General Discussions

  • ng
  • 11/10/08 31/12/20
  • a depositor
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Posted: Fri, 10/10/2008 - 05:39

Any general chat about what is going on that doesn't fall into any other categories.

IMPORTANT: How to post links to related News on other sites

As of 21/Oct/08 we have a searchable news archive. Site editors (and anybody else who wants to help) now have the mammoth task of find and re-posting all relevant links that were posted in forums and re-posting as a news item into the archive.

It would be appreciated if you didn't make the task even bigger than it currently is.

Please post news items using the Create new News item link near top of right side-bar.

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EDM: Template letter for MPs

  • anrigaut
  • 19/10/08 30/10/09
  • a depositor
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  • Thu, 17/12/2009 - 12:19

The Early Day Motion is the fruit of a lot of hard work behind the scenes by the DAG Strategy Team. We now need as many MPs to sign up to it as possible.

A template letter to send to your MP to support the Early Day Motion is available to all here: http://www.ksfiomdag.com/index.php?option=com_kb&task=category&category=...

Please note that the article by Helen Burgraff in International Adviser reporoduced in the recent PPD DAG blog has since been updated to correct a number of inaccuracies about our situation (see Tricky Dicky's blog here http://chat.ksfiomdepositors.org/blog-entry/early-day-motion-0)


I note that "the Depositors

  • expat
  • 10/10/08 31/05/09
  • unspecified
  • Offline
  • Mon, 21/12/2009 - 07:30

I note that "the Depositors Action Group did not hold the FSA responsible for KSF(IoM)'s failure, he continued, "but we need the UK government to note that the decision by the FSA to remove KS&F's UK deposit-taking licence led to the ultimate collapse of Kaupthing Singer & Friedlander (Isle of Man)."
Is that so???


Letter sent to Mark Lancaster - lab. MP North East Milton Keynes

  • rhbbpd
  • 12/10/08 31/05/09
  • a depositor
  • Offline
  • Sun, 20/12/2009 - 20:58

Letter sent to Mark Lancaster MP for Milton Keynes North East.

Thank you team for all the hard work you are still carrying on.


Thank you Expat

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Thu, 17/12/2009 - 08:01

We all need to get behind Bob Russell on this. Have you posted this on the other site?


SFO to investigate Kaupthing

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Sun, 13/12/2009 - 08:57

Article in today's Telegraph.


Link

  • caledonia
  • 14/10/08 30/09/09
  • a depositor
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  • Sun, 13/12/2009 - 09:17

Can someone post a link to this article please?


http://www.telegraph.co.uk/fi

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
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  • Sun, 13/12/2009 - 10:06

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5973630...

The Serious Fraud Office is gathering extensive intelligence on the Icelandic banks in the aftermath of last autumn's crash that left thousands of UK institutions nursing millions of pounds of losses.

By Rowena Mason, City Reporter
Published: 10:06PM BST 04 Aug 2009
Kaupthing - Serious Fraud Office intensifies Icelandic banking inquiry after Kaupthing leak
The SFO's interest in Kaupthing's loan book is likely to prove embarrassing for the bank's London advisers Photo: AFP

The SFO's team has intensified its inquiries following the leak of Kaupthing's loan book on to an internet site, Wikileaks.org , over the weekend, according to sources.

A team is understood to be examining the document connected to the failed Icelandic bank, which had a large UK client base. It has also received information relating to the UK operations of the Icelandic banks, apparently from a number of whistleblowers ranging from employees to investors and depositors.

Related Articles

*
  Kaupthing loan document: in full
*
  Kaupthing leak reveals unusual lending practices
*
  Iceland to hand bank stakes to creditors
*
  Iceland investigators turn to SFO
*
  Kaupthing chief defends bank's loans to top shareholders
*
  Time to show just how flawed the US-UK extradition treaty really is

The SFO is now believed to be looking for further whistleblowers to step forward following the leak of Kaupthing's loan book and risk analysis.

The document detailed huge sums allegedly given to companies linked to a key director of Kaupthing and its major shareholders with little or no collateral. A number of clients were also allegedly given loans to buy stakes in the bank itself with no collateral but the shares themselves.

Although it has not launched a formal criminal investigation, a team from the SFO is known to have been looking closely at Kaupthing, Glitnir and Landsbanki for a number of months, following their collapse in October last year.

The three banks were nationalised by the Icelandic government, which put their foreign operations into administration, while relaunching their domestic operations as new banks with different names.

The SFO's interest in Kaupthing's loan book is likely to prove embarrassing for the bank's London advisers and its high-profile banking clients, although there is no suggestion of any wrongdoing.

High-profile individuals such as Kevin Stanford, the retail entrepreneur, and Robert Tchenguiz, the property investor, were among Kaupthing's biggest clients, according to the loan book.

A closer look at the document appears to give a snapshot of Kaupthing's highly unusual lending practices as they stood just two weeks before the Icelandic system failed last October.

