The tiny island that’s caught the attention of 28 South African companies, including its biggest bank

First National Bank, which has had a branch license for a decade, will apply for a credit permit by the end of the year, it said in a statement Monday.

“We want to add an extension to that license to be allowed not only deposit taking, not only transactions, not only investments, but also lending,” FNB Chief Executive Officer Harry Kellan said in an interview.

FNB established the Guernsey unit more than 50 years ago to mainly serve high-net-worth individuals. It expanded its offerings to include international banking and savings in 2015.

Since then, deposits have reached £1 billion ($1.3 billion), with 10% comprising domestic Guernsey clients, it said.

The lender has grown its customer base to 9,000, while its trust company, which caters to Africans looking to externalize their assets, has £1.7 billion in assets under administration. 

“Market volatility, currency depreciation, geopolitical instability and changes in tax trends have all prompted South Africans to look to international banking as a means of hedging risk while remaining firmly rooted in the country,” FNB said.

Guernsey, a financial-services hub, has attracted at least 28 registered South Africa-based companies to its shores, including Investec and Momentum Group Ltd., as it offers most firms a flat tax rate.

The small island is in the English Channel off the coast of France and measures roughly 65 square kilometres—a tenth the size of South Africa’s capital Pretoria (~680 sqkm).

It is home to a population of about 65,000 people.

Kellan expects it will take at least 12 months for the Guernsey unit to get the credit license, which will enable the bank to offer a full suite of services ranging from transactional, savings and deposits, to investment management and lending.

Once it gets the license, FNB will target the almost 3,000 South Africans living on the island, representing almost 5% of its 63,000 population, along with high-net-worth individuals in the African markets it operates in.

Only a fifth of FNB’s 1 million private clients use its integrated solutions, including offshore exchange-traded funds and international trading, which highlights the potential available to the bank.    

“It’s not a short-term play, it’s probably more of a medium-term play,” Kellan said.

Issued on BusinessTech by Bloomberg | https://businesstech.co.za/news/business/833442/the-tiny-island-thats-caught-the-attention-of-28-south-african-companies-including-its-biggest-bank/