Feedback from IoM FSC

  • Anonymous
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Posted: Fri, 23/01/2009 - 05:12

DAG members may be interested to read my letter sent on 21/1/09 to all the relevant parties in the IoM I could find IoM, entitled “Solution for KSFIoM”. I realise that my request may not have been entirely realistic but I was pleased to get a rapid response from Andrew Kermonde, Senior Manager, Supervision. Are we further forward as a result? No. But we must keep lobbying.

Dear Sir

I understand that AlixPartners favour a slow wind down for KSFIoM, and
perhaps this is also favoured by the IoM FSC.

Many governments, including your closest neighbours both east and west, have now bailed out banks. Most of those banks had considerable toxic loans, but we understand that KSFIoM has few suspect loans.

As you know, KSFIoM depositors are 'incensed' about the slow progress
(especially Derbyshire depositors like me) and we want a clear and very
rapid course of positive action to follow the 29 January hearing. Is there
any reason why you cannot do the following?

  1. Immediately nationalise the bank and take it out of administration.

    Reinstate its banking license.

  2. Invite depositors to leave all their cash in the bank in exchange

    for an IoM Government guarantee. I know that I, and many other depositors,
    would be willing to leave all our money in the bank for 2/3 years in
    exchange for a highly competitive interest rate. This would give you time
    to recover assets whilst actually borrowing very very little. I recognise
    that the IoM is small but you do nevertheless have relatively
    straightforward access to finance.

Unless you do something like this, I think the Depositors Action Group may
make life quite unpleasant for the IoM. Many of us have extensive contacts
and are quite capable of removing any remaining funds from IoM. This may
not sink you, but it will certainly hurt your reputation hugely.

So please come to the party and solve this at once. I'm sure a plan like
this can be made simple. 8,000 people, many in real strife, await bold
actions from the Isle of Man. Please deliver promptly. Thank you.

Yours sincerely

Dear Mr XYZ

Thank you for your email. Firstly, I have not been privy to any information published by the Government or Alix Partners apart from such that is available on the Government website or notes of conversations between members of the Depositors Action Group and the Government or Liquidator Provisionally.

The FSC would be likely to support any proposal that would provide creditors with a better outcome than would be reached through a full liquidation and activation of the compensation scheme.

With regard to your specific questions, I can at this stage only answer as follows:-

With regard to "nationalisation", KSFIOM is a subsidiary of an Isle of Man holding company which in turn is owned 100% by Kaupthing hf, which I believe is now "Old Kaupthing". I am not aware that the Government can simply nationalise an unlisted subsidiary, in the same way in which the UK Government did not nationalise Kaupthing Singer & Friedlander Limited (KSFUK). Comparisons that may be made to Northern Rock and Anglo Irish are not necessarily straightforward.

In relation to obtaining a loan / guarantee to help repay depositors over time, I am sure that this matter will have been considered by Alix Partners. However, the issue is that the provider of any loan would require appropriate security to ensure that the debt will be repaid. Based on the current position of KSFIOM and the uncertainty with its exposure to KSFUK, providing such security would be difficult. Whether the Isle of Man Government would be prepared to underwrite any loss (i.e. provide a guarantee) on such a loan would be a matter for Treasury to consider, but I am not aware that the Government is committed to funding KSFIOM, or any other bank to more than £150m across the banking sector.


Andrew Kermode
Senior Manager - Supervision

Financial Supervision Commission
PO Box 58, Finch Hill House,
Bucks Road, Douglas
Isle of Man, IM99 1DT

Tel: (44) 1624 689320
Fax: (44) 1624 689399
Email: andrew [dot] kermode(?)fsc [dot] gov [dot] im

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Maybe it is time to be more

  • Anonymous
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  • Fri, 23/01/2009 - 11:34

Maybe it is time to be more demanding. Given the strength of feeling within the DAG, the qualities of its members and the power of the internet we really could make their life a misery. I have some sympathy for the IoM position but at the end of the day KSF IoM is in their jurisdiction and the buck stops with them. It is not really our job to pursue the other actors in this sad story no matter how crapuleux we think their behaviour has been.

Level of IOM Commitment

  • Anonymous
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  • Fri, 23/01/2009 - 14:23

Agreed Nivit. I don't even think the IOM Gov't is offering to put up 150m GBP as they have said that they would be taking back that 150mln from the first 150 recovered from the bank. Given the size of the loan book and the KSFUK funds plus cash already available I strongly suspect their actual level of commitment is very small. Given there responsibility they like the FSCS should be taking back after we have recovered our money. They are after all best placed to borrow the money and to chase down the UK and Iceland.

Level of IOM commitment (reply)

  • Anonymous
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  • Fri, 23/01/2009 - 14:36

I thought you were going to offer a measure of the Isle of Man commitment. On a scale from 1 to 100, I would quantify it as follows:

(i) commitment to ensuring that depositors are fully compensated: 0;
(ii) commitment to ensuring that no blame attaches to itself: 100;
(iii) commitment to ensuring that there is no liquidation to tarnish the IoM's reputation: 100;
(iv) commitment to ensuring that the DCS is never activated: 100;
(v) commitment to ensuring that the depositors are fobbed off: 100;
(vi) commitment to ensuring that they keep their jobs and salaries:100