The papers show that Kaupthing's highest loans, totalling more than €6.4bn (£5.45bn), were given to companies connected to just six clients, four of whom were major shareholders in the company. Kaupthing granted its largest loans, totalling €1.86bn, to companies connected to Exista, its biggest shareholder with a 22pc stake – some of which were "unsecured and with no covenants".

Mr Tchenguiz, who sat on the board of Exista, borrowed €1.74bn to finance his private investments, including stakes in Mitchells and Butler, and Sainsbury's. Mr Tchenguiz has confirmed that he was the bank's biggest client, but declined to comment further.


http://www.telegraph.co.uk/fi

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
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  • Sun, 13/12/2009 - 10:07

E.I.E


The whole article is posted,

  • Anonymous
  • Offline
  • Sun, 13/12/2009 - 09:42

The whole article is posted, if you look under new forum topics


Kaupthing men sentenced

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Fri, 11/12/2009 - 10:14

Icelandic asset manager & stockbroker both got 8 months. www.icenews.is/


8 months is that ALL? Thieves

  • Anonymous
  • Offline
  • Fri, 11/12/2009 - 10:36

Well we have been apart from our money for a year!! the LAW is an Ass Icelandic or otherwise... NO Deterant is there... Still Hope they never work again!!


Payment/Dividend

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Tue, 08/12/2009 - 12:54

Mine's in.


Iceland searches

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Fri, 20/11/2009 - 10:50

for banking crime suspects beyond its borders. Google that in & you will go to a Bloomerg article. As some of you know I am such an old basket case that I can't post direct to the news section, despite helpful hints!


arny if you have any problems

  • expat
  • 10/10/08 31/05/09
  • unspecified
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  • Fri, 20/11/2009 - 14:01

arny if you have any problems with articles that need posting in the news section, email me either the link or the article and I'll put it on both the chat and public sites.


The stench of corruption

  • Wanda
  • 12/10/08 31/08/09
  • a depositor
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  • Fri, 20/11/2009 - 13:40

Thanks for pointing us in the direction of the Bloomberg article, which confirms that the stench of corruption gets stronger by the day. The comment that "if convicted the offenders face as long as nine years in prison" is an insult to the depositors who face a soul destroying wait for the return of their hard earned savings. If the predicted 2017 for a final dividend is accurate then we too are facing a nine year sentence!

Here's the link: http://www.bloomberg.com/apps/news?pid=20601085&sid=aEsERuS7ge8c

I am, as ever, eternally grateful to Expat, Icecrusher and all of the other "warriors" whose verbal skills and tenacity in firing off letters to MP's are legendary. Having you fighting our corner gives me reason to hope for a fair outcome to this whole sorry saga.


Thanks arny re Icelannd searches for criminals

  • fight theft
  • 10/10/08 28/05/13
  • a depositor
  • Offline
  • Fri, 20/11/2009 - 13:29

This is the link for the Bloombrg article:

http://www.bloomberg.com/apps/news?pid=20601085&sid=aEsERuS7ge8c

I hope this terrible situation we are all in has not turned you into the "basket case" you call yourself - it certainly has upset all of our balances - financial emotional and physical. I want my money back more than the justice but all is taking too long, but when you think Madofff got an 150 year sentence....


Manx Herald report on KSF directors' evidence

  • leno
  • 06/11/08 31/05/09
  • a depositor
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  • Mon, 16/11/2009 - 10:54

Firstly, I note that 'the witnesses seemed surprised when the Committee said they had received evidence from a former member of the FSC-who had also been a customer of the Derbyshire- who claimed not to have known'. I am not surprised! The information contained in the KSF(IOM) brochure at the time of takeover of the Derbyshire is not very revealing on who owned KSF(hf), it is referred to as a 'Northern European bank' which operates in 14 countries, and the list of those countries is headed by Denmark and (the only mention of Iceland in the whole document) Iceland comes 4th, after Faroe Islands and Finland. No wonder I and many others believed fully in the parental guarantee and in Aidan Doherty's statement that KSF's commitment to personal service was based on 'the old fashioned value of 'the customer comes first'

This leads me to my second point: which customer comes first? Mr Davies, the former Finance Director of KSF(IOM) was able to withdraw his money on 6th October 2008. I applied to close my account (and my wife's) and to withdraw our funds on 6th October but, in common with many others, my instructions were not acted on. When I telephoned the bank to ask why, I was told because the large number of withdrawal requests meant that mine and my wife's were too late! Draw your own conclusions.


Leno's Letter

  • Julie
  • 03/12/08 14/07/09
  • a depositor
  • Offline
  • Mon, 16/11/2009 - 13:49

My wife and I went into KSF IOM office on 02/10/08 mid morning and we were told that if we wished to draw out 200K we would have to go home and write a letter, giving full instructions to where the money was to be sent and stating why we wanted to do this. I returned within the hour (12.00 midday approx) giving full instructions, which a child could follow. Guess what? They forgot to put our account number on and consequently the funds were returned or so they said! The funds did not leave our account until 03/10/08 and it took us until the end of October before they admitted this to us, even after numerous telephone calls throughout October where they kept assurring me that our funds were definitely in the system and would eventually be transferred.

