House of Keys

Treasury reveals £193m plan to speed up KSF payments

2009-07-01 23

Treasury reveals £193m plan to speed up KSF payments

ALLAN BELL: The Treasury minister said proposals would be put to this month’s Tynwald sitting and, if approved, it was expected that the bulk of depositors will have been paid before the end of August

Published Date:
01 July 2009
TREASURY proposes to take £193 million out of government reserves to speed up compensation payments to Kaupthing Singer and Friedlander (IoM)depositors, the House of Keys was told.
But Treasury Minister Allan Bell said this funding was not in addition to, but a replacement of, the £180 million approved by Tynwald to fund the now-abandoned scheme of arrangement.

The scheme, proposed as an alternative to the collapsed bank's liquidation, was rejected in a ballot of creditors.

With Kaupthing Singer & Friedlander (IoM) subsequently placed into liquidation, the depositors' compensation scheme (DCS) has been triggered, which will pay account holders up to £50,000.

The DCS is to be funded with levies from the government and the bank to a maximum of £150 million and £200 million respectively.

In a written reply to a question from Juan Watterson (Rushen), Mr Bell explained that the £193 million would cover the cost of the government's obligations under the DCS plus provide an advance of future bank levies and also a loan to the scheme to speed up early payments to depositors.

He said both the money advanced to cover future bank levies would be recovered from the banks over a period of three years and the loan to the scheme would also be recovered over time.

Mr Bell stressed the money advanced, which he said would effectively 'cash-flow' the DCS, would come out of reserves and would not be met by external borrowing.

He said proposals would be put to this month's Tynwald sitting and if approved, it was expected that the bulk of depositors will have been paid before the end of August.

David Cannan (Michael) pointed out that Tynwald had already approved £150 million for the DCS and questioned where the minister was borrowing the £193 million from 'in lieu of the banks putting in money upfront'.

But Mr Bell insisted that the £193 million was not in addition to the £150 million.

Asked by Peter Karran (Lib Vannin, Onchan) what the impact would be of taking £193 million from reserves, Mr Bell replied that the only impact would be the loss of interest generated. Pressed by Brenda Cannell (Douglas East) on that issue, he said he did not have figure for the loss of interest that would result.

He said that most people recognised that the times were 'exceptionally challenging' and it was appropriate now to draw on the reserves which would be built back in years to come.

In a question for written reply, Mr Watterson also asked how much it would cost to nationalise the KSF (IoM) bank.

Mr Bell replied that it was estimated that £240 million would be needed to cover the shortfall of assets but working capital of between £30 million and £50 million would be required as well as further liquid cash to cover any potential 'run' on the bank.

Replying to a separate question from Mr Watterson, the Treasury Minister said legal advice had been taken from both Attorney General John Corlett and specialist Queen's Counsel over whether depositor and government losses could be successfully recovered from the authorities in the UK or Iceland.

'No action is being taken on the matter of legal challenge,' he said. 'The legal position is kept under periodic review.'

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Government (IOM) takes advice on recovering Kaupthing losses

Posted 01/07/2009 - 08:32 by anrigaut

2009-06-30 23

Government takes advice on recovering Kaupthing losses
Published online at 01/07/2009 04:12:27

Legal advice has been taken over whether financial losses incurred as a result of the crash of Kaupthing bank could be recovered.
In a written question in the House of Keys, Rushen MHK Juan Watterson asked about the possibility of recovering any or all of the money lost by the Isle of Man Treasury, depositors with the bank and holders of banking licences in the Island.
Mr Watterson suggested action could be taken against Her Majesty's Treasury, the United Kingdom's Financial Services Authority or the Icelandic financial services regulator.
In his reply, Treasury Minister Allan Bell says advice has been taken from the Attorney General and from what he calls 'specialist Queen's Counsel', but no action is being taken on the matter of legal challenge.
He adds the legal position is kept under periodic review.

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KSF early payments will require £94m of taxpayers' cash

Posted 13/02/2009 - 02:44 by Hoping and coping

2009-02-12 16

TAXPAYERS' cash totalling £94 million would be required to fund larger early payments to Kaupthing Singer & Friedlander depositors.


Details of the early payment scheme emerged in the House of Keys this week as Treasury Minister Allan Bell was quizzed over whether the banks were fully signed up to part fund the planned scheme of arrangement.

In a written reply to a question from David Cannan (Michael), Mr Bell said the maximum contribution of each bank per year was set at a limit of £350,000 over a period of less than three years.

Mr Bell told the Keys there was 'agreement in principle' from the banks but that if in 'the worse case scenario' they failed to confirm their support, then 'clearly the scheme would fall' and the depositors' compensation scheme (DCS) would be triggered instead.


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