another anonymous letter

  • tsunamivictim
  • 11/10/08 n/a (free)
  • a depositor
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Posted: Wed, 18/03/2009 - 01:55

I actually received one of those "anonymous e mails " today myself. It was extremely well written by an obviously erudite and well mannered person. In fact, I had to agree with every word he said. Maybe it was sent to me so that everyone can see that it is not the dreadful blackmailing letter the politicians declare it to be.
Here it is:

To: The Manx Electorate 15th March 2009
The Manx Media
The Manx Business Community

From: A Group of Dispossessed Persons

On the 8th October 2008 a previously stable and viable bank in the Isle of Man, Kaupthing Singer & Friedlander
(KSFIOM), collapsed and was placed into provisional liquidation. The main reason for its collapse was that it
could not retrieve a large amount of its own funds which were being held in its sister bank in London (KSFL).
Shortly before KSFIOM’s collapse the Financial Supervision Commission (FSC) authorized and organized the
transfer of these funds and deposited them – UNSECURED – in KSFL. The value of these funds amounted to
over half a billion pounds. The fact that these funds were deposited unsecured enabled the UK government
(UKG), to subsequently freeze them and disallow their return to KSFIOM.
The Isle of Man government (IOMG) has persistently maintained that it is blameless in this matter, and that it is
all the fault of the UKG who refused (and are still refusing) to release the funds. The behaviour of the UKG has
indeed been reprehensible, but the inescapable fact is that the funds should not have been in the UK in the first
place. In the uncertainty and hostility that existed at the time between the UK and Icelandic governments it
seems incredible that the FSC authorized the removal of these funds from the Isle of Man’s jurisdiction to that
of the UK. And the fact that the funds were deposited unsecured beggars belief - if they had been secured they
could have been returned to KSFIOM and the collapse would almost certainly not have happened.
The seven commissioners who constitute the FSC are appointed by the IOMG and approved by the Tynwald. It
is the FSC’s responsibility to independently and impartially regulate and supervise the activities of banks and
other financial institutions operating within the Island. It is difficult to reconcile their impartiality with the fact
that according to the FSC’s website a number of them hold, or held as at 30/01/2009, directorships in the
following banks and/or bank affiliates:

Singer & Friedlander Investment Management (IOM) Ltd
Singer & Friedlander International Ltd
HSBC Securities Services (IOM) Ltd
Standard Bank Offshore Group Ltd
HSBC Custody Services (IOM) Ltd
Kaupthing Holdings (IOM) Ltd
Bank of Bermuda (IOM) Ltd
Standard Bank (IOM) Ltd
Kaupthing Singer & Friedlander (IOM) Ltd *
* the collapsed bank

