Focus on the vote

  • Anonymous
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Posted: Fri, 10/04/2009 - 08:20

I think it is essential for us to focus now on the vote. While there are still many legal and political issues that need to be addressed and hopefully will be, the vote on the SoA should take priority for the next 6 weeks. If the scheme is out-voted in one or more classes then the company will go into liquidation (strictly those classes in which the scheme is not voted in will not be party to the scheme, which means according to my understanding that the scheme cannot fly at all).

From my naive perspective, it appears to me that there are broadly two ways of looking at how to vote on the scheme:

  1. From a legal and practical viewpoint - the question is only one of whether you believe that the scheme will benefit you. If yes, then you should vote for it and if no then you should vote against it.

  2. From a political viewpoint - the scheme has been developed and proposed (in reality) by the IoM government. By voting against the scheme you can send a message to the IoM government that you believe it is responsible for the mess in which depositors find themselves and/or you do not trust it. Conversely, by voting for the scheme you can show your support for the IoM government.

Obviously if the scheme fails the test in (1) then there is no need to consider (2) - your vote should be no.

I think (2) falls to be considered if the answer to (1) is "yes" or if it is uncertain. Of course if you believe that (1) is true but you decide nonetheless to give more weight to (2) and vote against the scheme, you might be cutting off your nose to spite your face.

Perhaps there are other considerations or this is far too shallow an analysis, so I would welcome input from others on this.

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Well, I am on a knife edge,

  • Minotaur
  • 15/10/08 31/05/09
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  • Fri, 10/04/2009 - 17:48

Well, I am on a knife edge, and cannot be expected to make a decision until I have an informed estimate on how much cash will come back from KSF(UK).

I had £70K deposited. Under either scheme I will eventually get £50K back. I will get more than that only if liquidation/winding-down produces more than 72p in the £. The way things are going in general, this seems unlikely. And I comfort myself (cold comfort) that had I (against my principles and instincts) placed this money in shares or investments, I would probably have lost 30% of it. As it is, I will lose max 28.5%, but will also have seen nothing of the gains I might have done between 2002 and 2007 had I been inclined towards the risk of the markets.

So the only criteria for me are: which of the two options will actually produce my 50K with less hassle and with less delay. That I am unable to judge until I know a reponsibly estimated hard cash return from London and the time-scale required to produce it.

If anyone can advise, I would be grateful. I do not have the expertise to judge, and I do not intend to acquire it. I have spent years living on an academic salary doing work that I enjoy; and I moved abroad not for riches, but for a challenge and more interesting work. The fact that I was not able (rather than not legally allowed) to keep a pot of the currency of my home country in my home country, flies in the face of every treaty granting freedom of movement within the EU to the citizens of those countries (unless of course, they fall within the Eurozone, in which case it doesn’t matter much).

My rainy day fund was intended to a) function as a safely valve should my move have proved a mistake; b) to pay off my mortgage should I choose to retire in the country in which I now dwell; c) to facilitate a move back home if/when necessary. But these choices have now been denied me by the government of the only country for whose parliament I can vote.

To add insult to injury, the country I live in taxes one on capital, and not on interest earned. I will be taxed on £70K although I do not have the use or enjoyment of it.

(I know there are many people on this site whose situations are far worse than my own, and to them apologies for this little rant. I have been lobbying the MP in the constituency I last lived in: sympathetic replies, but nothing tangible).


The vote is about a month away

  • chris watson
  • 23/10/08 31/03/10
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  • Sat, 11/04/2009 - 03:41

So I'd suggest you keep a close eye on this forum as the views are already starting to polarise. You'll then be able to work out which way to vote, given your circumstances, in a more informed way.

I know I'm stating the obvious, but I hope this helps!


