Arithmetic does not add up

  • Anonymous
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Posted: Tue, 14/10/2008 - 19:50

Is my arithmetic correct?
If KSFIoM deposits total about 840m GBP (mentioned in one of the postings) and the IoM depositors compensation scheme is activated (annual income of 500,000 GBP per bank x approx 26 participating banks = 13m per yr), it will take about 62 yrs to repay everyone!

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Is it not 84 Million GBP ?

  • osprey
  • 15/10/08 31/05/09
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  • Wed, 15/10/2008 - 11:18

According to this guy who attended the meeting in IoM with depositors. Look at his report from the meeting. Is there any orignial source anyone can link for the £840 M ?


Time to compensate

  • klauseriksen
  • 10/10/08 31/05/09
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  • Wed, 15/10/2008 - 06:28

Yes that is what I have been saying for a while now. The compensation scheme seems to be merely a smoke screen to fool other Isle of Man depositors into thinking they have some sort of protection since it is wholly inadequately financed. Mind you with the limit of £50,000 per person and no individual compensation to depositors through companies the amounts involved will be smaller than £840M.
On the upside then our great great grandchildren will be reminded of us from time to time when a few pounds from the scheme drip into there accounts


Time for IOM Fiscus to Act

  • LifeSavingsGone
  • 15/10/08 31/05/09
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  • Wed, 15/10/2008 - 05:08

Open Letter To The Head FSC and the Tynwald [Posted to FSC and IOM Government on the IOM FSC web site]

I refer to the Financial Times weekend edition of Saturday 11 October 2008. George Bush, Gordon Brown, the German Government, the G7 and the rest of Europe are all pledging financial support for the state rescue of banks and recapitalisation of the financial system. Norway is swapping $55bn government bonds for distressed debt.

While the IOM FSC and Tynwald have increased the Depositors Compensation Scheme (DCS) to GBP50 000, this does nothing* for international depositors into KSF , on whose coattails, the prosperity of IOM economy has flourished.

[*It is my understanding that trusts and companies are not covered by DCF.]

While FSC and Tynwald have been quick (perhaps too quick) to act in placing KSF into suspension, the IOM government's silence regarding financial support for KSF is deafening. You have allowed Kaupthing Singer and Friedlander IOM Ltd to fall into the wrong hands, without proper support, capitalisation. The KSF default happened under your supervision and you must take some responsibility.

Both Icelandic and UK Kaupthing depositors appear to be in an advantageous position compared to the KSF IOM depositors - thanks to prompt and meaningful fiscal support and intervention by the regulators in those countries.

KSF is going to leave an indelible black mark against the name of IOM, and permanently damage your ability to attract investments. You appear to be forsaking the investors that helped build your economy.

The time has come for IOM to show the naysayers that you are not a pass-through conduit, empty-vessel haven, show your colours and step up to the plate with meaningful financial support - follow Iceland's example – for example - take control of KSF*, issue long-dated depositors loss compensation bonds (“LCB’s”) to be serviced out of a Tynwald lein on abandoned, unclaimed investments. Do a Norwegian style LCB for KSF swap. Do something meaningful and meaty.

*Less than 3 weeks ago, on 22 September 2008 Qatar bought 5% share in Kaupthing (Iceland) for GBP155m, placing a value on Kaupthing of GBP3.1billion. The stake in KSF IOM must be worth a fortune in IOM’s hands when this financial crisis abates.

The Depositors Compensation Fund is a smokescreen. Time has come for IOM to stop deferring responsibility to the UK courts and pointing fingers at Iceland and place some proper ficscal financial support behind the IOM distressed debt issue.


IOM government should pay up

  • Equus
  • 14/10/08 08/06/09
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  • Wed, 15/10/2008 - 10:58

We are a retired couple who just left the UK to live in France off the interest from our fixed term deposits. Unfortunately we have not only lost all our life's savings, but since we are renting pending a house purchase, we have lost all the money we had in a notice account set aside to buy a house. Ironically we had already given notice on this account in August and were due to receive it in November. How cruel this all is. We are now homeless, jobless and virtually penniless. We shall have to leave France and become a burden on relatives while we try to find work. And at our age that's a tall order.
The IOM government should borrow the money from the International Monetary Fund to guarantee at least retail deposits.
I can't believe they would jeopardise the reputation of the island as a financial haven by letting Kaupthing IOM go to the wall.
Anyway let's hope Mr Simpson of Pricewaterhouse Coopers finds enough assets to interest another bank to buy them and honour all contracts. I spoke to him the day after his appointment and he assured me that this is his main priority. Here's hoping.


petition

  • malc
  • 11/10/08 31/05/09
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  • Wed, 15/10/2008 - 05:12

lifesavings gone,

Excellent points, please see my posts re a coordinated petition signed by all of us. Your assistance in putting points forward for the petition would be very useful

malc


Not exactly...

  • cold-dose
  • 11/10/08 31/05/09
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  • Tue, 14/10/2008 - 19:59
  1. £500,000 per bank is the MAXIMUM. Most of the banks would not pay that much. £50,000 is the minimum per year.

  2. Not all £840m would be covered - only the first £50,000 per individual (so up to £100,000 in a joint account).

  3. There will be liquidation proceeds to add to the funds available.

The payout period will still be lengthy, and will get worse if the banking business in the island shrinks, or another bank fails.


