Discussion of Conference Call with Mike Simpson 22nd Dec 2008

  • frog
  • 10/10/08 13/09/09
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Posted: Mon, 22/12/2008 - 19:05

Dear all.

Here is the summary from my and Nick's notes. The call will be on the Bank site soon, but this may do in the meantime. Thanks for all the questions - let us know if you have any more or want a followup.

Questions for Mike Simpson. PWC 22nd December 2008

Previous Questions still open
1. Are you ready now to publish the statement of Affairs for the book value of the bank?
A: The responsibility of publishing this rests with the directors of the bank – and they have to do this on liquidation. A balance sheet though should be along very soon though there are still some issues relating to KSFUK still to do with the subordinated loans, account transfers and other items.
2. Any news on when the site will be open for statements?
A: It is just undergong testing so hopefully should be available soon.
3. Can you put the DAG website on the Bank page?
A:The issue is with being associated with the DAG website as it is not controlled by the LP. He will look into putting it on the site with certain disclaimers. One to follow up.
4. Are all bank transactions after October 6th being rolled back (including intra-bank)?
A:Only the inter-bank transfers are being rolled back. Any account transfers that were between accounts and went through will stay.
Bank Restructure or Sale
1. What is the status of the companies interested in the bank as a whole or the loan book only?
A: Mike Simpson would not like the number of parties to be published as this could give some of the parties an advantage. Gaps must be bridged and there is a certain level of uncertainty. It could be a scheme of arrangement, which could involve IOM government involvement. Not necessarily suggesting a nationalization of the bank though it is unclear as to how the government would participate in a scheme like this – maybe through the compensation scheme. Liabilities vs assets; clarifying the assets is an issue with the biggest single uncertainty is the £555m from KSF UK. Talking to the UK administrator to find out the realizable amount – there are assets and Mike Simpson believes he will get something – no idea when at the moment. The overriding objective of the UK administrator is to deal with the turning over of the retail deposit book to ING. E&Y are helping, but will get that sorted first. Could be sometime before it is clarified
2. How is PwC working with Alix Partners to review alternative solutions, e.g. sale of the Bank, if at all?
A:Yes, they are working together to get the best result
3. In view of there being interest still shown from several prospective buyers, do you think it would strengthen such interest if DAG was able to ascertain that there 'would' be a consensus of solidarity from account-holders to stay with any new owner for a period of the newly-directed bank's recovery time?
A: It is a useful offer, but it is unclear how valuable it is as yet. Maybe this will come in handy later although the LP office have had a number of people who cannot roll their money into a bond. We’ll have to keep an eye on this. If we could provide some indication of how many (and I guess how much money), it would help. This is an action for us!
UK and IOM Government
1. What is the role of Mr. Cashen and Mr. Gelling, as we understand that they are still employed by the bank?
A:They are assisting Mike Simpson with the running of the bank.
2. In what way are the FSC assisting you with the process of getting the money deposited with KSFUK
A:Nothing really – they aren’t involved
3. Can you also respond to the last bit of the original question last week, i.e. what role did the control authorities play in this? And why was such a relatively huge deposit (compared with KSFIOM’s total assets) not ring-fenced/ secured?
A: The money streamed to KSFUK had been common practice for years, the decision to stream the money that otherwise would have gone to Khf was in the Spring. Transfers of assets and cash from Khf to KSFUK has happened and Mike Simpson has been successful in getting hold of the assets that were transferred.
4. Why isn't PWC taking action to gain access to sealed Court papers in London? Won't these papers justify how/why UK Treasury did what it did?
A: He has taken legal advice about this and the conclusion was htat the chances of success are unlikely. The papers could have been sealed to protect the bank’s interests (not necessarily the UK Governments) so maybe it isn’t a bad thing! Legal costs could be very high if this were persued – with the costs being significantly higher if the action failed.
5. Why did the PWC lawyers advise against a Judicial Review against UK Treasury?
A: As above
6. Assuming the payout of £1,000 is made to eligible depositors, will this have any adverse effect in the future?
a. Under what conditions will the £1000 be paid? 

A: Still being worked out – but it is the IOM Govt, not KSFIOM who is doing this.
b. What happens if we don't agree with those conditions? 

A: The process seems to not be automatic, you’ll be able to claim. If you don’t claim, then you’ll not get the cash.
c. Will there be an option not to accept if we believe this adversely affects our claim under DCS or IoM plan B? 

A: As above
d. Why is it paid per account and not per depositor? When the DCS (for example) is per depositor? 

