by Fiona Ferbrache
The 2008 global financial crisis has had major impact on the geography of international banking centres (IBCs). In a forthcoming Area article, Derudder et al. analyse how leading IBCs have fared as a result of this financial crisis. While they argue that a broad geographical pattern emerges, revealing a shift from West to East (where IBCs faring best are located outside North America and Europe, and inside Asia ), they also provide a more nuanced analysis that indicates certain western centres hosting some of the strongest performing banks (e.g. Sydney and Santander). The rise or fall of IBCs is often connected to the collapse or take over of specific banks, for example Derudder et al.’s article is entitled “Goodbye Reykjavik”, as this city disappears from the IBC map after the collapse of all three of its major banks (Kaupthing, Landsbanki and Glitnir).
Other IBCs have been impacted by the Icelandic collapse and I was left pondering how international offshore financial centres (OFCs) might fit onto this map? The Channel Island of Guernsey is one such OFC with a finance industry reported to be in “good health” and “robust shape”, with financial funds reaching record highs in 2010 (Guernsey Finance, 2010). However, the Island’s relative resilience during and after the financial crisis is connected with its diversity of financial industries; fiduciary services, insurances, investments funds, asset management, and banking. It is banking, however, that presents the most varied scenario with some banks reporting increased deposit levels and others reporting lower levels (see, GFSC, below).
Derudder et al. reveal how mapping the global financial crisis is a complex and important process for financial centres (OFCs in particular) (should) remain closely connected to territorial states.
Derudder, B., Hoyler, M. & Taylor, P. (Forthcoming) Goodbye Reykjavik: international banking centres and the global financial crisis. Area.
Guernsey Finance (2010) Guernsey’s finance industry ‘is in good health’ http://www.guernseyfinance.com/news_room/guernseys-finance-industry-good-health 08 August, 2010
Guernsey Financial Services Commission (GFSC) www.gfsc.gg