23 Year payback - Liquidation.. IOM / PWC (posted by Hampnew)

  • coldlightofday
  • 20/10/08 31/08/09
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Posted: Sun, 15/02/2009 - 00:03

This little gem was posted by Hampnew.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_

There have been various posts in other forum topics about the way assets can appear to vanish into the pockets of
liquidators and lawyers, the liquidation of the Savings and Investment Bank (SIB) on the Isle of Man, liquidator PWC, seems to be the sort of event that confirms the cynical point of view.

Of more importance to us, which of the options, liquidation or SoA do we think is less likely to look like a rerun of SIB ?

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Mike Simpson expect to run the bank down in 6 years

  • klauseriksen
  • 10/10/08 31/05/09
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  • Mon, 23/02/2009 - 07:39

According to Mike Simpson the loan book would be run down in 6 years. Hence all depositors would likely have receoved 60-75% recovery within this timeframe. With regards to the DCS then this would only cover the balance for sub <50K depositors. You have to ask the question as to why the IOM simple doesn't just apply their loan to the DCS to repay smaller depositors 100% witin 2 years instead of trying to put the SOA through. The answer is simple. In a DCS, this would be paid for by IOM banks & IOM. In the SOA the majority is paid for by larger depositors


Klaus, please write your comments to IOMG & Alix Partners

  • mikeexpat
  • 31/10/08 31/05/09
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  • Mon, 23/02/2009 - 08:54

I agree 100% with your comments. I also cannot understand why IOM Government does not repay < 50 K depositors as soon as possible by taking a loan. Larger depositors should receive percentage of recovery after liquidation as soon as available. There is no need at all for SOA.

Examples for 70% RECOVERY:
All < 50,000 sterling Depositors get all their money back as soon as possible with help from IOM Government.
All > 71,429 sterling Depositors only percentage of recovery from liquidation.
For example Sterling 500,000 Depositor will get sterling 350,000 with no assistance from IOM.
For example US Dollar 800,000 Depositor will get US Dollar 560,000 (or fair sterling equivalent) with no assistance from IOM.
Liquidation will allow all large Depositors to sue whoever is responsible for this criminal collapse of KSFIOM for the missing 30% plus interest plus compensation.
But I would recommeend that you address these questions to ALIX Partners and IOM Government.
I already did it regarding FOREX.
Writing about it on this site will not resolve anything.
I am a high value depositor in US Dollars.
I have not applied for 1,000 EPS, and I will not apply for future 10,000 EPS or for DCS, and I very strongly advise each high value depositor to do the same for legal and other reasons.
However it will end, it will be the high value depositors who will be the biggest loosers in this criminal collapse of KSFIOM.


mikeexpat, I agree, but let's do it as a group

  • klauseriksen
  • 10/10/08 31/05/09
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  • Mon, 23/02/2009 - 09:08

I agree. I have already written to them regarding the FOREX issue and intend to write about this issue too. I personally don't think emails from single individuals will do the trick. The high net worth depositors needs to go together and put something similar in writing to IOMG, Alix Partners and the IOM courts. I understand “Liebenk” is trying to organize the high net worth depositors for action so I suggest we try and do it through this group


klauseriksen

  • Anonymous
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  • Mon, 23/02/2009 - 07:53

You state: "In a DCS, this would be paid for by IOM banks & IOM".

IoM contributes to the DCS? Please inform me of the source of your information.

The IoM has offered to contribute (up to 150m), but this is voluntary.


funds available

  • bobwin
  • 23/12/08 n/a (free)
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  • Mon, 23/02/2009 - 08:21

The tynwald has approved 105 million for the EPS--the loan book is 400 million over 6 years.
The banks would have to give 9 million for 08/09 and 9 million for 09/10. and whatever 0.125% of their deposits worked out to subsequently
LP Simpson has 140 million I think.
So cash now would be 263million followed by 66million per year for 6 years.plus 10 million from the banks(unless of course there is a huge outflow of funds).
Using the IOMG "loan" of 150million(= bribe to get the SOA (save our ars**) there would likely be enough cash to pay what---375million over 2 years followed by 66x4=284million over the next 4 years plus 36million form the banks=695 million in total less the 105million clawback from EPS=590million.
I think that represents around 70% of funds--can't remember the total.
Under liquidation, the bond depositors would get little so the 300million of insurance company money could be deducted from the total deposits.
This being the case, all retail depositors would be repaid in full.

