Isle of Man Offshore Company

Financial institutions on the Isle of Man have recovered from a challenging economic environment to see a sharp increase in the amount of managed funds and bank deposits in the year to March 31, 2005, the Manx Financial Supervision Commission has revealed in its annual report.

According to the FSC, the total net asset value of funds under management in collective investment schemes increased by 41.5% during the year to 31st March. There was a 17% net increase in the number of funds managed or administered from the Island during the period.

The expansion in the funds sector can largely be attributed to growth in the Experienced Investor Fund and Overseas Fund sectors, reflecting the ongoing popularity of alternative investment/hedge funds. The total net asset value of Experienced Investor Funds grew by 72%.

During the same period, deposits with Island banks rose 16.4% to £33.08bn from £28.42bn. Over 20 banks had capital ratios exceeding 20% at the end of March 2005. (The capital adequacy of Isle of Man incorporated banks is measured on a risk-weighted basis in accordance with the Basel Capital Accord.)

According to the FSC, after a more challenging economic climate in the previous year, many businesses in the Island’s finance sector now feel that prospects are improving, as evidenced by the profitability of a number of licence holders.

The report noted that:

“Those centres, like the Isle of Man, with a mature and broad base of financial services offerings are likely to be the ones which will continue to attract the major fund flows."

“As a consequence of this success there is a continued emphasis being placed by international standard setters on the soundness of the regulatory regimes in these jurisdictions and on the latter’s cooperation on tax and enforcement issues. These pressures will continue. The Isle of Man continues to adapt to these events. With a strong domestic economy and a AAA rating from the leading credit rating agencies, it is well positioned to maintain a competitive business environment.”

In his introductory remarks, Chief Executive John Aspden said that the Commission’s supervisory work is now primarily risk-based, enabling it to focus on those areas which incur the greater risks.

Mr Aspden stated that work had continued in making sure that the Island’s regulatory regime met the appropriate international standards. He said that the IMF can be expected to return to the Island for another assessment of its compliance with those standards in 2007.