A: not discussed – something for IOM Government
e. Why would we accept this without knowing the details or implications for the full IoM plan B? 

A: It isn’t offered yet – we’ll probably get the conditions when the scheme opens.
f. How much is it costing to administer this part payment?
The IOM Government is paying this out – so the costs will be borne by them.
7. Will depositors whose investment in KSFIOM is part of a group investment through another company (such as AXA, Skandia, AEGON etc) be treated in the same manner as individual depositors with regards to IOM Government’s proposed hardship payment?
A: Yes
8. Lord Bach said on 10 December that HMG was still in discussions with the Icelandic government to find a solution to secure depositors' money. Could Mike Simpson confirm whether or not he has knowledge of this? If so what is his understanding of the present position?
A: Mike Simpson’s understanding of his comment onl;y refers to the KSFUK depositors.
9. Lord Bach also said that depositors' money was secure. Was he simply being economical with the truth, meaning in fact that it was only secure in terms of the Financial Compensation Scheme and NOT in terms of a Treasury commitment to ensure that KSFIOM assets in Kaupthing would be restored to the Bank if there is no other solution possible?
A: As above

Bank Operations
1. Can he clarify why upstreaming took place to Kaupthing UK, which is a sister company, instead of to the parent company. Was it initiated in early 2008, when there were concerns about the Icelandic banks?
A: It was a normal state of affairs until Spring 2008 where the Khf deposits and assets were transferred to KSFUK as it felt it was safer there.
2. Was any attempt made to ring fence the KSF IoM deposit in KSF UK and if so by whom? Was ring fencing directed/advised by a third party, if so by whom? If ring fencing was attempted, why did this action fail, or why is it not seen as being valid?
A: as far as Mike Simpson is aware, it was not attempted as it would have restricted the use for the funds.
3. Are in-flight funds currently held within the £550m in KSFUK and, if not, where are they? Shouldn’t they have been returned to KSFIOM from KSFUK?
A: I missed this as I dropped off the call – hopefully it is on the audio recording
4. In the E & Y Statement of administrators proposals document 2.17B dated 14th Nov it was stated: quote "KSFIOM held funds at KSF on deposit. At present investigations and discussions are underway to determine and agree the exact nature of the transactional exposures between the two entities" The question is; has the exact nature of the transactional exposures between KSFIOM and KSFUK now been determined and agreed, and if so, what was the outcome?
A: Missed this one too – see audio transcript.
5. Banks are required to have counterparty limits with other banks and for intergroup thus a question on why KSFIOM was allowed to make such a large single deposit. The regulator has set legal limits, which are normally a percentage of the Bank's capital. If £555m sent to KSF (UK) was in excess of 10% of the Capital then this would have breached the standard Regulatory guidelines. Can Mike Simpson confirms that:
a. The counterparty assumptions as set out here, are correct?
Were KSF(UK) and KSFIOM working within those 10% counterparty limits?
A: This has to do with the amount of money sent outside of the Kaupthing group. About 20% of the funds were in 3rd party banks in the form of CDs and other instruments. In addition, there is the loan book.
6. If the IoM bank is restructured or bought, would its new title and ownership negate the effect of clause 27, as it would no longer be related to Kaupthing Iceland? If that is the case would that free up the £550m quicker than if it remained KSF in administration?
A: The clause doesn’t make much difference as it was put in place to stop the Icelandic s grabbing the UK assets. A request to transfer the KSFIOM assets is likely to be granted as these will be used to pay us.
7. In his last statement MS spoke of the chance of an offset in liabilities between KSFIOM and KSFUK can he confirm what prevents confirmation of this? Is clause 27 of the Statutory Instrument?
Mike Simpson has taken legal advice and this does provide for a good case for offsetting, nonetheless he expects it to be challenged due to the large amount of money it involves. There are some issues with UK Building Societies trying to offset KSFIOM CDs with credits into KSFUK which will neerd to be challenged in the courts. The expedited court hearing is expected in March for the first one. The amount under discussion is £10M.

