How to move forward - please read

Posted 18/01/2009 - 10:43 by Anonymous

It seems to me that the fundamental issue that would enable us to all get all our money back is for KSF IOM to come out of Administration. Also, I suspect the reality is that the UK Government can swallow KSF IOM going down and the associated human suffering that we all live with.

A way to get KSF IOM out of Administration would be to first take KSF UK out of Administration and this would release the £550 million (or whatever the net figure is) to KSF IOM and we'd be home to the extent that KSF IOM could resume normal commerical operations that would probably result in a sale. In the UK, there is considerable public outcry regarding charities that have been hit by KSF UK going into Administration - for example Naomi House that has some £5 million at stake. Not much compared with KSF IOM, but a much bigger political issue - and also much more political capital for fixing the charities problems.

A political solution is needed. My MP, Sir John Butterfill has been extremely helpful in trying to raise our profile. There is support for us in the House: Mary Creagh, Mark Oaten, Vince Cable and I think many others. We must keep lobbying MPS. Here's a model letter for you. Please make an appointment to see your MP at a surgery (held usually every fortnight) and explain how taking KSF UK out of Administration would solve the problem for the charities. It's an indirect approach, but I think it is politically acceptable whereas DIRECTLY bailing out KSF IOM is not politically acceptable.

Your Address 1
Your Address 2
Your Address 3

Date 2009


Dear ,

Savings Deposits with Kaupthing Singer & Friedlander

I can understand that the Government’s action in the freezing of Icelandic assets was triggered by legitimate concerns that may have included the need to get “Icelandic bandits” under control, abuse of offshore transparency and maybe even criminal activities. The issue has to be dealing with the unfortunate consequences of these actions and trying to find a way forward.

It seems to me that there are two principal “unfortunate consequences”:

  1. The freezing of Icelandic assets has triggered the legal process of administration for Kaupthing Singer & Friedlander UK (“KSF UK”). The consequences of Administration are determined by law and this makes progress slow and complex, with little scope for normal everyday commercial behaviour.

  2. Freezing the assets in the UK had the knock-on effect of causing KSF Isle of Man (“KSF IOM”) to have the insufficient assets to meet its short-term liabilities and hence the Liquidator Provisionally in Isle of Man was appointed.

The Government has used the Financial Compensation Services Commission Ltd to stand as a single creditor in place of all the Kaupthing Edge depositors who were unsecured creditors to KSF UK and unable to access their funds following the freezing order. However, all other unsecured creditors of KSF UK remain exposed. These creditors include several well-known and popular charities including Naomi House, local authorities and several thousand individuals who invested in KSF IOM on the basis that all deposits were fully underwritten by its parent at the time, the Derbyshire Building Society. There has been a public outcry regarding the impact on the charities and the human cost on individual investors, many of whom stand to lose their life savings, has been devastating.

So how can the matter be resolved? It appears that Kaupthing both in the UK and the Isle of Man are potentially solvent, or at least very close to this position. However, the operation of both banks are governed by the Insolvency / Administration process that is not only complex, but also likely to result in lower and slower recovery of assets than achievable under normal commercial operation.

The key is to get KSF UK out of Administration. If the UK Government could facilitate this process by guaranteeing the solvency of KSF UK, another investor would probably happily take over the bank. In all likelihood, the financial exposure to the Government is minimal. Similarly, the Isle of Man could then guarantee the solvency on KSF IOM.

The result of this strategy would generate considerable political capital in responding to the public outcry to support the impact on charities such as Naomi house and at the same time, end the huge human consequence to ordinary depositors in KSF IOM who are living with considerable uncertainty as to how much of their savings they will recover and when.

Please make resolution of this crisis a priority. My wife and I had invested our savings of over £xxx,xxx in Kaupthing Singer & Friedlander IOM. We have paid UK income tax on these investments and the sums represent our lifetime savings that we cannot replace. We find this situation extremely distressing.

I am grateful for your continuing support at this difficult time and look forward to meeting again at your surgery to discuss further developments.

Yours sincerely,

A N Other

House of Commons
London SW1A 0AA

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