Anyone find an issue with my maths please advise

The only people who want SOA are IOMG,FSC,Treasury,bond holders and sic insurance companies.

I said recently, I do not believe that bond holders cash is 100% invested in KSFIOM--if it is then they have a really good case against the companies and their advisers--this is child's play in bond investment terms--spread the risk!

Regards


steenjp, this is how it is likely to play out

  • klauseriksen
  • 10/10/08 31/05/09
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  • Mon, 23/02/2009 - 08:08

It is correct that the banks initially vould be required to fund the DCS. However if indeed the SOA is voted down or blocked by the courts it is pretty clear to me that the IOMG would be forced to intervene and fund the FCS from the money it otherwise has set aside for the SOA to save its reputation by providing a fast track payment for sub 50K and thus avoiding major repercussions on the IOM among the local sub 50K sterling depositors.
Given your views, then can you please tell me why you think the IOM is not simply providing the funds it has set aside for use in the DCS instead of proposing the SOA? The answer can only be the following. They want to protect themselves from legal action and they want the high net worth depositors plus the foreign currency depositors to partly foot the bill of the <50K compensation.


& a LOAN only.

  • skintagainnow
  • 10/10/08 31/05/09
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  • Mon, 23/02/2009 - 08:06

& a LOAN only.


Did SIB collapse usherd DCS in IoM?

  • columbgc
  • 11/10/08 14/07/10
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  • Sun, 15/02/2009 - 08:02

Can DAG/anyone verify if it was the collapse of SIB that so rattled the IOM to set up the IOM Compensation Scheme? It may be that there was no DCS before .....


SiB and the DCS

  • Anonymous
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  • Thu, 19/02/2009 - 13:37

Not that you can always believe wiki!
http://en.wikipedia.org/wiki/Savings_and_Investment_Bank

SiB was a very different situation to ours.. KSFIOM was solvent until Oct 8th!


DCS in ioM

  • cypheath
  • 01/11/08 30/10/09
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  • Wed, 18/02/2009 - 15:19

As it has never been funded IMHO it was never set up except in name only. A PR ploy to seem to be doing the right thing without having to do anything. Put IoM maybe ahead of Channel Isles when making choices where to deposit.

Now the cat is amongst the pigeons, it mught truly be put to the test.


'We must not lose sight of

  • Anonymous
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  • Thu, 19/02/2009 - 13:03

'We must not lose sight of the fact that the Isle of Man is well ahead of the game in that we are one of the few jurisdictions with a depositors' compensation scheme.'

With idiotic statements like this from Bell posed in IOM Today is there any wonder why this whole debacle it taking place. I thought the way the US operated was a disaster but once again I found there is another group on the planet even worse.


DCS

  • maxsweep
  • 15/11/08 31/05/09
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  • Sun, 22/02/2009 - 12:34

IOM may well be one of the few jurisdictions with a DCS. However, some jurisdictions which did not have any scheme when this whole debacle began have paid out at least some funds - I'm thinking of Guernsey!


Please do not hold up

  • expatfrance1
  • 15/10/08 31/05/09
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  • Sun, 22/02/2009 - 12:57

Please do not hold up Guernsey as an example of how things should be done. They may have paid out 30p in the pound but that came from liquid assets within the bank.

The Guernsey authorities have done sweet FA to help any of the depositors. In fact they have stated to the effect that they really do not give a toss about retail depositors on the Island because the vast majority of their finance industry is based corporate and insitutional banking.