How SOA will treat Joint Account Holders

  • steelwood
  • 24/10/08 31/05/09
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  • Fri, 10/04/2009 - 11:58

elgee
Can you please explain / clarify that under SoA joint Holders will be treated as DCS ? or the account holders will be treated as ONe regadless of Single or Joint Account Holder


How SOA will treat Joint Account Holders

  • Anonymous
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  • Fri, 10/04/2009 - 12:37

I wish I could but I do not understand how SoA will treat joint account holders because it is not clear.


well summarised

  • chris watson
  • 23/10/08 31/03/10
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  • Fri, 10/04/2009 - 08:33

...and good to see your analysis has not fallen into the "those with under 50K" vs. "those with over 50K" split.


I'd appreciate Capt

  • smithAD
  • 10/10/08 31/05/09
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  • Fri, 10/04/2009 - 17:28

I'd appreciate Capt Mainwarning's thoughts and Divers, BBlair, Matt Walker.


Split

  • Tricky Dicky
  • 24/10/08 30/05/09
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  • Fri, 10/04/2009 - 10:20

I agree wholeheartedly with elgee and chris. Reading the reports from the hearing it appears that all the 'groups' within DAG are disadvantaged by a SoA over the DCS


Tricky, That really is not

  • expatfrance1
  • 15/10/08 31/05/09
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  • Fri, 10/04/2009 - 11:16

Tricky,

That really is not the case. As far as I can make out for my specific circumstances IF the SoA does what it says on the tin then I would be better off with the SoA. (All my money returned in 3 months). I know that is specific to my situation and it is a big IF as to whether the SoA will operate as is being promoted by the IOM but please do not generalise when making statements.

As elgee has suggested it will be down to each individual to make a decision based on the facts to hand and their individual circumstances.


my understanding

  • Tricky Dicky
  • 24/10/08 30/05/09
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  • Fri, 10/04/2009 - 13:01

expatfrance1,
I assume that by saying you would be paid out within 3 months means that you have £20k or less - not that, that is a problem - what I would say is that :
a) if the DCS had been triggered in Nov 08, you would have had a good %age (if not 100%) of that back by now at the latest and
b)if it was triggered yesterday, you would probably have it all back within weeks and not months
thats what I understand from what our legal team were saying in Court, as points against the SoA and its 'supposed' benefits of speed and certainty.
You are right of course it is up to each individual to decide what to do for their circumstances


Tricky, I am not sure how,

  • expatfrance1
  • 15/10/08 31/05/09
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  • Fri, 10/04/2009 - 13:31

Tricky,

I am not sure how, if liquidation had been triggered in November, I would be anywhere near to getting my money back. As far as I am aware, the LP has assets available to pay a 10% dividend. If I had 20k deposited that would amount to 2k. I am also aware that I could also have benefited from the EPS but a) there may have not been an EPS if liquidation has been triggered and b) the 2k dividend would have gone to pay back what might have been paid via the EPS. So all in all I would still be a long way from getting all my money back and with no indication of the timescales involved.

If the DCS had been triggered, there is still no indication as to what might have been paid from it by now so any examples of what may have been paid if liquidation had been triggered is really hyperthetical.Now I know that there are many people who are likely to not benefit from the SoA, in which case they should of course vote against it.

However in my personal case I have a choice of voting for the SoA where I know that I am going to get all my money back and when that will be, as opposed to voting against the SoA and knowing that, in your words, I would 'probably' have my money back in weeks if not months. With all the flack being thrown at the the SoA because of its lack of guarantees, the alternative of 'probably' getting my money seems to me to be even more uncertain. In which case, unless anyone can provide more concrete evidence as to why I should not, I will probably vote in favour of the SoA.

All I hope is that we can eliminate all the mis-information about both alternatives and that people can vote whichever way they see fit based upong the facts.


You seem to have ignored the

  • nivit
  • 19/10/08 31/05/09
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  • Sat, 11/04/2009 - 08:40

You seem to have ignored the DCS in your analysis.


Does the DCS help more those who deposited over the DCS limit?

  • chris watson
  • 23/10/08 31/03/10
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  • Fri, 10/04/2009 - 16:27

Expatfrance 1,

If your scenario is correct, does this mean when there is a 10% dividend payment via liquidation/DCS, someone with 1,000,000 at stake would receive 100,000 and someone with 50K would receive a 5K pay-out, on the same day?