When KSFIOM’s licence was suspended the IOMG could have faced up to its responsibility and admitted that it
was - through the negligence and irresponsibility of its appointed FSC - instrumental in the bank’s collapse. Had
the IOMG immediately arranged to raise sufficient funding to reopen the bank with other interested parties, the
Island’s reputation would have soared. Larger depositors had already indicated their willingness to help by
pledging to allow the bulk of their deposits to be converted into long term accounts or bonds. But the IOMG did
not have the courage to admit its liability created by the blunders of its FSC and decided on a strategy of
denying any responsibility and placing all blame on the UKG.
Meanwhile the IOMG will probably end up spending more than a million pounds in hiring an American firm
(Alix) and eminent UK legal advisers to formulate a complicated “Scheme of Arrangement” which it is trying to
promote as a most generous payment package. It is nothing of the kind; it is a disgraceful sham. If it wanted
to, the IOMG could resolve this debacle very quickly, and without cost to the Isle of Man taxpayer. KSFIOM has
many millions of pounds in assets such as the loan book, bonds etc., which in time will mature and become
recoverable. There will also eventually be the return from London of a proportion of the half billion pounds
frozen there. The IOMG could borrow the amount necessary to pay all depositors in full from the UKG (there
could not be a better time for low interest rates) and then recover the money as the assets and the funds from
London became available. It has been estimated that in time the government would probably recover the bulk,
or possibly all, of the borrowed amount.
But the ministers of the IOMG will not do this: it would be admitting to the electorate and business community
that it was a terrible blunder by their appointed FSC that caused a viable bank to collapse. They have instead
chosen the cowardly path of closing their eyes to the FSC’s action and are now boasting that their Scheme of
Arrangement will pay out the bulk of depositors in full quite soon. This is true; those with savings up to £50K
will be paid in full relatively quickly; and for the extremely wealthy it probably doesn’t matter too much.
However for us this “scheme” is catastrophic; it will pay us in dribs and drabs perhaps 65% of our money over
a period of about seven years. Liquidation appears no better.
Our group consists mainly of people who have had their life savings taken from them; some of us have lost our
homes and most are too old or infirm to find employment. In the last five months while the IOMG has dithered
and given us nothing but platitudes, our lives have been irretrievably shattered. We fully support the KSF Direct
Action Group in its objective of fully recovering the money due to all depositors in a reasonable time. We are
not seeking charity or compensation; neither are we asking the Isle of Man taxpayer to bail out a failed bank.
What we are demanding is that the government makes amends for destroying the perfectly viable bank which
held our savings. The Island’s prestige as a world banking centre has already suffered as a result of this
debacle, but even at this late stage if the government had the courage and honesty to acknowledge its
responsibility and paid depositors in full within a reasonable time (weeks, not years), then we believe the
Island’s reputation would be considerably enhanced.
We have asked the IOMG to make a public statement on or before the 9th April 2009 that they are prepared to
rectify the blunder committed by their FSC and undertake to pay all depositors in full by 31st August 2009.
Should the IOMG choose not to do so then we are determined to ensure that never again will savers feel
secure depositing their savings in the Isle of Man. Newspapers, radio and TV channels will be contacted
wherever our members live and asked to publish/broadcast our warning based on personal experience. Chains
of E-mails will start simultaneously in various parts of the world requesting all recipients to forward, as a public
service, the message that the Isle of Man is not a safe place to invest in or deposit savings. The message will
be short and to the point:
•If you are thinking of investing or depositing funds in the Isle of Man: DON’T.
•If your financial adviser has recommended you to save or invest in the Isle of Man: DON’T.
•If you already have investments or savings deposited in the Isle of Man, GET THEM OUT AS
•If your pension/insurance fund has investments/deposits in the Isle of Man: EXPRESS
This message originates from a group of persons who have lost their life savings, and in some
cases their homes because they deposited their money in the Isle of Man.
It will take a while to gather momentum, but gradually the effect of such a concerted and continuous onslaught
on the Island’s reputation will start to be felt. Banks, financial services and insurance companies will begin to
close and depart the Island resulting in much unemployment and a general deterioration of services such as
health and education.
We have twice informed all the IOMG ministers of our intentions, but it appears from past performance that
they are quite likely to take a political decision to maintain their image and that of the FSC at any price – even
at risk of destroying the Island. It seems they are prepared to gamble that we are bluffing – we are not. In
addition we have also contacted members of the House of Keys and the Legislative Council; but with the
notable exception of the Bishop of Sodor and Man, all remained silent. We are deeply grateful to the Right
Reverend Robert Paterson for his efforts in publicising this matter.
We must emphasize that we have no wish to proceed with this action which will cause irreparable harm to the
Isle of Man – we just want the government to do the right thing, own up to its mistake and return our savings
in full; now. The last opportunity to change the government’s mind and prevent the described scenario lies with
you, the electorate, the media and business community to whom this circular is being despatched in the hope
that you will exert pressure on your government to reconsider its proposed action.
Anyone who doubts the facts given in this document has only to ask a member of the House of Keys –
preferably a minister – for a straight, unambiguous answer to the question: “Why did the FSC authorize and
arrange the transfer of over half a billion pounds’ worth of KSFIOM’s assets to be deposited with KSF in London– UNSECURED – at the height of friction between the UK and Icelandic governments?”
The other question we would ask you to consider is this: If you had placed your life savings in a bank on the Isle of Man and later discovered that the government’s regulatory authority had made a blunder which resulted
in the bank’s collapse, would you not consider that the government owed you an obligation to act honourably
and ensure that your savings were immediately returned to you in full?
Thank you for taking the time to read this circular.