How gullible can one be leaving a branch where your money is to write a letter? Surely any honest bank would have had the necessary documentaion available for us to sign there and then, without the necessity of us going home to write a letter and then returning to their offices with it? Surely if the funds were returned, as stated by them, they should have had enough time from 02/10/08 to 08/10/08 to correct their mistake, but all you get is that "they were very busy"?

We have since written to Ernst Young in England, as personally recommended by Mike Simpson, in June and August of this year, to ask if our funds have been returned to KSF IOM, or whether they are still holding them, but even they have not had the courtesy to give us any reply of any description. Not even a letter of acknowledgement stating that the case is being looked into. What kind of people are we dealing with? Some 13 months later and nobody will give me a proper answer. We still can't understand why Mike Simpson cannot tell us. I suppose it is because he wants to get his hands on it as they have already shown it coming back into our account, on paper. BUT HAS IT ??????????????????????????????????


Manx Herald report on KSF Directors Evidence

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Mon, 16/11/2009 - 06:19

Former IOM Chief Minister, Donald Gelling, and Chairman of Kaupthing Singer & Friedlander (IOM) Ltd, and his fellow Board members finally broke their silence following the collapse, last October, of the subsidiary of the troubled Icelandic bank; and gave their side of the story to the Tynwald Select Committee established to investigate its failure.

Mr Gelling, and fellow non executive director, former Chief Financial Officer of the IOM Treasury and Deputy Chairman of the Financial Supervision Commission (FSC), John Cashen, managing director, Aidan Doherty and former finance director, Andrew Davies (who resigned from the Board in November, 2008) appeared before the Committee on Friday, 13th November 2009; and all effectively said the collapse was not as a result of any failure on their part as directors.

They all essentially maintained they are innocent of any blame and the fault, for the collapse, lies squarely in London; and to a lesser extent with Kaupthing personnel.

Mr Gelling, in a brief opening statement, stated that in the Board’s opinion, right up to the point the bank was put into provisional liquidation, it was a solvent and viable business.

He said he also wanted to make it clear the amount moved from the ‘mother’ bank in Iceland to the ‘sister’ bank in London was only £360m – substantially less than the amount being alleged in some quarters – and this had, as far as they were concerned, totally removed their exposure to Kaupthing (Hf).

He went on to say, on the 8th October, 2008, without any warning, the UK authorities had transferred all the retail deposits of KSF (UK) to ING and put the remainder of the bank into administration.

Thus deprived of access to funding from London they had appealed to Iceland for help; but once it became clear they could not get the help they sought they had no choice but to petition for provisional liquidation.

The collapse was, therefore, the result of the “unforeseen and unilateral actions of the UK authorities”.

It seems Mr Gelling is convinced the collapse of KSF (IOM) was deliberately orchestrated by the UK authorities – who he also believes stole the bank’s money; and is part of a conspiracy formulated - by the UK Prime Minister, Gordon Brown and his Chancellor, Alistair Darling - in order to give the IOM a good kicking.

Mr Gelling insisted later he was absolutely sure a gag was applied in the UK in the last few days in the run up to the 8th October, 2008, in order to prevent then getting wind of what was being planned by the UK authorities. It was at this point he described not being told what was going on as like being on a pedestrian crossing and being run down by a lorry.

Mr Doherty referred to the “cloak of secrecy” that had descended at the beginning of October 2008; and much was made, especially by an incensed Mr Cashen, of the revelation officials at Kaupthing had been in discussions with the FSA for two weeks – but the FSA had not told the FSC.

The Manx Herald doesn’t doubt Mr Darling has probably taken some pleasure in the trouble, and cost, the collapse has caused the government in the IOM; but stops short of believing, in the face of no concrete evidence, so far, of such a conspiracy.

However, from the evidence presented previously by FSC Chief Executive, John Aspden, and now by the bank’s directors, it does appear there was a conscious decision taken in the UK not to keep the IOM authorities in the loop; but for a reason yet to be fully established.

During the nearly three hours of questioning by Committee chairman, Juan Watterson MHK, John Houghton MHK and Eddie Lowey MLC, the witnesses insisted they had not sat back and let the global financial troubles pass them by; but had proactively sought assurances the placings they had made in London were secure. They said they had taken comfort in the fact the FSC had independently corroborated their own findings – and, thereafter, as no adverse reports were ever passed back to them they believed they had no reason to become overly concerned.

Mr Doherty, who answered most of the questions for the four, pointed out nearly all the bank’s lending was of the ‘vanilla’ variety: i.e. residential mortgages to ‘High Nett Worth Individuals’ and nothing ‘exotic’; and refuted any allegations the bank had ventured, even after Kaupthing had taken over, into any areas of high risk banking. He went as far to say nearly the entire loan book was secured and only one was in default at the time of the provisional liquidation.