Does this mean, if there is a 60% dividend payment on liquidation/DCS, someone with 1,000,000 at stake would receive 600,000 and someone with 50K would receive 30K pay-out, on the same day?

Does this mean those with over 50K at stake will receive the same % of their funds as those under 50K, but receive larger sums quicker under DCS than SOA, whilst those with under 50K receive smaller sums, and get ‘complete’ slower?

Is this what is meant by 'everyone taking a haircut'?

If so, those with over 50K at stake may get the ‘best of a bad deal, quicker’ under DCS rather than SOA, making DCS a ‘risk worth taking’ in their view. Those with under 50K deposited would wait longer for their return, even though they kept their deposits under the DCS limit, unlike those who, for whatever reason, exceeded the DCS limit?

If this is the case, for Tricky Dicky to categorically state, which he did, that all 'groups' are treated the same under SOA and DCS must be wrong, as it would appear quite the opposite. In fact, if the above scenarios are correct, the DCS certainly compares more favourably to the SOA in the short-term to those that deposited, again for whatever reason, over the DCS limit, than it does to those who did not.

I’ve not made my mind up about this, but I’m starting to. There is a lot of talk about the SOA ring-fencing funds for payments to KSFIoM depositors only, but is it a concern if, as an over 50K depositor, you have opted for DCS over SOA and decided to rely on liquidation dividends as the best way to retrieve money you are owed? Apparently not - as this is rarely addressed, if ever, by those who obviously have more than 50K at stake.

Why? Liquidation is in theory, ring-fencing the over-50K’s potential funds already, and a subsequent bank failure on the IoM would not lessen their expected returns, nor have an impact on their expected timelines of re-payment.

If much of above is correct, given the DCS was meant to help those depositing within the guaranteed limits, is it not a paradox that those it was meant to help will vote against it, and those it was not meant to help, will vote for it!?


DCS limits

  • rapata
  • 13/10/08 03/08/09
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  • Fri, 10/04/2009 - 20:57

Forgive me for my rant which is to follow, but after reading the posting above I cannot suppress my feelings any longer. I refer to the following two excerpts.

....................
.......... even though they kept their deposits under the DCS limit, unlike those who, for whatever reason, exceeded the DCS limit?
................................
and
...................
.......... those that deposited, again for whatever reason, over the DCS limit, than it does to those who did not.
....................................

Up until the day (or days, I forget the exact timing) before the collapse of KSFIOM the DCS limit was 20K, and the IOMG upped this limit to 50K supposedly to restore confidence in the banking system. I doubt that anyone actually deposited more money into their accounts to bring it up to the new DCS limits in the days prior to the collapse.

The new higher limit benefits anyone who had more than 20K, but I am sick to death of all the under 50K vs over 50K comments. To those of you with deposits between 20 and 50K, be thankful that you will eventually recover all your funds due to the higher DCS limit, but please please, stop being so smug about it and have some feelings for those who stand to lose so much more.

There has been much comment about the fairness of repayment for the Under/Over 50K groups, the only fair way is to pay everyone up to the "OLD" DCS limit first and then on a pari passu basis for all further payouts. It should not matter at all if one has 50 K or 500K, repayment should be on a percentage basis.


Never mentioned 'fairness', just observing facts

  • chris watson
  • 23/10/08 31/03/10
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  • Sat, 11/04/2009 - 03:36

Rapata,

I used the caveat 'for whatever reason' in both the quotes you have taken from me, because I do actually appreciate people with large sums at stake are most probably victims of thinking 'a bank will never collapse, why worry too much about the limit', or were caught with some temporary large deposit from a house purchase/sale, or were in a bond they could not get out of, or had money in a building society bought up by Kaupthing, or were badly advised by IFA's, or didn't realise their monies were in the IoM etc. etc. I've yet to read any posting from anyone who admits it was their 'fault', and no doubt for good reason.

I don't blame these people in any way, as I am one of them, even if the sums involved are different to yours. But it doesn't mean I can't point out the irony that DCS probably favours those 'above the 50K limit' than those below '50K limit', when compared to the SOA, for the reasons I tried to explain in my posting.

