Guernsey and the value it provides to the UK: An interview with Rupert Pleasant, Chief Executive at Guernsey Finance

Transcript:

Katie
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Earlier this year, Guernsey Finance commissioned Frontier Economics to conduct an analysis of the quantitative and qualitative value that Guernsey provides to the UK to discuss the findings of this, the work that Guernsey Finance do and much more. I'm delighted to be joined today by Rupert Pleasant, CEO of Guernsey Finance. This is marketplace Matters. Rupert, thank you so much for joining me today at the LSE. Why don't we start by talking a little bit about the work that Guernsey Finance do please?

Rupert
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Well, firstly, thank you very much for inviting me here today. Um, Guernsey Finance itself is a joint initiative between the states of Guernsey, which is our government and the Guernsey financial services industry. And it's really to connect and promote Guernsey as a leading international finance centre into its target market. And as I'm sure you can imagine, the UK is and remains by far our largest target market.

Katie
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Excellent. And you recently commissioned Frontier Economics to conduct a quality of and quantitative analysis of the work, um, that and sort of the quality of value that Guernsey provides to the uk. Can you tell us some of the headlines from this report, please?

Rupert
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Sure. Obviously it's an election year this year, so it's, it's very important that, um, we can provide key messages, uh, into what is now obviously a new government. Um, and even we were quite surprised, the headline figure is basically 57 billion of capital has flown through Guernsey into the United Kingdom. And if you want to put that into some kind of context that's over three times the crossrail, the the cost of Crossrail. So absolutely huge amount. But obviously Rachel Reeves has recently come out and said the, the, you know, there is a black hole, and I think she said it was, it was 22 billion. So again, it's more than double that. So it's an absolute significant figure. So what we're trying to say is that, listen, we are part of the British family. We are a huge net contributor to the United Kingdom. Um, if something were to happen to that relationship, um, and that 57 then were removed from the UK economy, what would happen then? It would probably go to the likes of another financial centre that doesn't have that relationship with the United Kingdom. You know, maybe it's Singapore, maybe it's Dubai or wherever, but doesn't it, you know, doesn't feel part of that British family? So again, we calculated that probably a, a vast majority would come back, but certainly 13 billion wouldn't. So, uh, again, it's just making sure that everybody appreciates that there is such a fundamental and strong relationship and, and, and, you know, let's keep it that way.

Katie
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And how does Guernsey investment contribute to foreign direct investment going into the UK economy Rupert?

Rupert
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When you looked at both parties, manifestos, obviously foreign direct investment was gonna be absolutely key, not only for maintaining the UK economy, but for enhancing it as well. Um, in the King's speech recently, it's been a, a, you know, a very key factor there. And looking back at the Frontier Economics report, um, not only are we a key contributor, we've actually increased our contribution year by year since 2020, we've increased 14% each year. So, uh, again, not only in net contributor, but we're also increasing that contribution as well.

Katie
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And what tangible good does this do?

Rueprt
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It's a very good question. Um, one of the things that really came out the Frontier Economics report was very much the social returns and the social value that this, this then generates, uh, the report calculated this between three and 4 billion that goes into some kind of social investment or social return. Now, whether that's gonna be social housing, whether that's gonna be social infrastructure, uh, in the likes of, uh, sustainability in in wind or solar. Um, so it's, it's a very key and very tangible, uh, investment from Guernsey into the United Kingdom. But let's not also forget the investor returns that are generated as well. Um, there's 7 billion of investor returns. Um, a lot of that is gonna go, uh, into treasury. You know, a lot of that is going to be, uh, tax take. Um, so again, very significant indeed, but also, um, the UK fund management industry generates 2 billion of fees from that investment into the United Kingdom economy. So when you put those three together, I think it's a very compelling argument exactly how much we are contributing and how much we are really part of the British family there. But also, if you look at the social factor, we're trying to be a force for global good as well.

Katie
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Excellent. Thank you, Rupert. Incredibly fascinating. And I mean, we've recently had a general election here in the uk and a, a key talking point that always tends to emerge in and around these, these scenarios is ensuring that investment is sort of split across the nation. So how does Guernsey's investment support that, please?

Rupert
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We thought it would probably best to use a, a case study. Mm-Hmm. So you can actually then look at, uh, evidence of, of how that wealth is actually then, um, propagated through all four Nations. So we used a company called, uh, next Solar Energy, um, been a big investor
and a big supporter of Guernsey for many years.They're, uh, in the FSE 250, so again, a major contributor. Uh, and it was actually fascinating to see that these, um, solar installations are, uh, going into Wales, they're going to Scotland, they're going to Northern Ireland, and they're going to England. Um, and I think there's a kind of misconception that that capital flow only goes into a certain region. Everybody instantly thinks of London. It's not, it's, it's actually going into, uh, all four nations. So as I said, there, there's a hundred plants, uh, throughout the United Kingdom supporting 300,000 homes. So, um, the, the environmental factor, the green factor, and, and again, we're gonna be coming on to, uh, hopefully some of that a little later in the interview. Uh, it's a very tangible display into all four nations.