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An extremely erudite and

  • barrona
  • 17/11/08 31/05/09
  • a depositor
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  • Wed, 18/03/2009 - 12:05

An extremely erudite and accurate letter which I am sure conveys the views of most of the depositors in KS&FIOM.
Lest's hope that the impact of this letter is fully absorbed by the incompetent IoM government and that they realise we are not bluffing.

The consequences of inaction

  • bobwin
  • 23/12/08 n/a (free)
  • a depositor
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  • Wed, 18/03/2009 - 07:31

I believe the letter to be entirely appropriate.

I believe the powers that be in the IOM think they bombproof--I think they are pompous aerosoles.

Fortunately they are not that bright and cannot see the wood for the trees.

The exception is MHK Canaan--he knows the plot--good on you m8.

Whatever the outcome on 9th April and thereafter, it is my avowed intent to bring these cretins to book and they will realise the power of the internet to destroy their economy.

The shoe has already fallen.

let us think--2,500 members with 100 contacts=250,000 people--if they send 100 e mails that is 25million and if they all send 100, it is 2.5 billion --the world population is only 6.6 billion!

So after only 3 layers, everybody knows--that has an e mail addy and therefore some money.

Are you reading this Bell, Brown, Spelling, et co?

BTW US GOV has provided almost 1000 million dollars to shore up the economy--that is 17 cents for everyone in the world!!!!--a cup of rice here.


  • lorraine
  • 14/10/08 14/07/10
  • unspecified
  • Offline
  • Wed, 18/03/2009 - 18:45

I have been suggesting that we send such an email for what feels like months but no one seems to be interested. I have a mailing list of over 2500 names for starters.

More Sums for Bobwin

  • merlina
  • 26/01/09 01/06/09
  • a depositor
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  • Wed, 18/03/2009 - 16:00

Here's a sum for you Bobwin, although it may muck your %'s up. I live in an expat community, last count 10,000. They have expat newspapers, their own clubs etc. I know if I put my mind to it I can contact all 10,000 quite easily. What percentage of these people, you think, bank IOM offshore ?

I am told IF I don't pay my electricity bill, they WILL cut me off. Is that blackmail ?

IF I don't get my savings back 100% I WILL see how many expat friends I can make. Is that blackmail ?

On another subject, I can't understand why Ramsey defends the IOMG so vehemently. We are mostly British and not one of us defends Gordon or Alistair one iota. In fact I've never heard any taxpayer applauding its government. Perhaps his full name is Allen Ramsey Bell, or Tony Ramsey Brown. It really puzzles me.


  • Ramsey resident
  • 22/10/08 31/05/09
  • unspecified
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  • Wed, 18/03/2009 - 16:19

I, Ramsey Resident have stated here recently that I am not an IOM mole, I do not work for the IOM Gov or any financial institution but am a working person in the private sector who is also a depositor who lost money in this debacle

I also however depend on the IOM economy for my livelyhood and get really p.....sed off by some of the anti IOM blinkered views posted on this site by the same small minority of people who blame the collapse of the entire Icelandic banking system on the IOM and expect us to bale everyone out when the depositors, me included, were well aware of the 75% of £20K compensation limit up to the day before the collapse. You invest more than the limit and you take a risk. Risk equals possible pain

I am not Manx born but like the Manx people will staunchly defend the Island when it is under attack!!

@Ramsey resident: You have made some relevant points....

  • follow_the_tao
  • 11/10/08 31/05/09
  • a depositor
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  • Wed, 18/03/2009 - 18:21

This time what you are saying makes sense.
I think you posted yesterday about the 530m really having been moved from Iceland to the UK. Good point also.
Iceland collapse OK.
Good point about the 75% 0f 20K. I agree.

But there are still a lot of questions unanswered. A lot, and we are basically trying to prevent the collection of negligent parties passing the buck endlessly between themselves whilst we lose out to a considerably greater degree than others who have been affected by the crisis. We were depositors, and there is a genral consensus in the current situation that we shouldn't bear the cost of this crisis. And it is widespread.

