It’s true that learning from past mistakes can be helpful in informing future decisions, but rather than wallowing in the misery of the past ten years, I’d like to advocate that this anniversary should serve as an opportunity to look forward.
If there’s one thing that has emerged as a vital take-away from the financial crisis, it is that careful analysis of your environment and prudent forward-planning is absolutely essential. There’s no doubt that we’ll see further disruption in the coming years, whether economic, social or political, and taking a strategic view (and sticking to it) will be vital for organisations and the IFCs that house them.
Realising this is one reason why Jersey has emerged so strongly from the crisis. Shortly after it hit, Jersey’s government, regulator and industry took the brave and joint decision to invest considerably in a strategic review that we felt would serve us well in the long-run.
The output from that significant piece of work, undertaken during 2013, outlined four key priorities – to protect existing business, to emphasise our key strengths, to capture opportunities in growing areas, and to explore new opportunities in less familiar territories.
From an industry perspective, following the recommendations made in that review – which spanned a whole range of areas including regulation, legislation, infrastructure, skills, reputation and overseas markets – has been absolutely pivotal in shaping the direction of our industry. Whilst other centres were panicking, having the foresight to undertake this piece of work really did differentiate Jersey.
Yes, Jersey has been impacted by consolidation and restructuring in the banking sector globally, the result of the low interest rate environment and the regulatory and stability measures to come out of the crisis, but Jersey’s banking sector has remained markedly resilient.
Whilst overall deposit levels have reduced, this was mainly due to less interbank activity with customer deposits holding up incredibly well. Jersey continues to house the headquarters of a number of international banks and is home to banking organisations from the UK, Europe, North America, the Caribbean, Africa, India and the GCC. That’s not something you see in many IFCs.
Meanwhile, we have deliberately placed a focus on mitigating the impact of reduced roles in banking by helping people to re-skill and move into growth areas – funds, trust and company work.
That foresight has served us well – funds levels today are as high as they’ve ever been and 50% higher than they were in 2008, whilst alternative funds now represent more than three-quarters of our total funds business, with private equity activity growing by almost a third over 2017.
Our trust and company sectors continue to perform strongly too, growing collectively by 9% last year, with our trust sector being the envy of jurisdictions the world over, holding in excess of £400bn of private assets.
We’ve also deliberately focused our efforts on growth markets, particularly the Middle East, China and Africa, whilst we’re also stepping up our focus on the US – all whilst maintaining our core market in the UK and Europe. That focus has really diversified our industry.
Today, the picture for Jersey is actually very positive – our figures are very good and firms here are bullish about future activity – more than 700 jobs are expected to be created over the coming four years.
So what now? Perhaps one of the key things to emerge from the past ten years is the narrative of austerity. Over the past ten years, national governments have reacted by making swathing cuts to services and expenditure to protect national reserves and manage debt.
That in turn has led governments to look for other sources of income, including trying to claw back money through tax leakage. That has meant a lot of finger pointing at IFCs and the (unfounded) assertion that there is a magical pot of money in IFCs that can be recouped.
That is the new narrative we are living in now. It’s a pleasing narrative for the electorate, a convenient one for governments, and one of the most unfortunate legacies of the financial crisis – because it is simply not true.
Which brings me back to my starting point. Although we are in a good place now, we cannot afford to rest on our laurels. Forward-thinking is as important as it has ever been if we are to negotiate this new landscape.
It’s why we have launched, since our initial strategic review, a refreshed review that takes into account the rise of digital technologies and Brexit in particular; a Future of Banking report that sets out specific recommendations to ensure the backbone of our industry remains strong; and a suite of thought leadership reports that explore our place in the modern world. No other centre is doing this, but we’re doing it because we believe fundamentally that our role is a positive one.
Looking back at the financial crisis for what it was is one thing, but preparing for the legacy it has created is something quite different. Jersey is ready for it.