Mr Houghton pressed Mr Doherty quite hard about the transfer of funds from Iceland to London, and the rational behind the transfer; whilst Mr Lowey said he couldn’t understand how transferring the money from one part of the group to another removed the risk.

Mr Doherty insisted the transfer totally removed the exposure to the parent company, but conceded it did not remove the group risk; but that was not what the FSC had required. In any case, he explained the risk to the group was mitigated by securing £175m of the money by the REPO agreement.

Mr Doherty also explained the Board had been able to satisfy the FSC the risk to Iceland was removed whilst also being able to meet their own business needs, as a group, to keep the deposits taken by KSF (IOM) within the group.

The Committee appeared to be less than convinced by some of the responses.

The subject of the takeover of the Derbyshire was touched upon, with a straight denial being issued that customers were prevented from removing their money – albeit with a penalty; or that customers could not have known who had taken over their accounts.

The witnesses seemed surprised when the Committee said they had received evidence from a former member of the FSC - who had also been a customer of the Derbyshire - who claimed not to have known.

Mr Doherty also denied there had been a large body of complaints lodged at the time, and said customers had not been treated any differently to existing KSF customers.

He also went on to explain the rational for buying the Derbyshire - which he said had been put up for sale and was the subject of other bidders – in that it would have taken KSF (IOM) many years to have built up the £360m - £370m of business acquired through the acquisition of the Derbyshire; and made good business sense at the time.

In defending the actions of the Board, in how and where it chose to place the deposits taken in the IOM, Mr Doherty referred to the recent Foot Review. He pointed to the ‘industry standard’ of 70% of deposits being inter bank but stated KSF (IOM) had been much more prudent and only had 39% at the time of the collapse.

Whilst true, this obviously overlooks the fact it was only because they had more or less been directed by the FSC to reduce the exposure they too would have been nearer to the ‘industry standard’ in October 2008.

Mr Doherty also reiterated they had inquired about KSF (UK)’s exposure to Iceland and had been reassured it was minimal; acknowledging they had taken the assurance at “face value” as they had no other reason for not believing the information. They also wanted to be sure their placing was ‘round-tripping’ and ending up back in Iceland; and got the comfort they sought. He said this was the message they were getting right up to the 7th October 2008 and so they believed there was sufficient liquidity to ensure the repayment of the 39% if needed.

Mr Doherty also explained they had taken steps to secure certain assets but without their knowledge and agreement some of this was removed, and funds were moved on the 6th/7th October 2008, and now forms the basis of legal action.

Mr Houghton became a bit agitated at this point as he felt the Board should had covered this issue in their submission to the Committee, but Mr Doherty said, although he was sorry, it was information already in the public domain.

Mr Watterson wondered if the Board thought, with hindsight, the FSC had made “the right call” in allowing the transfer of assets from one part of the group in Iceland to another part in London; to which Mr Doherty replied that he thought the REPO deal spoke for itself – but yes he did think it was.

It was clarified the deal and been signed off correctly in accordance with the ‘four eyes’ principle and that all parties, bank and regulatory, were involved in the process.

A short while later Mr Watterson sought to put the amount of assets transferred by KSF (IOM) to KSF (UK) in to context – and was effectively told it was insignificant compared to the £5b-£6b size of the sister company; and because of the netting out of the risk to Iceland the only exposure KSF (IOM) had was to the UK.

Mr Houghton put it to Mr Doherty it was his responsibility to look after the IOM and that he was under pressure from the FSC to keep his eye on the ball. He inquired if he had taken his eye of the ball; and whether this was the reason why the bank failed?

Mr Doherty denied he had done so; and again reiterated the information they were receiving lead them to believe the group was in a good position.

Mr Houghton wouldn’t accept this answer and wondered if had read the press reports; but Mr Doherty responded by saying they had no exposure to Iceland.

Mr Houghton persisted and suggested everybody else was aware of the problems except the directors of KSF (IOM).

Not so, replied Mr Doherty, and he again stated that almost up to the moment the bank failed they had been told the bank was stable - with substantial amounts of liquidity in the form of £1.5b in UK Treasury Bills – and no evidence, to the contrary, for them to act upon. He also added they had been receiving some of these assurances from the highest echelons of Kaupthing and had no reason to doubt what they were being informed.

Mr Watterson wondered about the run on the bank, but Mr Doherty said it was just a matter of confidence, and as the Icelandic authorities had stated they would stand behind Kaupthing the Board had thought things would settle down and they would be ok.

It became apparent through further questioning that the Board had not even, officially, been told there was a problem with the clearing system; and because they believed things would work out they had continued to take deposits until everything ground to a halt at lunchtime on the final day.

The Committee then raised the issue of when the last payments were made and whether any of the directors had money in the bank and if they had got it out before the collapse.