You are right - potentially a

  • Stakeknife
  • 13/10/08 31/05/09
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  • Tue, 14/10/2008 - 20:11

You are right - potentially a very long period before complete payout, although sums will not be anywhere near £840m. I stand corrected.


Arithmetic

  • IanAbroad
  • 11/10/08 13/08/09
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  • Tue, 14/10/2008 - 19:58

you are wrong. The compensation is for a max of £50k each, not everything we've lost.


Arithmetic

  • Anonymous
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  • Tue, 14/10/2008 - 20:29

So we may get lucky and get most of our money back over maybe 20 years - I'll probably be dead by then anyway. Problem is the compensation fund is a drop in the ocean compared to all the deposits - and what if another IoM bank goes to the wall? The provisional liquidator needs to find a buyer or put a rescue package in place - very quickly. I cannot believe my misfortune in entrusting my savings to the only bank in the whole wide world to go insolvent as a result of the current international financial crisis - every other bank in difficulty is being bailed out!


Compensation Scheme

  • Roger Price
  • 14/10/08 31/05/09
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  • Tue, 14/10/2008 - 22:29

Clearly the Isle of Man is not serious about continuing as a financial centre. There can hardly be anyone banking there in the still (supposedly) sound banks who does not appreciate by now that if their bank goes belly up they will get nothing. If I had money in another IOM bank I would have moved it already.

So I think it very likely another one will go bust. I think the Isle of Man as a financial centre will be finished if we (all depositors) are not given sufficient compensation very quickly. In my view thay have days, weeks at the most, certainly not years. If the other institutions don't realise this then they must be stupid.

But a lot I have read recently about bankers in general is making think that terminal stupidity is a required qualification for earning their multi million pound salaries and bonuses. It beggars belief some of the crooked and stupid things that ere being revealed about American bankers. Ours, I'm sure, are just as bad. Soon as I'm well I'm getting to Britain to get my few thousand remaining pounds out of a bank there and bury it in the garden. Banks are not to be trusted.

My understanding is that KSFIOM was not bankrupt, far from it, but that the funds were transferred, via KSF London to Iceland to help those thieving bastards out of the hole they had dug for themselves. Kaupthing is still open for business there, using our money to pay Icelanders back their deposits. Isn't that racism?

I was there Tuesday 7th giving instructions to wire my money away. I dragged myself there, very sick, from Ireland. My instructions were not carried out. I was told by two different bank employees that KFSIOM was in sound financial shape.

That aside. I think the IOM authorities should be investigating who authorised the transfer of that money. It clearly breaks many laws, not least their own on bank secrecy. Criminal acts have been committed here. They should use the European arrest warrent if necessary to get the bankers from Head office London to the IOM for questioning and trial, and try and get even those from Iceland. At least they'd never be able to leave their poxy bankrupt little country. I hope it gets swallowed up in a volcanic disaster.


"My understanding is that

  • occams razor
  • 10/10/08 31/05/09
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  • Tue, 14/10/2008 - 22:35

"My understanding is that KSFIOM was not bankrupt, far from it, but that the funds were transferred, via KSF London to Iceland"

Where did you get this understanding? I'm not sure I have read anywhere that this is the case. From what I understand KSFIOM was solvent at the time it stopped trading. At least 60% of its assets were held as loans with KSFUK from what we know, and that is now in administration.
But I haven't seen any evidence that KSFIOM funds were transferred to Iceland.


Banks

  • cold-dose
  • 11/10/08 31/05/09
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  • Wed, 15/10/2008 - 00:17

Banks lend out most of the money they take in - they need to earn interest to pay the depositors interest on their savings.

There is relatively little in the Isle of Man to loan it out to or to invest it into - the total of all the deposits is several times the Island's GDP.

Therefore the money is loaned and invested in a larger economy, in this case the UK.

KSF in the UK won't have been sitting on the money as cash either. It'll mostly be out there as loans, mortgages, property, bonds, etc.

This wasn't some overnight flight from the Isle of Man with a plane stuffed with cash. The assets are quite possibly all still out there, and in time will be unwound and returned to the Isle of Man. But something like a mortgage can't be turned back into cash all that speedily, it'll take a bit of time to sort it all out.


Yes, fair point. And when

  • occams razor
  • 10/10/08 31/05/09
  • a depositor
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  • Wed, 15/10/2008 - 00:27

Yes, fair point.
And when they do that, will "normal" depositors get priority in terms of either value or speed, over institutional investors who had money in KSFIOM?


Priority

  • cold-dose
  • 11/10/08 31/05/09
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  • Wed, 15/10/2008 - 00:38

Unfortunately not under current rules - all would have equal status as unsecured creditors. Pari passu and all that.

On the other hand it does mean that the councils in the UK don't get to jump ahead of KSF(IOM) in getting the money out of KSF UK either.

There would also probably be staged payments rather than getting all the money at once.


Technically correct. In

  • Stakeknife
  • 13/10/08 31/05/09
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  • Tue, 14/10/2008 - 19:56

Technically correct. In reality wrong. The bank has both liquid and illiquid assets that will reduce its overall exposure once the provisional liquidator gains control.


correct

  • adrienne
  • 10/10/08 13/05/10
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  • Tue, 14/10/2008 - 19:56

correct. hence the concern of this group. hoping for the 50K is a bit of a pipe dream, frankly the last in the queue of positive solutions for me.