Thursday 04 June 2020
The Policy & Resources Committee has finalised an agreement with a consortium of five local banks who are providing a revolving credit facility of up to £225m for an initial period of up two years.
This follows the States resolution to borrow up to £250m to meet short-term cash requirements as a result of the implications of the COVID-19 pandemic which is having a major impact on Guernsey's public finances. A number of financial support measures for businesses and individuals including grants to small businesses and the self-employed, the payroll co-funding scheme and hardship fund are paying out significant sums and it is likely some form of financial support for businesses and individuals will need to continue for some time.
Meanwhile, the amount of revenues collected is also down significantly as individuals and businesses earn less and are therefore paying less tax. Furthermore, the States' cash-flow has been impacted as substantial sums due to the States have been deferred as businesses are given time to recover from the impact of the pandemic.
The States have also agreed to provide funding for Aurigny's additional cash requirement as a result of the COVID-19 pandemic.
To provide liquidity through this extraordinary period, the Committee has secured a revolving credit facility which is provided jointly by Barclays Bank PLC; Butterfield Bank (Guernsey) Limited; HSBC Bank PLC, Guernsey Branch; Lloyds Bank International; and The Royal Bank of Scotland International Limited.
Deputy Lyndon Trott, Vice-President of the Policy & Resources Committee who is leading on the States of Guernsey's financial support measures, said:
"I'm very pleased that we've been able to secure this facility so quickly, and my thanks go to the five banks who are working with us to ensure that we have the liquidity we need to fund these essential measures which are supporting our community through this crisis. They've recognised the urgency and importance of what we're doing in the spirit of Guernsey Together."
While the States agreed short-term borrowing of up to £250m, the Policy & Resources Committee has continued to review the likely implications for public finances of the ongoing crisis and is confident that £225m will be sufficient to provide the necessary funds in the short-term whilst still allowing sufficient 'headroom'.
The process for putting the facility in place was led by Treasury and the Law Officers of the Crown, with advice from the UK Debt Advisory team at EY, and legal counsel provided by local firm Carey Olsen and in the UK by Slaughter and May.
Benedict Jones, Head of Business & Commercial Banking for RBSI in Guernsey, said:
"I am delighted that RBSI were involved in supporting the States of Guernsey in providing this facility which supplements our ongoing support for the wider Guernsey community during this period of uncertainty. This support aligns to our purpose- we champion potential, helping people, families and businesses to thrive."
Alasdair Gardner, Islands Director, Lloyds Bank International, said:
"Lloyds Bank International is delighted to be participating in this funding line for the States of Guernsey. This will provide additional liquidity to the Government, supporting its response to the Covid-19 pandemic, which is helping islanders, businesses and the local economy through these unprecedented times."
Carrie Ng, Head of Commercial Banking HSBC, added:
"HSBC is pleased to be part of the banking group to support the States of Guernsey and the community. These times are unprecedented and it is imperative that we do our best to support the local economy and look to a future with resilience and positivity. We are committed to the island and our participation and this facility supplements the wider suite of support measures we have introduced for businesses, individuals, and the community."
Richard Saunders, Managing Director, Butterfield Bank (Guernsey) Limited commented:
"Butterfield is proud to assist the States of Guernsey in supporting the Island's people and economy during these uncertain times. As one of Guernsey's largest financial services employers, we are pleased to work alongside the States of Guernsey to arrange the loan facility to support the island we call home."
And Simon Phillips, Country Manager for Barclays Guernsey, said:
"Barclays continues to invest in securing the future prosperity of our island. We are proud to be supporting the Government's efforts and this facility to protect Guernsey's society and economy in the face of unprecedented health challenges. We are committed to continuing this close cooperation to achieve the best possible outcome for the Bailiwick."