There is still a disparity between the situation of depositors in the British dependencies v UK and European mainland. Have you seen the size of the tab the UK, European, and USA taxpayers are picking up? Proportionally the Isle of man hasn't been touched.

And there is a considerable financial industry here which apparently the government doesn't want to tap. I don't know how culpable you feel the finance industry generally might have been in this crisis, but I feel it was complicit. And who's paying, apparently the IoM taxpayer. Now why is this?

Some of the things that really gall me are the statements of Apsden, the apparent arrogance of Bell, and I believe he appears arrogant to many Manxes as well, the lack of appropriate attack on the UK by IoMG if they really believe that the UK mislead them, the lack of consultation, the lack of appropriate release of bank funds whilst the IoMG have fiddled for months, and are still fiddling, with an SoA that appears reasonably to be manipulative over a straightforward liquidation, the IoMG's lack of boldness in not simply capitalising the 'solvent to the last minute bank'.

I could go on. I am in favour of reasonable debate, reasonable actions, responsibilities assumed, transparency etc. I think if you read the papers and see how we got in to this mess you might agree that these were not the style of the majority of the lead actors in this debacle. What we need to do is hold all of them to account. Now unfortunately some of them are IoM players. This doesn't mean that I'm attacking the Isle of Man, this means that I have some very sound criticisms of the FSC, the Treasury, the governments provision of infrastructure for the financial firms that choose to work from the IoM for what I assume are sound business principles, i.e. profitability (of what degree?).

Can you see where I'm going?

Isle of Man - Banking Sector

  • jr
  • 10/10/08 31/05/09
  • a depositor
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  • Wed, 18/03/2009 - 17:28

During the recent financial crisis, all other jurisdictions have guaranteed depositors 100%, ensuring that depositors do not lose any money. If the IOM cannot do this, should they be allowed to exist as a financial centre?

In my opinion if they can't do more to protect depositors more than on current evidence, the answer is no.

@jr - All depositors guaranteed?

  • Ally
  • 13/10/08 31/05/09
  • unspecified
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  • Wed, 18/03/2009 - 18:12


This is not to defend the IoM on this one at all and on RR points about the FSC I am total disagreement in that the FSC should have done more when moving assets from Iceland. However are we sure all depositors in other jurisdictions have received 100%. I have not seen anything to say German depositors received 100% (if they have I apologise and someone will be kind enough to post the link).

I only say this as when DAG are issuing press releases and depositors talk to MP's etc it is vital to get facts correct otherwise the arguments can just been thrown out.

@Ally: Look at "News" in the bar overhead...

  • follow_the_tao
  • 11/10/08 31/05/09
  • a depositor
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  • Wed, 18/03/2009 - 18:40

I posted some news items, and I believe we all ought to get accustomed to using the "News" facility to post external references, one of which was a Iceland source that seems to be on the ball, I've spoken to the person that has organised the site. They are trying to stay abreast of the Kaupthing situation.
To return to the substance of your post, I feel the majority of other deposit holders are moving closer to an equitable settlement than we are.
Please look and if you choose give you reading.

@Ramsey resident

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
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  • Wed, 18/03/2009 - 17:23

Looks like you'd better dig in Ramsey; man the trenches, the DAG is on the attack and there'll be no let up. You can spin and turn topsy turvy if you like, but I'm not giving up 40% of my hard earned savings banked in the IoM for the past 16 years and I don't get the impression that anyone else on this site intends to either.

By the sound of your situation, you anticipate a future based on continued earnings from a position on the island rather than depending on your life-long savings. The majority of depositors are already living their future and this is what it feels like: let down; impoverished; insecure; no escape; pointless deprivation for what they now don't have; guilty; fearful; lonely; foolish and dreadfully wronged.