The only thing they have done is to commission their own whitewash of a enquiry show how whiter than white they are.


'We must not lose sight of

  • Anonymous
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  • Thu, 19/02/2009 - 13:22

It is particularly ironic in that Bell and co. are doing their very best to avoid invoking the DCS.

If the IOM affidavits are to be believed, he should be saying something like: "'We must not lose sight of the fact that the Isle of Man is well ahead of the game in that we are one of the few jurisdictions who, having a depositors' compensation scheme, will do everything in our power to avoid ever calling upon it in the event of a bank collapse, because we know that we can do so much better with a scheme of arrangement".

Future literature from the island should be amended to read "we are proud that we are the only jurisdiction on Earth that boasts a DCS that we steadfastly refuse to allow to be triggered, even in the event of the total collapse of a bank."


elgee funny

  • Anonymous
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  • Mon, 23/02/2009 - 07:57

Hah! I smirked at this one, elgee!

I am annoyed that the DCS is still touted as a security on bank's websites. How does the FSC allow banks to solicit custom based on a lie? Grrrrrr!


DCS in ioM

  • cypheath
  • 01/11/08 30/10/09
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  • Wed, 18/02/2009 - 15:20

Sorry double post, senility is creeping in again!


http://business.timesonline.c

  • coldlightofday
  • 20/10/08 31/08/09
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  • Sun, 15/02/2009 - 00:17

This is the link provided by Hampnew

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_...

(one day I will manage to set up a link at first attempt! Also could not edit the first post in the topic!)


SIB Questions

  • Alastair
  • 10/10/08 30/09/09
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  • Sun, 15/02/2009 - 00:26

Fair point but to compare SIB and KSFIOM I'd like to know:

a. what the cause of SIB going into liqudation
b. how much as % did SIB hold in cash and good quality loans at the date of liquidation.
c. was there prima facia regulatory failure and if so was litigation against the regulator pursued

I'm not naive about the costs of liquidation and PWC will be very happy to see it happen but we do have 3 clear items of assets (Cash/Loan Bk/KSFUK deposit) and I believe a strong case against the FSC and Bank Directors and quite possibly the FSC.


23 years of pain

  • Hampnew
  • 22/01/09 31/05/09
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  • Sun, 15/02/2009 - 08:56

This is the scenario most will face if we accept anything other than 100% return for all now. Too few are doing too little.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_...


Too few are doing too little.

  • nivit
  • 19/10/08 31/05/09
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  • Sun, 15/02/2009 - 09:15

Too few are doing too little. What do do suggest?


23 years of pain

  • Hampnew
  • 22/01/09 31/05/09
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  • Sun, 15/02/2009 - 09:40

I would guess that more depositors need to make their representations to the relevant authorities, probably the IOM Government and the Courts, although it appears that DAG are doing this. Maybe more investors should contct and support DAG. Maybe they should pay a visit to the authorities.

We have to face it that depositors have had plenty of opportunity already to make their representations and those that have not will just have to accept the consequences, like we all will. This appears to be fact.

Frankly, I would be prepared to consider any other suggestion that depositors have?


LOAN

  • bellyup
  • 10/10/08 09/01/10
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  • Sun, 15/02/2009 - 10:27

How can we convince the IOMG that it is in their interests to take a loan?

They could then do one of two things

Buy the Loan book and it will pay itself off over 6years ie no loss to the IOMG -
They will have to pay someone to manage it .
Mr Aspen could do it and thereby extend his education in to what constitutes a deposit and an investment.
The loan book is solid and will an be investment for them.

They could take a loan to cover everything.
The loan book will pay itself off and the 550k in the UK will yield something at some point in the future.
It will then be their job to keep E& Y up to scratch.

Thus they come out of this debacle smelling of roses inside of the other stuff.

I dont see they are so hesitant about taking this step.

Does anyone think that they tried this route at all?

As George Brown money out left right and centre it seems there must be some left to sapre for the IOM if they will only ask.