Mr Gelling said he had none in the bank, Mr Cashen said he had an account and his money was still locked in; whilst Mr Doherty said a relative had withdrawn money to purchase a house on the Island having moved from Malta. However, the potentially most embarrassing withdrawal was by Mr Davies who managed to withdraw money on the 6th October 2008. His explanation was that he was in the process of restructuring his finances and withdrew the funds to pay down his mortgage. He said his request for a withdrawal had not received any preferential treatment; but Mr Watterson - in the likelihood that the withdrawal would spark a level of public interest - still asked him to write to the Committee and provide more details.

Returning to the closing of the doors, Mr Watterson wondered if there had been an “aha moment”: this is the end.

Mr Doherty said they had attempted to obtain funding of £300m from Iceland, and initially they had been led to believe their request would be honoured – but as the day progressed it became apparent this would not happen; and by 7.50pm it was more or less game over.

However, Mr Doherty maintained if the timing had been a few days later some of their funds would have matured and could have been recovered; and potentially saved the bank.

Moving on, Mr Watterson wondered what lessons could be learned about regulation in the IOM as a result of their experience.

Mr Doherty could only really point to the failure of communication, and pointed the finger of blame for this at the FSA. He maintained the banking business model used in the IOM works (which beggars’ belief in the view of the Manx Herald) and said Foot and the IMF held the same opinion; and it was only a lack of “truth” on the part of the UK that created the problem – but they had just protected themselves, and he didn’t know why.

Bringing matters more-or-less to a close Mr Watterson asked what banking qualifications each of them held.

Mr Cashen answered he is a Chartered Public Finance Accountant, Mr Gelling said he has none but pointed out he is the Captain of the Parish of Santon, Mr Davies replied he is a Chartered Accountant who trained with KPMG which involved quite a bit of banking work. Perhaps surprisingly of all, Mr Doherty who has been working since he was 16 in the banking sector, and had risen to the position of MD, has apparently acquired no banking qualifications, whatsoever, in his 32 years in the business.

In response to a further question from Mr Watterson, Mr Doherty explained that although three of them remain as directors, and are being paid, they no longer have any powers as they are now all vested in the liquidator. In Mr Doherty case, he said he is being employed to help manage the recovery of the banks assets.

In bringing the session to a close, Mr Gelling said no one has more sympathy for the depositors than the directors. He said they had tried their best and the failure had come as a great shock to them, and they desperately hoped things could be sorted out as soon as possible if that could be a long time.

Mr Doherty added to this by saying they had done everything in their power up to the 8th October 2008, and since then to recover the assets. He very much hopes they will be able to recover, and pay out to depositors, far in excess of what is expected.

The next programmed session is 4th December 2009, when Treasury Minister Allan Bell will be appearing.


Mr. Simpson

  • Valentine
  • 18/10/08 31/05/14
  • a depositor
  • Offline
  • Sat, 21/11/2009 - 08:55

Can I have Mr. Doherty's job, please?
I have no qualifications either.


Incompetance

  • conned
  • 13/10/08 n/a (free)
  • a depositor
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  • Sat, 21/11/2009 - 11:21

My grandaughter aged 4 can count up to 18, can she have Mr Doherty's job?


No Qualifications !!!

  • merlina
  • 26/01/09 01/06/09
  • a depositor
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  • Sat, 21/11/2009 - 04:48

Now I understand why we are still paying Doherty's salary - where else could he get a job without any qualifications. Will we be paying for him for the next 10 years ?


YOU GET WHAT YOU DESERVE

  • conned
  • 13/10/08 n/a (free)
  • a depositor
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  • Sat, 21/11/2009 - 07:59

While we all keep quiet because we are too lazy to do anything about it, then you can only say, 'we deserve what we get.' These people lead us about by the nose and we let them. We need to go for the Great Leap Forward, now is the time to put the pressure on. 2 weeks after I was told the figures for the last quarter for deposits on the IOM would be out. Where are they? I suspect they are not good, thanks to our efforts in broadcasting our plight. We need to keep the pressure up.


I dont think this is anything

  • expatfrance1
  • 15/10/08 31/05/09
  • a depositor
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  • Sat, 21/11/2009 - 06:11

I dont think this is anything unusual in banking. As far as I can remember, most of the senior managers in the failed UK banks had to admit to the Treasury Select Committee that they had few if any relevant banking qualifications. Only goes to show that in banking and finance it is more who you know than what you know!!


BOB'S YOUR UNCLE?

  • conned
  • 13/10/08 n/a (free)
  • a depositor
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  • Sat, 21/11/2009 - 07:52

Robert Peel conived at getting all his relatives jobs in Parliament, hence the Quotation, ;Bob's your uncle' Nepotism is alive and well and living in the IOM.


this is the latest article on IoM today

  • expat
  • 10/10/08 31/05/09
  • unspecified
  • Offline
  • Fri, 20/11/2009 - 13:58

Published Date:
19 November 2009
By ADRIAN DARBYSHIRE
THE collapse of Kaupthing Singer & Friedlander (Isle of Man) was precipitated by the 'unforeseen and unilateral' actions of the UK authorities, the bank's directors have told a Tynwald select committee.
And the directors insisted they knew nothing about the imminent danger the bank was in until the very last moment.