Reporting
5. Can he update the cash held on account. I assume that the loan book is receiving cash all the time and indeed some loans are constantly falling due.
A: There is about £115M of cash in the bank. A lot of the loans are ‘interest only’ with the main sum being paid back on completion of the term, so the loan book isn’t shrinking significantly.
6. Can he estimate when at least a significant percentage of funds might be made available to depositors? Might this be measured in months, or perhaps years?
A: If the bank is liquidated, then the application will happen in February, with the likelihood of the cash being able to be distributed in March. The FSCS would activate upon notice of liquidation.
7. If a restructuring looks unlikely, can he estimate when the DCS might be implemented?
8. A: As above
9. Geographical Distribution of accounts?
A: 30% IOM, 30% UK and 40% others (incl. Ex-Pats)

Other
1. What can the DAG do to help PwC get our money back faster, e.g. take legal action.
A: Not clear although if it were a procedural action to get money back, then PWC would probably be doing this anyway. He warned about the extreme costs in this (specially if the actions failed as costs would be awarded).

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Thanks

  • Julienne
  • 16/10/08 31/08/09
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  • Wed, 31/12/2008 - 04:39

I just want to say thanks for your efforts in bothering to talk to Mike Simpson and posting a resume here .......... I keep reading it to make sure I haven't missed anything..

I too have been looking for notification of the next call between you and MS. but scouring the bank web site I can find nothing - I must be on the wrong site or wrong place ---------

If anyone has found the link please post here.

Happy New Year to ALL


The time hasn't been set yet

  • frog
  • 10/10/08 13/09/09
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  • Wed, 31/12/2008 - 10:55

We will have the call in the week of the 12th Jan 2009 - actually probably on the 12th itself. We delayed this one because we didn't expect any new news bduring Christmas and the New Year.

I'll let everyone know when it is when it is set and also set up a thread for questions.


Frog I am wondering if

  • Anonymous
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  • Wed, 31/12/2008 - 11:26

Frog

I am wondering if the message that some of the depositors are willing to leave part of their funds for a fixed period of time in the bank to help with the restructure/nationalisation has been delivered to Mike Simpson or IOMG

Will this information add any value in helping the decisions at this moment?

Many thanks for your great support.


This was discussed on the

  • frog
  • 10/10/08 13/09/09
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  • Wed, 31/12/2008 - 12:03

This was discussed on the last call and he broadly welcomed the idea. I have sent him a message separately to ask if he could modify the bank site to include an option to say exactly this. I haven't heard from him yet but I only sent the mail a couple of days ago (though he does have a Blackberry - he may need some time to see if it is possible).

The reason for doing this on the bank website is totally down to privacy issues.


About this part... 3. In

  • ng
  • 11/10/08 31/12/20
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  • Mon, 29/12/2008 - 12:29

About this part...

3. In view of there being interest still shown from several prospective buyers, do you think it would strengthen such interest if DAG was able to ascertain that there 'would' be a consensus of solidarity from account-holders to stay with any new owner for a period of the newly-directed bank's recovery time?
A: It is a useful offer, but it is unclear how valuable it is as yet. Maybe this will come in handy later although the LP office have had a number of people who cannot roll their money into a bond. We’ll have to keep an eye on this. If we could provide some indication of how many (and I guess how much money), it would help. This is an action for us!

Sorry if its been discussed elsewhere and I've missed it, but we could run a survey on this topic. This would need to be something like "I would be prepared to commit x,000 pounds for x months", and I guess some kind of disclaimer that this is only indicative, no kind of contractual commitment. I will set up the necessary on-site forms and handle the data processing, can we establish what the wording should be? Possibly the LP could make input on this?

As for privacy, all individual responses can and will be deleted once the totals have been established.


About this part.....................

  • SBS
  • 28/10/08 31/05/09
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  • Wed, 31/12/2008 - 08:43

This would seem highly sensible, and the right road to go down.

We would be prepared to leave circa 70% of our funds in situ for a reasonable length of time.

SBS


A poll, but not too specific just yet

  • Anonymous
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  • Mon, 29/12/2008 - 14:46

Maybe best not to be too specific with the questions at this stage. Just a poll to obtain a consensus of agreement in principle.

Then to have this discussed in more depth at an LP conference and/or with IOM Treasury. Main agenda, instead of just one of several questions. Depending on further questions to us that this may generate, post another poll to elicit our responses. If LP and/or IOM Treasury is positive to this, a second poll, set up more securely through the KSF website, may then involve our having to provide names and be more specific with financial amounts.

The poll will do what emails would do, but more concisely, which is to register our support in principle. Step by step, along with what must already be going on, we negotiate our way into a prospective new structure.


it moves things on a poll

  • hippychickrobbed
  • 03/11/08 31/05/09
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  • Mon, 29/12/2008 - 15:09

It sort of moves things on doesnt it? if liquidity is only that percentage then this bank can be up and running and this nightmare can leave our lives everybody. We like Ally has said have to compromise and bigger depositors leave funds in for longer no problem , we have to show them that we will be willing to do anything to secure capital. back to writing to more mps ....