Nor will I accept people posting, 'for all the world to see', that DCS is better for 'everyone' when I see no logic behind their rationale, and I will challenge this whenever I see it.

But for you to actually want to worsen other people's situation, that is those who would get 100% of the monies returned under the 50K guarantee by reverting back to the "OLD" DCS limit so that they don't, to me is pretty incredible!

I mean, those with 'only' 50K may be faced with losing their life savings as well. Just because you have more money at risk does not give you the right to deny others. Personally, I would accept the facts and wish these people well, rather than try and turn back the clock, which let's face it, if we could all do that, we'd all be in a different situation and my aunt would be my uncle.


Payout under DCS

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  • Fri, 10/04/2009 - 17:45

Chris, as expatfrance 1has indicated below, any percentage payout under DCS will be applied to ALL depositors alike. The same is true under the SOA but under an SOA the timing of the first three payouts has been set over a two year period which is not the case under the DCS. Also under the SOA minimum payouts have been set for the first three payouts-
The greater of 12.5% or £20,000 (not to exceed one's account balance)
The greater of 7.5% or £15,000 (not to exceed one's account balance)
The greater of 10.0% or £15,000 (not to exceed one's account balance)

Therefore, under the SOA those with £50,000 or less in their account will be paid off in full within two years. To my knowledge there is no guarantee of this under the DCS as it stands.


Chris, In simple terms, in a

  • expatfrance1
  • 15/10/08 31/05/09
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  • Fri, 10/04/2009 - 17:00

Chris,

In simple terms, in a liquidation, dividends are paid out at the same % to everybody at the same time. If the liquidator announces that he has enought money to pay out a 10% dividend on 1st May, then all creditors will get 10% of what they are owed on 1st May. So someone who is owed 50,000 will get 5,000 and someone who is owed 1 million will get 100,000.

The added complication is that at some point the DCSwill kick in and top up to 50,000 what has been paid by the liquidator. In the above case, if no other dividend had been distributed the person who had 50,000 deposited will get the 5,000 that he has already received topped up to 50,000, whilst I think the person with 1 million deposited will get nothing from the DCS. The only problem is that no one really knows how and when the DCS will kick in as it is currently unfunded and the IOM could in theory take as short or long a time to pay put as they want.

There has been a lot of talk stating that if liquidation had been triggered then people would have been a lot better off but as far as I am concerned that is just not the case. OK we may have already got a 10% dividend paid by now but the benefits of that are going to be different depending on each individuals own circumstances. I would not be so presumptious to say that the SoA is good for everyone or bad for everyone.


Thanks for your summaries

  • chris watson
  • 23/10/08 31/03/10
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  • Sat, 11/04/2009 - 03:55

Expatfrance1 and Undone


Great point Tricky!

  • chris watson
  • 23/10/08 31/03/10
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  • Fri, 10/04/2009 - 11:28

Could you elaborate in more detail outlining how this is so, as I am sure this will be of interest to absolutely everyone!

Many thanks


dcs

  • Anonymous
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  • Sat, 11/04/2009 - 04:03

I'm sure this has been posted heaps of times and that I can't remember it all, but here goes:
The DCS manager has first claim on funds arising from the winding up. So, the manager attempts to compensate eligible depositors (not bond people) up to 50k. If/when this is done, the DCS winds up. Remaining funds are distributed pari passu (penny in the pound). If there is not enough to pay off all depositors up to 50k, banks registered in the DCS chip in annually. This is distributed over a decade (or so) until every eligible depositor is compensated up to 50k.

The DCS seems to be in ruins because the IoM refuses to support its own its own scheme! I am sure that winding up will recover sufficient funds to compensate every eligible depositor (no, I can't remember figures). The DCS attracted me to the IoM. If the DCS is not activated, I will feel cheated (again). IoM banks are still soliciting business by touting the DCS. Annoying.

