ACCRUED INTEREST UNDER THE DCS

  • KSFIOMCRAP
  • 15/03/09 31/05/09
  • not prepared to answer
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Posted: Tue, 02/06/2009 - 11:17

Dear fellow depositors,

I have had a look at the DCS web page and FAQ and to my disappointment found out that the DCS will only compensate depositors for accrued interest up until 9 October 2008 but not until 27 May 2009. This was reconfirmed to my by KPMG who administer the DCS.

It is really disappointing to see this and it shows once again that the IoM is trying to save some money and is not really taking the situation of depositors into serious consideration.

After all it is not because of the depositors that it took so long to finally trigger the DCS on 27 May 2009. If the DCS had been triggered on 9 October 2008 we would already have some of our money back.

Because of the endless discussions about the Scheme of Arrangement and the several attempts to modify it have delayed the triggering of the DCS and DCS compensation payments by nearly 8 months.

It was not for the benefit of depositors to develop the SoA and it is not acceptable that depositors are now not getting properly compensated with accrued interest up until May 27 2009.

I would appreciate if the Depositors Action Group could take some action to push the IoM Government to amend the DCS regulations to allow the Scheme Manager to include claims for accrued interest up until 27 May 2009.

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Many thanks for your comments - one suggestion:

  • KSFIOMCRAP
  • 15/03/09 31/05/09
  • not prepared to answer
  • Offline
  • Wed, 03/06/2009 - 18:27

Many thanks for your comments and support. I think the probably best way to ensure depositors can claim interest up until 27 May 2009 is to amend the terms of the DCS to make clear that the compensation is due on the balance including accrued interest on May 27 2009 when the decision was made to liquidate KSFIOM and to trigger the DCS.

KSFIOM still has assets and is still recovering assets and also earned interest on those assets so it is not reasonable to refuse to pay out any interest after 9 October 2008 just because the IOM was unable to handle the situation from the outset and spend about 8 month to prevent the liquidation from happening. By doing so it did not act in the interest of depositors and the SOA was rejected by creditors as a result.

The DCS regulation has been amended serveral times over the last few months by the IOM to incorporate specific features in relation to KSFIOM such as the set-off with payments under the EPS etc etc. So it should be fairly easy for the IOM to make another amendemend to ensure interest until May 27 2009 can be claimed in this particular case of KSFIOM.

By the way:
I dont think it is possible to first make a claim under the DCS for the deposit and accrued interest up until 9 OCtober 2008 only and then claim the rest of the accrued interest until May 27 2009 from KSFIOM itself. Normally when you make a claim under DCS you assign the right of your claims towards the defaulted bank (KSFIOM) to the DCS in return for getting the compensation payment from the DCS.


KSFIOMCRAP wrote: "I dont

  • Anonymous
  • Offline
  • Thu, 04/06/2009 - 10:20

KSFIOMCRAP wrote: "I dont think it is possible to first make a claim under the DCS for the deposit and accrued interest up until 9 OCtober 2008 only and then claim the rest of the accrued interest until May 27 2009 from KSFIOM itself. Normally when you make a claim under DCS you assign the right of your claims towards the defaulted bank (KSFIOM) to the DCS in return for getting the compensation payment from the DCS."

I do not think that can be true. You should only have to assign your rights in respect of the sum claimed from the DCS, not your rights generally.


yes its wrong

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
  • Offline
  • Tue, 02/06/2009 - 21:57

Its wrong but then isnt so much wrong the whole disaster is wrong nothing is right.
getting any money out of these twisters and turners is going to be hard enough.


Interest payable

  • ianw
  • 14/10/08 n/a (free)
  • unspecified
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  • Tue, 02/06/2009 - 19:58

My understanding is that interest is payable up to 9th October 2008 and this is added to any capital at that date to calculate the total of your claim. However, the actual proportion of your total claim that is paid out will include interest that is capped at 5% if there are insufficient funds to meet all claims in full. If there are sufficient funds to meet all claims in full, then you will finally receive the balance of your interest (e.g.difference between bond interest at 6.95% and 5% paid = additional 1.95%) with your final payment. At the London SOA meeting PWC said this was Manx Law. I'm not sure what happens to interest after 9th October - where it's payable at all, or whether payable until a bond matured etc etc....


