The beautiful island of Jersey, for so long identified as the number one tax haven for Brits, is to mark an end to decades of sheltering those who are not so keen on paying their income taxes. The U.K. government will sign a tax- information sharing agreement with Jersey tomorrow, making the island the last of Britain’s offshore tax havens to agree to a new level of transparency.

Jersey will honour their agreement to sign a tax information exchange with the UK today The agreement to exchange of information in criminal tax matters with the UK Government follows the signing of the island’s first Tax Information Exchange Agreement in 2002 (TIEA), with the US Government. Agreements have also been reached with the Netherlands in 2007, as well as the Faroe Islands, Greenland, Iceland Denmark, Finland, Norway and Sweden. The last major European to sign a TIEA with Jersey was Germany, who put pen to paper last year.

The new agreement will be signed in London by Jersey’s chief minister, Senator Terry Le Sueur, and the UK’s financial secretary to the Treasury, Stephen Timms.

Le Sueur recently confirmed d Jersey’s intentions to fully cooperate with the major economies to stamp out illegal financial transactions by stating ‘Our continuing programme of signing agreements with jurisdictions across the globe confirms our commitment to the OECD standards of tax information exchange, and demonstrates our willingness to comply with international standards of financial regulation, anti-money laundering, and combating the financing of terrorism,’

‘We are particularly pleased to have Jersey recognised by the UK as a member of the community of jurisdictions committed to international co-operation and information exchange on tax matters, and to have their assurance that Jersey will be treated as such by the UK authorities.’ He continued.

As well as the US, Jersey has already signed tax information exchange agreements with the ‘Last year the OECD secretary-general referred to the fact that Jersey has signed a number of tax information exchange agreements, and called for clear political recognition for those offshore financial centres that have made this kind of progress,’ Le Sueur says.

‘We hope to see this reflected in the outcome of the G20 summit in London on April 2 and that there will greater pressure put on those countries, including some OECD members, who have not yet shared Jersey’s commitment to transparency and co-operation.’

A TIEA is scheduled to be signed with France later this week, and in the near future with Eire. Signs that the issue is being taken seriously is the fact the discussions are also taking place between Jersey and both the Spanish and Italian governments prior to signing agreements.

Jersey says it is ready to extend such agreements to all other jurisdictions, including OECD countries. Negotiations are well under way with Australia and New Zealand to also display mutual transparency.

Prime Minister Gordon Brown has consistently stated the government view that new financial rules under negotiation by Group of 20 industrial nations need to be extended to tax havens. Countries that extend favorable tax policies for investors are estimated to be costing the U.K. Treasury at least 4 billion pounds a year in revenue.

Alistair Darling, UK Chancellor of the Exchequer recently commissioned an independent review into how the financial transparency of not only Jersey, but also the Isle of Man, Guernsey and the British Virgin Islands will be affected after signing the agreements.

The agreement will require ratification by both the UK and Jersey parliaments before it comes into force.

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Tags: Alastair Darling, Alistair Darling, Bank, Banking, Economics, Economy, Finance, Financial News, Gordon Brown, Money Markets

In a time where just about anything is possible in the banking World, there might even be a scenario unfolding where banks will begin to charge their customers a storage fee for keeping their money on deposit. Sounds unlikely? It might well be, but with experts predicting that interest rates on savings account may fall by around a quarter of a percent in the wake of last week’s treasury decision to cut the base rate to a half a percent then the prospects of interest rates on short term deposit accounts could hit that big round zero figure, with the question of what comes after that!

Among the latest line of depressing statistical releases from the Bank of England was one that announced that the external liabilities of UK banks fell by a massive three quarters of a trillion pounds in the last nine months of 2008, representing the largest ever withdrawal of foreign funds in recent decades

And who can blame the depositor for looking somewhere else to take of their money? With concerns that the UK is no longer the safe place that it was to hold funds, under the considerable and ever-growing uncertainty of the banking crisis, along with almost inevitable shift towards financial protectionism internationally, it seems almost logical.

There is no escaping the fact that the average rate paid out by British Banks for an instant access account sat at 0.17% at the end of February, before the last rate cut. While the low interest rates charged by the banks and building societies may well suit those who are sitting on heavy mortgages, it will certainly not suit those who have been saving hard all of their lives, and have accumulated a small next egg, where they hoped or even assumed that the interest earned would go a long way to supplement their pension. Even 2008, not a great year for savers by anyone’s standards, but at least the banks were paying out 2.69% interest on savings accounts. An indication on the slide in interest rates is that in January 2008 banks were paying out 5.06% on savings accounts.

The feeling amongst savers is that they are being punished to meet the costs of mistakes made by banking management.

The only ray of light in a distinctly black picture for savers is that general acknowledgment that rates have gone as low as they are ever likely to, and form here the only way is up for savers. An interesting fact revealed by the Bank of England in their recent survey was that, despite the doom and gloom of recession there are household savings currently being held by banks an building societies of just over one thousand billion pounds, a considerable sum by any ones terms, but not so, when you consider that the banks are currently owed one and one quarter billion.