The SoA may well compensate me up to the limit of the DCS, but I feel the IoM are evading their responsibilities. They could just as easily fund (if necessary) the DCS as the SoA. They hate liquidation because it sounds bad. The reputation of the IoM as a sound banking centre is naturally more important than us lot.


steenjp, I am not sure you

  • expatfrance1
  • 15/10/08 31/05/09
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  • Sat, 11/04/2009 - 05:10

steenjp,

I am not sure you are correcr regarding your statement that the DCSmanager has first claim on funds from the winding up. I thought that the DCS just topped up what was distributed from the assets and that any of the 150m from IOM would just top up the bit over 20k, but I also may not understand this correctly.

Anyway it just goes to show that even though some people claim that the DCS is better than the SoA and that it is cast in stone there are still a lot of unknowns regarding the actual operation of the DCS that make me wonder how people can make such statements.

Whatever you say about the SoA, with all the legal time that has gone into it and the large document that has been produced there should be no mis understanding of how it will operate once the consultation period is over. You may not like what it but it should be pretty clear what it does offer.


Liquidation on IoM

  • chris watson
  • 23/10/08 31/03/10
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  • Sat, 11/04/2009 - 04:30

Steenjp,

Thanks for your reply, although I am still hoping to receive one from Tricky Dicky.

A few points:

  1. I think the DCS manager pays himself first, and some other people/statutory bodies, before the funds left over are split with us depositors.

  2. The original post by Tricky Dicky claimed SOA is more disadvantageous to 'all groups' of depositors compared to DCS. However, you believe payments up to 50K could take over 10 years, wheras the SOA states it would take 2 years. This does not sound to me like the SOA is more disadvantageous.

  3. I feel cheated and annoyed too. I know IoM don't want a liquidation and the threat of one is a way to leverage greater concessions from them. Unfortunately for those trying to leverage, the IoM Govt have come up with an alternative to the DCS which appears to be more beneficial to the majority. This is why I was surprised by Tricky Dicky's original claim, as I couldn't believe the IoM govt could be that stupid!

  4. I have heard/read that liquidation on the IoM is not straightforward and have no reason to share your belief "that winding up will recover sufficient funds to compensate every eligible depositor", as much as I'd like to. This makes me ask the question, "is the risk of liquidation and forcing the IoM to live up to it's responsibilities worth taking, given the return I will receive via the SOA?".

I guess for some it will be, but for others it won't.


The rumour going back to

  • expat
  • 10/10/08 31/05/09
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  • Sat, 11/04/2009 - 04:25

The rumour going back to last autumn was that the banks refused/were unhappy to support the DCS on this issue. A number of them were suggesting they would withdraw from IoM if it went ahead. They allegedly see the demise of KSF IoM as a political act by UK'
I can't prove the truth of that, but I heard it more than once, but it speaks for itself about how some of this came about. Retail banking is a small part of IoM Financial Services, KSF a small part of that overall number. I think its J154 billion a year business, KSF was less than a billion. So logic would tell you which way this was going to go a long time ago. Add the potential of another bank going under, realistic or otherwise (well who dreamt the US would allow Lehmans to go?), and you have the scenario you have to deal with on IoM.
You can add a few other externalities to that, such as a festering row with UK over medical services on IoM, and what appeards to be an HMG refusal to talk and it all becomes pretty clear why an SoA of some description was going to be dreamt up.
Whether I like or dislike the detail of the SoA isn't the point, the reality has been there for some time. So like dj I prefer now to concentrate on letting the world know how the UK has let us down. Again read the Stevens/Nicholson analysis of this.


Stevens/Nicholson

  • chris watson
  • 23/10/08 31/03/10
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  • Sat, 11/04/2009 - 04:36

Expat,

Thanks for the insight. I was not aware of most of the detail you have written.

What is the Stevens/Nicholson analysis I should read and where can one find it?


Go to this link'

  • expat
  • 10/10/08 31/05/09
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  • Sat, 11/04/2009 - 04:54

Go to this link' http://www.ksfiomdepositors.org/node/2278

If this doesn't work contact me and I'l email you