Your support of the FSC, IoMG etc, is based on your survival strategy, nothing to do with what's right or wrong. You mistake lack of intent with lack of guilt; just because the FSC and others may not have intended the outcome, of failed to take account of the probability of an occurence, they are still responsible for their actions. When you take a position of high office earning nearly £1/4M per year, you take on great responsibilities and may expect to suffer the consequences when things go wrong. What honourable people do is own up and stand down, they don't try to fob off the result of their error on to ordinary decent savers who cannot rise from the ashes to fight another day. But you can, so do the decent thing, stop sitting on the fence and either get with the depositors or leave quietly - please.

A completely, well presented,

  • SgKZ
  • 10/10/08 31/05/09
  • a depositor
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  • Wed, 18/03/2009 - 04:41

A completely, well presented, balanced and articulate letter.

No blackmail whatsoever. He points out possible consequences of us not receiving our funds back.

Does a Bank commit blackmail by saying that it will re-possess your house if you don't pay it back its money.....?

@another letter

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
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  • Wed, 18/03/2009 - 07:02

Hear, hear, it's fair and uncompromising.

Upstreaming funds

  • Ramsey resident
  • 22/10/08 31/05/09
  • unspecified
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  • Wed, 18/03/2009 - 09:25

There is one huge flaw in the above e mail, the IOM FSC advised KSFIOM to upstream its £550 million to the UK INSTEAD of Iceland that had previously been the norm. The funds were not moved from the IOM to UK but from Iceland to London

Had the funds continued to go to Iceland then they would have gone for ever with 0% recovery, but in London there is a good chance that a good % will be recovered

Some depositors question why KSF IOM had to place its deposits anywhere else but most of the IOM banks are simply deposit gatherers for their parent company or group and without upstreaming there would be no reason for their existence

The above e mail is another example of blinkered IOM bashing!!


  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
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  • Wed, 18/03/2009 - 11:27

Why would Mr Tony Brown MHK, make a statement indicating that an element of confusion still exists over the powers used to place KSFUK into Administration back in October 2008? The process was well documented at the time: the UK Financial Services Authority (FSA) determined that the bank could not meet its liabilities and immediately placed it under Administration. A power within the Anti Terrorism, Crime and Security Act was used against the Landsbanki IceSave internet bank because it was regulated by the FME – Iceland’s regulator, denying the FSA the normal authority to place that bank under Administration – even if it was unable to meet its liabilities. I therefore ask if this statement by the Chief Minister’s is intended to diminish the responsibility of the IoM’s Financial Supervision Commission (FSC) in this wretched affair.

KSF’s Administration now looks very much like a pre-planned conclusion waiting for its moment; nevertheless, had the massive asset belonging to KSFIoM not been so carelessly placed in this single bank – an Icelandic bank operating in a neighboring jurisdiction outside of the FSC’s control – then 11,358 customers would not be in the dire situation of having had their life savings lost to them by others. The responsibility for this situation, affecting thousands of individuals; their partners; children; family and friends, besides the impact upon the island’s reputation and future, rests with the executive management of the FSC and the KSFIoM bank. These people, headed by the gullible Mr Aspden, placed a commercial bet on profit before prudence, using other people’s money to do so, but the odds were already stacked against them, odds notified to them in advance by none other than the UK FSA.

The UK government can be blamed for instigating the circumstances that brought about this tragedy, but the buck stops with the FSC and bank’s directors. They gave no thought to securing the asset; no thought to diversifying the placement of the asset; no thought to the ownership by thousands of the asset. Knowledge within the industry at the time was not complimentary towards Icelandic banks, quite the opposite, but due diligence was not exercised - not even attempted - the FSC oversaw an operation moving 11,000 peoples future security, the total sum of thousands of hours of labour, in one lump sum to another Icelandic bank with reckless abandonment. No amount of bluster and spin from the Tynwald or elsewhere can cover this huge stain creeping into the social fabric of the island.



