in Jersey will have the capital and liquidity they need to continue to operate which includes their ability to provide liquidity to their subsidiaries and branches here in Jersey if it is needed.

We are not aware of any problems arising from the local operations of any banking branch or subsidiary here in Jersey. As you would expect, however, in current conditions, there has been and continues to be intensive monitoring of this by the Island’s Regulator. The regulator also maintains regular contact with the regulators of the parent banks in order to ensure our interests.

All of this has confirmed once again the primary importance of depositors selecting top flight banks from well regulated jurisdictions rather than relying on the existence of a local compensation scheme.

However the review of a compensation scheme continues and I hope to be able to put proposals before the States in the near future.

I hope members and all who have an interest in this matter will take comfort from my comments here today. We have adopted a measured response in difficult circumstances, and that approach appears to be working. I can confirm that I continue to meet with my advisers to monitor developments and agree any necessary actions. I can also confirm that we are doing all that we can to ensure the continued security of all individuals' deposits, the continued health of the banking industry and the long term interests of our Island and everyone who lives here.