I've just sent an email to

  • frog
  • 10/10/08 13/09/09
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  • Tue, 30/12/2008 - 11:49

I've just sent an email to Mike Simpson to see if he could host such an option on the main site. This would solve the privacy issues that hosting on this site would cause. I'll let you know his response when I get it.


Poll on bond

  • frog
  • 10/10/08 13/09/09
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  • Mon, 29/12/2008 - 12:51

Agree. It is almost an essential thing to do. If we can make an informal offer of how much money we would leave in the bank, it would help the administrators significantly in terms of finding a 'going concern' solution.

I suggest we ask how much for 1 year, then 2 years then 3 years. This would give a good spread of options.

How about this.

Without prejudice.

I agree that I am prepared to not withdraw the following sums from my account(s) as described below.

Name:
Account Number(s):
Deposit
Amount to leave in for 1year:
Amount to leave in for 2years:
Amount to leave in for 3 years:


Need to get PWC's input

  • ng
  • 11/10/08 31/12/20
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  • Mon, 29/12/2008 - 13:24

I guess we need PWC to confirm what information is needed. Can this be done via the next conference call?

I'd guess it may be important to collect information on how much money might be taken out as well as how much would be left in - this would allow them to estimate the needed liquidity.

I would be reluctant to collect account number information for privacy/security reasons. Our survey could be a first pass indication - it could be repeated via a more secure mechanism, logically the bank's web site, that should not be complex for them to set up, but probably not worth doing until our indicative results are obtained.


This is our lifeline

  • hippychickrobbed
  • 03/11/08 31/05/09
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  • Mon, 29/12/2008 - 12:58

shall we propose this to the core members? we really have to be assertive about all of this, we want to see our funds again dont we? come on troops .


Conference Call

  • ferrandiere
  • 19/10/08 31/05/09
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  • Mon, 29/12/2008 - 11:36

A big thank you to you for all your hard work on our behalf. As someone who sometimes doesn't understand all the financial terms, its great to have people like you on our side!

A VERY HAPPY NEW YEAR TO ALL AND LETS HOPE FOR BETTER NEWS IN 2009!


Conference call link

  • Xochitl
  • 27/10/08 31/05/09
  • not a depositor
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  • Mon, 29/12/2008 - 10:52

I cannot find the link to the conference call. Please would someone post it here.

Thank you.


Conference Call Link

  • steelwood
  • 24/10/08 31/05/09
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  • Mon, 29/12/2008 - 16:00

Go to Bank Site
Click on Mike Sympson affidavit. at the top of page
At the bottom of next page you will find Call 22 Dec. Click it you have the link.


When is the next Conference Call

  • rapata
  • 13/10/08 03/08/09
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  • Tue, 30/12/2008 - 21:02

I have searched the site but can't find any mention of the next conference call. Is one scheduled and is there a new list of questions to be raised?


Conference call link

  • Xochitl
  • 27/10/08 31/05/09
  • not a depositor
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  • Tue, 30/12/2008 - 15:17

Thanks very much steelwood. Have located it now.

Happy New Year


There is reason to be optimistic

  • Lucky Jim
  • 13/10/08 31/05/09
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  • Wed, 24/12/2008 - 13:32

Thank you Frog & Nick for what you have achieved in this intiative....just a pity that Mike Simpson didn't share this in advance via the KSFIOM website as he had promised! Never mind... there seems to be cause for optimism that the outcome will be more than it would have been if the bank had gone into liquidation on 27 November.

Bearing in mind that the bank was solvent (though lacking the liquidity needed to operate), when it's licence was withdrawn by the IOM Government, the question has to be where are all the bank's assets now? They are not 'lost' as their whereabouts have been ascertained, so what stops them being returned forthwith?

If your Christmas is not the going to be the happy one that you would have liked, may I wish you all the prospect of a more Prosperous New Year when your money is returned to you.


Lucky, The assets in the form

  • thesunnysouth
  • 10/10/08 31/05/09
  • unspecified
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  • Wed, 24/12/2008 - 14:01

Lucky,
The assets in the form of a loan book are just that, loans to people and businesses. the only way to get them back is to say to someone happy christmas sell your house we want our money back. They have to get another loan or sell the house, probably meaning they do not repay the whole debt and we get a reduced payback and they lose their house.