  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
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  • Wed, 18/03/2009 - 11:43

Sir, The fact is, that it is the depositor's money; we know where it is too - and we know how it got there. It has not gone missing, the bank was not broke, and it didn't go back to Iceland and fund the domestic collective there. Some may say that it's as well that the FSC and directors of the bank moved the assets to the sister bank in the UK instead of leaving it in Iceland. Now that we know as much as the FSC did at the time, I think we are quite at liberty to say that what the FSC and directors did was less than 1/2 a job. Just knowing that Icelandic banks were under close scrutiny from the FSA and other regulators should have put all the warning lights on, and to trying to foist the responsibility of the decision in moving the assets to London onto the FSA instead of making up their own minds and taking responsible action - appropriate to all the circumstances - speaks volumes of people doing a job for which they were neither competent or qualified to do.

The Isle of Man has operated its Financial Offshore Centre along lines not too dissimilar to Iceland, especially in having no independent bank of last resort. The Icelandic people are bearing the brunt of the greed and incompetence of their banks and their officials for getting them into this awful mess, but they also realise that their Government failed to enact rules preventing fiscal deprivation being wrought upon thousand of other hapless European depositors and that they must foot the bill and suffer the consequences - on top of their own much reduced quality of life. If you belong to a free country and the elected leaders of the majority screw up, then you all pay. The UK taxpayers will be funding this financial banking disaster for many years, if not decades.

The IoM Government were happy to advertise a Depositors Compensation Scheme (DCS) which went without pre-funding even though there is no bank of last resort to step in and ADEQUATELY satisfy a single bank failure, let alone more than one in succession. The IoMG have escaped the consequences of this risky operation for years; years in which the average size of accounts has vastly increased without any corresponding increase in the size of compensation. These people have been living in cloud cuckoo land; only when the bank failed did they take extraordinary measures to implement an increase in the 'virtual' DCS. They have been happy to take the profits of a multi-billion pound financial business, but run from one disaster to another in a purely reactive manner because they do not have the vision to see what's coming, a proper sense of responsibility, and the means to take effective action prior to the event. You have only to look back at the number of sheer cock-ups made by them to realise that the people running this Government and other official entities are inadequate in any fair appraisal of their efforts. Someone must pay for their mistakes, and its not going to be the thousands of folk who have prudently saved for their respective retirements in the mistaken belief that the Isle of Man was a safe place to do so. No, the Government of the island has let down its own people and the thousands who brought wealth to the place for decades past. It is a simple fact of life, it is not for the people who made these diligent savings to lose their money, or even part of their money, it is for the people who lost it to pay, and that ultimately falls to the people who voted these incompetents into office - and have kept them in office despite the magnitude of past errors that already found them seriously wanting in truth and integrity. I am as sorry for the Manx people (22% of KSFIoM savers are from IoM) as I am for the Icelandic people; they apparently did nothing wrong - but sitting on the sidelines and watching an incompetent Government continue its practice is an apathetic abdication of responsibility from which too many of us suffer, and no one is going to escape paying for the multitude of mistakes that have brought us here.

Spreading the Risk

  • Tricky Dicky
  • 24/10/08 30/05/09
  • a depositor
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  • Wed, 18/03/2009 - 10:35

Hi Ramsey Resident,
I have no intention of raising any heat here, but whether the bank was IOM, Jersey or UK etc etc, I understand it is also common practice to spread the risk, by upstreaming to more than one bank. 50-60% was upstreamed from KSFIOM ending up in KSF UK by some route - not really relevant - other banks would offload %ages to 3rd party banks, so that they don't have 'all their eggs in one basket'.
I understand that there are deposits from KSFIOM placed in other banks (not KSF UK) in order to 'protect' it, to 'spread the load'. I suppose the question is why didn't the officials of the bank and financial services not recommend this, irrespective of what country they are in.
Maybe my understanding is incorrect - always willing to learn

Spreading the risk & Upstreaming

  • Ally
  • 13/10/08 31/05/09
  • unspecified
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  • Wed, 18/03/2009 - 14:20

Tricky Dicky

I am not here to defend IoMG on this. As my personal opinion is that if they thought KSF Hf in Iceland was not secure why would you move the money to its direct subsidiary in London! Just doesn't make sense.