Interest and the DCS

  • David9J
  • 10/10/08 31/05/09
  • a depositor
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  • Tue, 02/06/2009 - 14:26

Although the DCS does not pay interest accrued after 9th October, the bank is still liable to you for interest accrued at least up to the date of default (27th May). It is my understanding that this should be paid out of asset realisations, even to depositors who are compensated from DCS. I am not sure if this is one of the questions which Frog has asked of Mike Simpson, but if not it would be a good one to get confirmation of on the next conference call.


interest and DCS

  • Anonymous
  • Offline
  • Tue, 02/06/2009 - 18:27

David9j's posting is correct, but I do not like the DCS refusing to pay interest accrued after 9 Oct 2008 and I will be asking that DAG's lawyers look into this.


Interest and DCS

  • KSFIOMCRAP
  • 15/03/09 31/05/09
  • not prepared to answer
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  • Tue, 16/06/2009 - 13:38

Dear elgee,

I am still not clear how to claim the interst from October 9 2008 to May 27 2009. Clearly it is not possible to claim it under the DCS. KPMG confirmed to me that they would not take it into consideration and referred to the rules/legislation of the DCS.

So if I cant claim it from the DCS can I claim it from the bank directly by logging a claim with the liquidators?

If I want to log a claim with the DCS for the deposit and interest until 9 October 2008 does that mean I can not log a claim with the liquidators for the interest from October 9 2008 to May 27 2009.

You said you wanted the DAG lawyers to look into this. Would be good to have some guidance what to do, where to claim what and when. What did the DAG lawyer suggest?


On reflection I suppose it

  • Anonymous
  • Offline
  • Tue, 02/06/2009 - 21:04

On reflection I suppose it does make some sense that interest after October last is not payable under the DCS, since strictly speaking no interest was earned in the bank accounts after that date. Nonetheless, I think I will get this looked into. As for the IoM ombudsman, thanks to Manx-person but apart from my personal feeling of unwillingness to rely on IoM institutions to solve depositors' problems, this appears to be a problem with the DCS (run by the FSC) rather than with the bank.


DCS/Interest

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Tue, 02/06/2009 - 21:26

well the point i was making is that there is a complaints procedure which can make awards against the bank. I could think of some claims which might be able to be made under the ombudsmen scheme, and there isnt the risk to costs in making a court application for example. Also its one of the 'metrics' used by external assessors of the IOM - IMF, OECD etc, so it would have some polictical impact potentially.

prior to the granting of the FSA 2008 - the bank wasnt licensed by the FSC so arguably was outside the remit of the ombudsmen scheme.


interest and DCS

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Tue, 02/06/2009 - 19:29

I am sure that it has not escaped you that the bank is now licensed by the FSA pursuant to the FSA 2008.
http://www.fsc.gov.im/ViewNews.gov?page=lib/news/fsc/kaupthingsingerf1.xml
There is of course now the possibility of recourse to the Financial Ombudsmen as a licensed institution.
Of course the other provision of the FSA 2008 will apply.
see http://www.gov.im/oft/ombudsman/


Interesting re: interest manx person

  • fight theft
  • 10/10/08 28/05/13
  • a depositor
  • Offline
  • Fri, 05/06/2009 - 14:23

Hi manx - thanks for the interesting post - I think you should post it as an active forum post, and make sure the DAG strategy team see it, and it doesn't get buried under the deluge of discusssions. Thanks for your financial advice again


KSFIOM's new license @fight theft

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
  • Offline
  • Fri, 05/06/2009 - 15:29

Its not financial advice ;-)
Just commenting that the Bank has now been granted a license.
It will need to comply with the FSA 2008. In addition, in due course any conditions attaching to the license will need to be in the public domain and available on the FSC website.