Katie
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Excellent, thank you. And I mean, you spoke there about Inheritant Capital flows, but there's other ways that, that Guernsey finance support and one is the key insurance, um, sort of solutions and, and sectors that you support. Can you speak a little bit about that please?

Rupert
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I think that there's probably a lot of, of people who don't know that Guernsey's had an insurance industry for over a hundred years now. In actual fact, it started 1922, uh, Dewhurst the Butchers was actually the first captive that was actually established in, in Guernsey. So we've got a massive amount of longevity in that market. And obviously with Lloyd's of London here, being the centre of the insurance industry, we're a huge net supporter of that, of, of that industry. Um, but again, I don't think a lot of people know that, um, 40% of the FTSE 100 companies actually have a captive in Guernsey, and we've calculated that, um, saves them about a hundred million in fees, which, um, mm-hmm. Again, a lot of that will be invested back into the United Kingdom. So, um, it's something that we have expertise in, in servicing, and it's something that we're very, very proud of. So again, we're a collaborator with the UK and supporting the UK's insurance industry.

Katie
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Excellent. And I mean, I know that another growing sector for you is the pensions industry. So how, so how does sort of, um, Guernsey's pension industry support the UK economy Rupert?

Rupert
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Um, it provides approximately 30 million pounds worth of investment management fees for United Kingdom Companies. So, uh, it's a net contributor in that way, but we'd like to think of, you know, ourselves as one of the, the, the key pillars. Um, you've got social security over here as a, as a kind of key pillar, but, um, pension is obviously something that younger people are, are thinking a lot more about at the moment. Uh, it's something when you look at the city UK or look at City of London Corporation, it's something they're really looking to drive forward. So if we can contribute in that way and, and do our part from, uh, a Guernsey point of view, then we're, we're very proud of doing that again.

Katie
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Amazing. And given where we are today at the LSE, why don't you tell me a little bit about the track record that Guernsey Finance has when it comes to the LSE please.

Rupert
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We've got many, many years of, of working with the LSE. There's a number of law firms in Guernsey who are, um, world leading experts in, in actually placing with you here, uh, in London. Uh, but again, I think what a lot of people don't actually realise is there's actually more Guernsey companies that actually listed on the London Stock Exchange than any other jurisdiction outside of the United Kingdom. So, um, not only is that kind of familiarity there, uh, we've got the expertise there as well and we continue very much looking forward to, to working with you into the future there as well.

Katie
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Well, likewise, Rupert and I mean, I've seen some lovely images recently. I think you had a special visitor, didn't you?

Rupert
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We're absolutely delighted to be able to host King Charles recently. Um, the relationship goes back a number of years. Uh, Guernsey has been a world leader in sustainable finance for a number of years now, and we have an event every year called Sustainable Finance Week in 2021, we approached the then Prince Charles and said, please, sir, would you contribute towards our event? Um, and it was just as he started his Sustainable markets initiative and he sent a video over that we played at our event, and we stayed in contact ever since. So when we heard that he was visiting Guernsey and we thought, wow, there could be an opportunity there for us to actually engage with him, uh, maybe we get five minutes. Mm-Hmm. Uh, we got half an hour and it was fantastic. So we were able to, to host him, and we were able to really discuss with him the Guernsey Green Fund, the Natural Capital Fund, both World first as, as far as we know, but also demonstrate, uh, a couple of market leaders that are based in Guernsey under the Guernsey Green Fund regime. And he was very engaged. Um, he's obviously exceedingly knowledgeable, um, very interested, asked huge amount of pertinent questions. So it was a fantastic opportunity for us, but also as part of the Sustainable Markets Initiative, um, Noel Quinn, who's the, uh, CEO of of HSBC was there, uh, Emmanuelle Bury, who's the country head of BNP Paribas, was there. So to actually engage on that kind of level, um, and actually agree some targets under, um, the, um, sustainable markets initiative was absolutely fundamental to us. So that's something we really look forward to going forward. And, uh, as we say, when you get the backing of the Monarch mm-Hmm, who can go wrong. So, uh, we were absolutely delighted with that. 

Katie
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Well, I think that's a lovely place to finish. It's been an absolute pleasure. Rupert, thank you so much for joining me today at the LSE. For more information about Guernsey Finance, you can visit their marketplace profile page on the London Stock Exchange Issuer Services platform. Thank you so much for watching. Fascinating. Thank you, Rupert.