However upstreaming to the parent is common practice, as Ramsey resident says a lot of the banks in IoM and Channel Islands are little more than deposit gathering entities that upstream almost everything to the parent in the UK (or wherever it may be)

KSFIoM had 50% of its assets upstreamed to KSF in London. This is a pretty low figure. Take a look at Nationwide International

Out of total assets of £2,772,624,000 the amount classified as Funds placed with parent company is £2,750,173,000 or 99.19%.

These are the March 2008 figures so the 2009 might look different but if gives you an idea of the scale of upstreaming of these operations

However you do not upstream to a bank outside of the group otherwise you are basically collecting money for someone else!!.

In KSFIOM I would say the money should not have been upstreamed as there was a clear fear amongst regulators that all was not well in Iceland so they should have made it clear that they could not upstream more than say 25% and had to place the rest in 3rd party banks.

Spread the risk

  • Tricky Dicky
  • 24/10/08 30/05/09
  • a depositor
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  • Wed, 18/03/2009 - 14:36

Hi Ally,
Thanks for the info. Is there not a limit in the FSC Regs regarding the amount that can be upstreamed, I thought there was a figure of 25%. I suppose that is why the FSC is now revising its regulations to ensure IOM banks retain more of their assets - a case of closing the stable door after the horse has bolted - also seems in line with the facts that the DCS was not updated (since 1991) last March/April, but only when KSFIOM went belly up. My general feeling is that everyone in the Financial Industry knew of problems with the Icelandic Banks last year but did nothing to stabilise their own banking system - (UK included).
So to me the mistakes do not lie with the depositors, but with the regulators, and the decision makers within the banks - IOM, UK etc - but the depositors are being asked, or told to 'take the hit', which is wrong to me, which is basically what you are saying in your last paragraph

Spread the risk

  • Ally
  • 13/10/08 31/05/09
  • unspecified
  • Offline
  • Wed, 18/03/2009 - 14:48


Yes I agree the regulator knew there were problems with Icelandic banks so quite rightly asked for the money to be moved from Iceland. But then went and placed it in the next worst place, a 100% owned subsidiary of an Icelandic bank. Out of the frying pan and into the fire spring to mind!!!

I think it would have been difficult for them to tell the IoM bank to move all of those funds outside the group but then it should have limited the amount to a manageable amount, 50% is obviously not manageable, whereas 20% or 25% could well have been manageable.

As for placing funds within in the Group I am not sure on the limits. I thought most of the money could stay in the Group. I don’t where I get it from but I thought 10% had to be placed outside the Group. However the Nationwide figures shows 99% to be placed within the group so I must be wrong. I really am not sure of the limits but for sure the vast bulk of the funds could/can be placed within group companies without breaking any regulations.

However as I said at the beginning common sense should have told someone that if you are moving the funds from Iceland because Iceland is on the point of meltdown why put those funds in something that is directly owned by Iceland!!

Spread the risk

  • Tricky Dicky
  • 24/10/08 30/05/09
  • a depositor
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  • Wed, 18/03/2009 - 15:27

This has been one of the problems, moving the money from KSFIOM in whatever way to KSFUK, in an attempt to stop it going to Iceland, just does not work, because KSFIOM and KSF UK being sister banks, are both beholden to K hf the mother bank, who could call back the cash from either one, so in no way would the moving of the money to KSF UK 'protect it from being upstreamed to Iceland.
To protect KSFIOM depositors the banks officials and the FSC should have offloaded assets to 3rd parties, or at least the bulk of it.
So the only conclusions you can draw are:
1. The bank officials and FSC are inept
2. There was collusion with the UK, becuse they knew they would be freezing the assets in UK, to stop Iceland (K hf) getting their hands on it

Tricky Dicky

  • Ramsey resident
  • 22/10/08 31/05/09
  • unspecified
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  • Wed, 18/03/2009 - 16:00

You cannot seriously expect any banking organisation to permit a part of its own group to move the bulk of its deposits out of its own group into the coffers of one of their competitors. It simply would not be allowed to happen in the real commercial world and therefore the bank officials and FSC took what appeared to be the safest course of action open to them at the time. That does not make them inept

The unprecedented financial firestorm very quickly destroyed everything soon afterwards and now hindsight paints a totally different picture. No one on this earth would have predicted the UK actions re KSFUK therefore no one could have planned for such eventuality

The Irish banks/economy are currently under more pressure than most, but their IOM subsidiaries are not diverting funds elsewhere as they exist simply to suck in money for the parent groups. I have sought clarification from the FSC on this point

As to collusion, the UK Labour Gov so hates offshore tax jurisdictions that any idea of them entering into any collusion with us is preposterous - it would not happen

@Ramsey Resident

  • Ally
  • 13/10/08 31/05/09
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  • Wed, 18/03/2009 - 16:41


I agree on some of your points.