Former chief minister Donald Gelling, a non-executive director of the ill-fated bank, likened it to being on a pedestrian crossing and being hit by a wagon.

'All of a sudden the whole thing was taken from under us,' he said.

Mr Gelling was one of four witnesses giving evidence to the second public hearing of the Tynwald select committee set up to investigate KSF (IoM)'s collapse on October 8 last year, the others being fellow non-executive director John Cashen, managing director Aidan Doherty and the bank's former financial director Andrew Davies.

All remain in office except Mr Davies who resigned at the end of November last year.

In an opening statement, Mr Gelling said the bank had been 'solvent and viable' right up October 8, and was fully compliant with its regulatory and licensing requirements.

He said that in April 2008, amid growing concern over the state of the Icelandic economy, the Isle of Man's financial regulator the Financial Supervision Commission had 'requested and approved' the transfer of £185 million from the parent bank in Reykjavik, Kaupthing hf, to the Island's sister bank in London, KSF (UK). This was done in the form of a secured equity repurchase (repo)agreement.

Then in June, the FSC indicated it wanted KSF(IoM) to remove all its remaining potential exposure to Iceland and as a consequence, £175 million was transferred to KSF(UK).

Mr Gelling said that on October 8, without warning or having given any notice of their intentions to the FSC or KSF (IoM), the UK Treasury and the FSA ordered the transfer of the majority of KSF (UK)'s retail deposits to ING Direct and placed the London bank into administration.
Deprived of access to the funds, KSF(IoM) called upon Kaupthing Bank hf in Reykjavik to provide liquidity to meet its future needs, said Mr Gelling.

When advised that KBhf was unable to honour its parental guarantee, the bank's directors petitioned for a liquidator provisionally who was appointed on October 9.

'Against the backdrop of economic turbulence unprecedented in recent times, the collapse of KSF(IoM) was precipitated by the unforeseen and unilateral actions of the UK authorities,' said Mr Gelling.

Committee chairman Juan Watterson MHK asked: 'Was there an "aha" moment, "this is the end"?'

Mr Doherty replied that moment came at 7.50pm on the evening of October 8, when the parent bank in Reykjavik, the ultimate lender of last resort, refused to provide liquidity the Island bank needed.

He insisted he had 'kept his eye on the ball' but the information being provided to the KSF (IoM) directors 'substantiated our belief that the group was in a sound financial footing both in terms of capital and in terms of liquidity'.

He added: 'I've absolutely no idea why anybody chose not to tell us. There was a whole list of people. Nobody in Reykjavik, nobody in KSF (UK) told us anything. The FSA told us nothing even though we registered with them as part of our mortgage business. They chose not to tell the FSC. There was a cloud of secrecy.'

Mr Gelling added: 'There was actually a gag, I'm quite certain of it.'

Mr Doherty refuted any suggested that the Island's Kaupthing bank had been involved in high risk banking.

He claimed part of the securities that had backed the repo agreement had been removed 'without Isle of Man knowledge or approval', which he said was currently subject to a legal challenge.

Each of the directors were asked if they had withdrawn money from accounts at the bank.

One said that he had — Mr Davies confirmed he had withdrawn money on October 6 as he was 'restructuring his personal finances' and was looking to repay part of his mortgage. He was given no preferential treatment, he inisisted.

Each witness was also asked if they had banking qualifications. Mr Gelling replied that he had none and Mr Doherty said that he too had no professional qualifications but he had worked in banking for 32 years since the age of 16.


Buck passing..

  • dawes
  • 24/10/08 31/05/09
  • unspecified
  • Offline
  • Wed, 18/11/2009 - 11:53

"Mr Gelling, in a brief opening statement, stated that in the Board’s opinion, right up to the point the bank was put into provisional liquidation, it was a solvent and viable business."

Bull****. Kaputthing was insolvent years ago..


By Alex on Oct 21, 2009 in Finance and Business, Iceland, International, MBL, Politics, United Kingdom

high-court-londonThe much-talked-about EUR 500 million from the Central Bank of Iceland to Kaupthing shortly before the latter bank collapsed did not (for the most part) go to the UK and into Kaupthing Singer & Friedlander. This is one of the findings of the High Court case in London brought by Kaupthing against the British government. It is interesting to note, according to Visir.is, that the court ruling implies that if the loan had been used to support KS&F, the fall of Kaupthing might have been avoided.

http://www.icenews.is/index.php/2009/10/21/kaupthing-loses-claim-against... is clear that the British government’s forced closure of Singer & Friedlander was the last nail in the Kaupthing coffin during the eventful first days of October last year. After this, the company was doomed.