Q & A with Mike Simpson

  • britsick
  • 19/10/08 31/05/09
  • unspecified
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  • Wed, 24/12/2008 - 12:18

Many, many thanks to frog and Nick for setting the call up and taking part. Another valuable contribution in trying to understand what's going on.
It may not be all doom and gloom in 2009 - let's fervently hope that we get 100% of our money back sometime during next year; obviously the sooner, the better.
Also, thanks to all who are working so hard on everyone's behalf to achieve a happy resolution.
Season's Greetings, fellow sufferers!


Conference call with Mike Simpson 22nd Dec

  • AJM UAE
  • 11/10/08 31/05/09
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  • Wed, 24/12/2008 - 12:09

Frog - thank you very much for setting up this call. It must have involved a huge amount of time and effort on your behalf. The answers you obtained go a long way towards clarfiying exactly how things stand at the moment.

Merry Christmas, everyone! (this is, after all, what the impoverished Tiny Tim said ...)


Excellent Summary of the Call

  • steelwood
  • 24/10/08 31/05/09
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  • Wed, 24/12/2008 - 09:48

Hi FROG
Thank you very much for the excellent and updating of the information which gives the real picture of the current and updated affairs

MERRY CHRISTMAS AND A HAPPY NEW YEAR

steelwood


Frog, Many thanks for a great

  • Stunned Mullet
  • 17/10/08 n/a (free)
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  • Tue, 23/12/2008 - 23:48

Frog,

Many thanks for a great job in summarising the call. A big thank you also to the IOM and UK teams who continue to act on our collective behalf. Managing this time to the end of January was always going to be very challenging and you work and postings are of enormous help.

Happy Christmas to all, and for my part, I can't wait to drink this year out and move forward in a positive way in 2009.


thank you

  • hkbased
  • 26/10/08 31/05/09
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  • Wed, 24/12/2008 - 11:20

have been rading the site, thinking, reading again etc for the last few weeks. Completely agree with previous supportive comments and a big thank you to the teams at the front who are doing such a great job. Supporting the IOM G is the way forward here and let us all wish for a better Q1 in 09 than Q4 in 08... Happy Christmas to all.


appreciation frog

  • Anonymous
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  • Wed, 24/12/2008 - 05:05

Arigato from Japan, frog.


Well Done Frog and Nick

  • Chairman2
  • 12/10/08 31/05/09
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  • Tue, 23/12/2008 - 23:08

I have just read through your very well written report and would like to thank you for all your efforts and time in putting this together. I guess people are busy preparing for Christmas but nevertheless they should still spare the time to say thank you.

Well done to you both.


Well done, Frog and Nick

  • wood
  • 12/10/08 30/05/13
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  • Wed, 24/12/2008 - 18:23

I'd like to say thanks to you both too for all your time and effort. Great work.


Disappointed but thank you

  • chd
  • 13/10/08 30/09/09
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  • Tue, 23/12/2008 - 09:30

Can't believe that nobody has posted a comment on this one. We may be disappointed by the apparent stalemate, but I want to say thank you to frog and laser for their phenomenal work.

It's clear that our situation is extremely complicated with ramifications all over the place. It struck me that some kind of nationalized IOM bank is the only solution in the short term. We will probably get the money back once the blame game has been sorted out, but it will take for ever. So just get writing to IOM, letting them know, that at this point in time, they have to bail us out. I just don't understand why they can't get a loan equivalent to the blocked funds in UK.

Let IOM play the waiting game to get the return of the bail out money from Iceland, UK, Treasury, Kaupthing UK, Timbuktu, or God knows where.

It also struck me that the sealed papers and a Judicial Review aren't going to help our case. It will be interesting to see what the DAG legal team have to say about that. We know though that it will be very costly.
If you want your morale lifted, just read the e-mail reply that chb got from Henry Bellingham. He said that he will not give up our cause until we get 100% return of our funds.

http://chat.ksfiomdepositors.org/forum-topic/replies-mps-post-them-all-here

THANKS AGAIN FROG AND LASER.


Thanks again

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
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  • Tue, 23/12/2008 - 11:53

yes thanks again both of you


Mike Simpson Conference Write-up

  • Clogs2
  • 20/10/08 31/08/09
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  • Tue, 23/12/2008 - 21:44

Appreciate your efforts in setting up the conference call and providing the feedback. Although our situation continues without resolution, it is heartening to at least get an update on what is happening. Thanks.