I don’t think in April 08 when funds begun to move to London it was known to anyone that on 8th October 2008 the UK govt would put KSF UK into administration.

I also agree that you can’t ask one bank to upstream funds to another bank, you’d basically be asking for one bank to collect funds so another could use them.

There I must disagree though. I also live on the IoM and I do think some of the anti IoMG stuff posted is ridiculous and some of it just plain untrue, but in the case of moving funds from IoM to London while I do not agree with all that has been written on the subject, something is just not right

The movement of funds to London occurred only because the FSC had concerns about Iceland, so I would suggest this fact alone would mean that options apart from the normal ones should have been considered. It could have limited the funds to be upstreamed to a figure below 50% lets say 25%. The rest of the money, well seeing as KSF UK used some of this to buy Certificate of Deposits then surely KSFIoM could have bought Certificates of Deposits itself. Or it could have moved the money with added security. Again I know this is not normal practice and inter-company balances are not normally secured, however the FSC simply by the act of its intervention knew these were not normal times as far as Kaupthing was concerned, so were not abnormal course of actions called for?

I have to disagree, that it should have upstreamed all the funds it did. It knew something was wrong. The simple fact is everyone seemed to know something was wrong in Iceland by March/April 2008 (by that I mean the FSC, the FSA, the UK govt etc). Knowing something is wrong you do not follow normal business practice i.e. upstreaming.

I agree that no one knew how bad the financial storm was going to be but people knew something was wrong but still allowed those funds to remain unsecured in the Kaupthing group outside of the Isle of Man. That to me, means someone really didn’t think about it.

It’s like knowing a row of terraces houses is going to collapse. You don’t go to the people in the first house and say you’ll have to move into the second house because the whole row is going to collapse!!!


  • Ramsey resident
  • 22/10/08 31/05/09
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  • Wed, 18/03/2009 - 16:50

Thanks Ally for your reply. You obviously have a much superior knowledge of financial and banking practices than I do

I admit my views are probably a bit simplistic at times but hindsight is a wonderful science as they say

@'this debate': What matters is the result.

  • follow_the_tao
  • 11/10/08 31/05/09
  • a depositor
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  • Wed, 18/03/2009 - 19:11

The question as I see it was whether the 'responsables'/authorities had enough gumption to recognise that with credit default spreads running at 1400+ that they were in exceptional territory and that exceptional territory required exceptional responses.

Are these guys competent ot not?


  • steveservaes
  • 13/10/08 31/05/09
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  • Wed, 18/03/2009 - 10:11

I agree with the main gist of your message, fellow Manx resident.
However I also consider I was Ponzied by the FSC and KSFIOM.
When they decided the parent of the group was so dodgy (a year ago) that no cash could go there, they shouldn't have allowed the Bank to continue to operate.
That may have had some difficult consequences for the people in the Bank at the time.
However, that was the time they should have sorted the issue out - and any liability of the FSC to depositors then would have to be determined by facts and events up to then.
But thereafter - they certainly should not have allowed KSFIOM to carry on sucking in money (including mine) by trumpeting the PG.
It seems to me they were at that stage hoping that sucking in our extra deposits would Ponzie the problem away.
That was where the FSC clearly fell down in my opinion.

Well said Steve

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
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  • Wed, 18/03/2009 - 10:33

This was a bank - a place where you put your money for safe keeping .
That bank was not in Iceland but in the IOM
The IOM needs its reputation it gets upset if it thinks that that will be taken from it.
We need our savings - we are upset because they have already be taken from us.

Its as simple as that.