The court ruling pointed out that the UK financial regulator, the FSA and Kaupthing negotiators reached an agreement after exhaustive negotiations on 4-5 October 2008 that Kaupthing would increase Singer & Friedlander’s cash position in stages. The FSA did inform Her Majesty’s Treasury (the UK finance ministry) of this decision.

The EUR 500 million loans from the Central Bank of Iceland came on 6th October. The day before (5th), Kaupthing had promised to pump GBP 186 million into KS&F (around half the loan value) on the 7th October. In reality, only GBP 36 million ended up in London. As previously reported by Visir, the FSA believed that the additional GBP 150 million had been frozen by the Central Bank of Iceland.

But according to other sources, this was not true. Visir.is reports that the entire loan was paid out; but that Kaupthing used the money to shore up its operations elsewhere in Europe. Among others, a portion of the funds went to Sweden and another chunk was used to save Kaupthing Edge in Germany. This comes as a surprise because Kaupthing managers themselves pointed out that Singer & Friedlander would be the key to the bank’s survival.

The nationalisation of Glitnir Bank is also mentioned in the High Court ruling and the strong negative effect it had on trust in the entire Icelandic banking system.

On the day after Glitnir’s nationalisation, on the 30th September, GBP 37 million was taken out of Kaupthing Edge bank accounts in the UK. This massive withdrawal triggered a ‘code red’ on the state of Singer & Friedlander. In response, Singer & Friedlander announced it would increase its funding from Kaupthing by an additional GBP 1.1 billion; but the mother company could not provide such funding.

The FSA later agreed to accept GBP 1.25 billion in smaller chunks, as stated above.

It was at this time that Kaupthing made desperate attempts to sell S&F to JC Flowers. The negotiations failed partly because Kaupthing promised the FSA it would transfer GBP 175 million “within hours” on the 7th October. The funds, however, never arrived.

On the 8th October, the FSA learned of the failed JC Flowers deal, but accepted Kaupthing’s new promise to send GBP 300 million; but that too never arrived. By this time, the patience of the British government was exhausted and later that day the government decided to take over Singer & Friedlander and transfer all its assets to ING Direct in the Netherlands before it fully collapsed.

This timeline of developments seems to be accurate and is backed up by documentation presented during the High Court hearing. However, during the entire process last autumn, Kaupthing leaders were assuring the world the bank’s overall liquidity was strong and the chances of collapse were extremely remote.

(Note, in the typical way of the Icelanders, the link no longer points to the real article. Embarrassing facts censored out from the their fairy story)


Its interesting to hear the

  • expat
  • 10/10/08 31/05/09
  • unspecified
  • Offline
  • Wed, 18/11/2009 - 08:26

Its interesting to hear the accounts given at the Inquiry and then read this article in the FT on the way the offshores are being treated

http://www.ft.com/cms/s/0/66d54c12-d3e3-11de-8caf-00144feabdc0.html

You might also be interested in this article in the FT:
http://www.ft.com/cms/s/0/8f5e8b10-d241-11de-a0f0-00144feabdc0.html


Manx Herald Report on KSFIOM Directors' Evidence

  • leno
  • 06/11/08 31/05/09
  • a depositor
  • Offline
  • Tue, 17/11/2009 - 15:11

How is it that Mr. Davies, former finance director of KSFIOM, was able to withdraw his funds on 6th October 2008? I requested my account and my wife's account to be closed and the funds transferred to our English bank accounts by letter posted on 4th October and received by KSFIOM on 6th October. It was impossible to contact the bank by telephone on the following days to check that our instructions had been implemented. When I finally did make contact I was told that because of the volume of requests meant that ours had not been acted on. Was Mr. Davies given special treatment, if so, why? If he was not given special treatment why do I, and many others like me have to rely on luck of the draw?


KSF IOM director's evidence

  • Brabander
  • 15/10/08 31/05/09
  • unspecified
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  • Mon, 16/11/2009 - 21:34

I sincerely hope that Aidan Doherty is correct in his hope that "they will be able to recover, and pay out to depositors, far in excess of what is expected". He should be in an excellent position to judge the feasibility of this statement as in his evidence he has also stated that he is being employed to manage the recovery of the banks assets.
This, of course, begs the question of what he thinks the recovery expectation is?
Based on past reports by MS I suggest that the current expectation is a minimum of 80%.
I am right to assume that in consideration of Aidan Doherty's evidence the actual recovery is now likely to be far in excess of 80%?
How do other depositors feel about this?


@Brabander+80%

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
  • Offline
  • Tue, 17/11/2009 - 21:40

I am right to assume that in consideration of Aidan Doherty's evidence the actual recovery is now likely to be far in excess of 80%?
How do other depositors feel about this?

I feel very much encouraged by this and want to believe it.


hopeful?

  • brokefirefly
  • 12/10/08 31/05/09
  • a depositor
  • Offline
  • Wed, 18/11/2009 - 18:10

Sounds more to me like someone telling the Committee exactly what they want to hear.......we've all been looking for ways to get back "more than expected" for over a year, and none of us can think of anything except an (increasingly unlikely) political solution, or successful legal action (the cost of which would probably be prohibitive).