The question would have to be that, in the light of this information and the very low return on their investments, if the Great British saver could find a safer and more magnanimous place to house their savings, would they?

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Tags: Alastair Darling, Bank of England, Banking, British Economy, British Pound, Finance, Financial News, Money Management, Savings

In yet another attempt to kick start the British economy, it is expected that the Bank of England will announce yet another cut in interest rates today. The cut, from 1% to 0.5%, is probably the lowest that the Banks can afford go. With the anticipated increase in lending failing to transpire, Chancellor Darling may be forced to admit that the UK economy will require a different form of innovative thinking to help it to get back on track.

Banks continue to be the centre of attraction as news that legal action against Sir Fred Goodwin as well as others who are likely to be implicated in their role in the near-collapse of RBOS could begin within a matter of weeks.

Two former members of the RBOS board were criticised at a recent meeting of the Treasury committee handling the affair. They were “hauled over the coals” for failing to dismiss Goodwin, when the bank were handed a stay of execution at the time of the October taxpayer bail-out. The decision to allow Sir Fred, the bank’s former chief executive, to take early retirement instead of giving him 12 months’ notice to quit allowed his pension to almost double from £416,000 to £703,000 a year

The “compromise agreement” between the Bank and Sir Fred has now provoked a political storm was seemingly negotiated at the very last minute before the rescue deal for the bank was announced

A more pleasant side of the face of banking was the announcement made yesterday that the National Savings and Investment had seen a 10.5 increase in deposits during the second half of 2008. Deposits in the state owned bank, founded in 1861, rose to £94.9 billion on Dec. 31 from £85.9 billion from the previous period.

A sign that more and more people are spending less time in front of their television is the announcement that ITV are to lay off 600 people across the UK in a major cost cutting exercise. Another move in the offing for ITV is a “pain sharing” deal with Setanta, the UK television cable channel that specialise in sports broadcasting. The plan seemingly involves cutting competition on broadcasting live FA Cup and England international soccer matches for which they share a contract.

A rare and unusually bright star on the FTSE yesterday was the UK business process outsourcing (BPO) Capita who’s recently announced results revealed a growth in revenue of £2.4 billion, with operating profit up 18% to £321 million.

BPO appears to be a growing business in the UK, with Capita holding 25% of the total BPO market within the British Isles.

Producer of Hovis bread and Mr. Kipling cakes, Premier Foods, are expected to announce today the implementation of a £400million equity issue in conjunction with the company’s annual results. This move is planned as a reward to shareholders, as Premier announces their intention to sell a large but minority stake in the company to Warburg Pincus, a US based private equity group.

The rights issue is reckoned to more than double the equity value of the group, which has recently dwindled to £238million. In anticipation, shares closed up 3½p at 28½p on Wednesday.

The FTSE 250 index remained stable at 6,083.51 while the FTSE 100 finished at 3,645.87.

Sterling rose again, albeit slightly against the dollar and the Euro and considerably against the Japanese Yen and the Swiss Franc:

Pound/US dollar 1.4186

Pound/Euro 1.1241

Pound/Japanese Yen 141.38

Pound/Swiss Franc 1.6640
At his meeting with PM Gordon Brown at the White House on Tuesday, President Barack Obama publicly announced his backing of British efforts to forge a global response to the economic crisis. Obama voiced his support for coordinated fiscal stimulus measures in an aim to stimulate the world economy ahead of next month’s G20 summit, due to be hosted by in London.

As if strengthening the shared optimism of Brown and Obama, Wall Street shares had a good day. Largely offsetting the losses incurred on Tuesday.

The Dow Jones Average rose 149.82 points to close 6875.84. NASDAQ also rose 32.73 points to 1353.74

On the other side of the World, things appear to be getting gloomy. The ability of Australia to escape the global recession appeared to be under threat after a government spokesman reported on Wednesday that its economy an unexpected contraction in the fourth quarter, its first in eight years.

The spokesman announced that Australia’s economy had shrunk by 0.5 per cent from the third quarter, against predictions that the economy would remain at least stable. Over the last year, Australia’s economy has grown by 0.3 per cent, a considerable achievement all things being equal in the current global financial turmoil.

Indonesia, one of the few developed countries not considered to be crisis have been granted an unsolicited $2 billion loan by the World Bank, it was announced on Tuesday. The loan, the largest ever World Bank loan to Indonesia, is earmarked as a contingency facility to support government spending and external fundraising during the current market turmoil, and part of a $5.5 billion fund including Japan, Australia and overseen by the Asian Development Bank.

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Tags: Alastair Darling, Banking, British Economy, British Pound, Economics, Financial News, Interest Rates, UK Banks, UK Recession