I wish I could feel encouaged and believe this too, but, as Conned says, these are the people who claim they didn't see anything coming until lunchtime on 8 October 2008. Even many of the depositors, who had been kept in the dark by false reassurances, had tried to remove their money by then!


Including Mr Davies - director of KSFIOM

  • glen07
  • 21/10/08 n/a (free)
  • a depositor
  • Offline
  • Wed, 18/11/2009 - 21:59

Funny enough, Mr Davies also decided to withdraw his deposits and unlike so many others, mananged to withdraw his funds on 6th October as did one of Mr Doherty's relatives. Funny coincidence or what? Are directors of KSFIOM really that out of the loop of world financial information?


Hopeful?

  • Valentine
  • 18/10/08 31/05/14
  • a depositor
  • Offline
  • Wed, 18/11/2009 - 05:58

He "very much hopes" that depositors will get back more than they expected.

This doesn't make me any more hopeful at all.


Expected Returns

  • Alastair
  • 10/10/08 30/09/09
  • a depositor
  • Offline
  • Wed, 18/11/2009 - 19:11

Doughty's comments in themselves don't mean much. What I do take hope from is:

  1. Liquidators/Accounts are naturally conservative and there is no upside in over promising. Better to be conservative and deliver more so they will normally indicate numbers with very high degree certainty leaving upside.
  2. The economic climate has improved since the 77-88% return (not real term) was predicted by PWC.

Given the above 2 factors I beleive that Doughty's comments probably reflect inside knowledge (he is still working with PWC) of the state of the loan book and the various other elements of the KSFIOM assets. You can see this even in the KSFUK predictions from E&Y in which in excess of 50% was changed to 60-75% (those figures off the top of my head)


Transcripts of the two

  • expat
  • 10/10/08 31/05/09
  • unspecified
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  • Thu, 19/11/2009 - 07:56

Transcripts of the two sessions may be found at

http://www.tynwald.org.im/papers/early/committee/eptksf281009.pdf and http://www.tynwald.org.im/papers/early/committee/eptksf131109rha.pdf .

I also concur with Alistairs comments by the way, I also note that the exposeure to the Uk is not as bad as has been suggested, that makes a difference in a rising market.


Complete transcript of Directors Evidence

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
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Faith in Directors

  • conned
  • 13/10/08 n/a (free)
  • a depositor
  • Offline
  • Tue, 17/11/2009 - 15:22

I don't know how much faith you can have in Directors who didn't see Kaupthing hitting the buffers until lunch time on 8th October?


Hi Brabander, I am waiting

  • thesunnysouth
  • 10/10/08 31/05/09
  • unspecified
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  • Mon, 16/11/2009 - 22:35

Hi Brabander, I am waiting for the update from the Committee as hopefully it will provide an update on not only what we will expect in a months time but a general view of how well returns are doing and whether the loan book is holding up as well as we all hope. If the E&Y returns are incrasingly becoming a smaller percentage of the overall return it is to our own loan book we should be looking and if the evidence to Tynwald is to be believed it is very good and should return a high yield. So 80% is fast becoming a minimum - hopefully!
John


A modest proposal

  • arny
  • 15/10/08 31/05/09
  • unspecified
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  • Sun, 15/11/2009 - 20:29

I am coming/going to Blighty in the spring to protest ouside one of the Derbyshire Building Society branches. I am flexible as to the date, but later rather than sooner would be safer weather wise, so, say May.
Can we cover all the branches on the same day? Far better publicity that way. We have lots of time to plan things. I haven't seen a copy of the handout used before. Can it be improved? May I have a copy?

Any takers?

Things have gone very quiet recently. Am I the only restless native?


bbciplayer

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Wed, 11/11/2009 - 17:13

Go to the world service programme Business Daily. Iceland's special prosecutor speaks.


Donald Gelling

  • arny
  • 15/10/08 31/05/09
  • unspecified
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  • Fri, 06/11/2009 - 06:34

and three other directors are to give evidence to the Tynwald Enquiry on 13 Nov. Do we have someone at these sessions?


Alan Bell Evidence

  • Julie
  • 03/12/08 14/07/09
  • a depositor
  • Offline
  • Fri, 06/11/2009 - 14:10

Where will this be held in the I.O.M?


@ Julie

  • arny
  • 15/10/08 31/05/09
  • unspecified
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  • Fri, 06/11/2009 - 17:20

Yes it's ongoing, I can't find regular reports. Perhaps it's not a daily event, the committee have day jobs.


yes we will have somebody at

  • expat
  • 10/10/08 31/05/09
  • unspecified
  • Offline
  • Fri, 06/11/2009 - 07:00

yes we will have somebody at the seession arny


Looking at the bigger picture

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Tue, 03/11/2009 - 10:39

Two articles:

Kaupthing could acquire forty per cent in Hagar. to be found at iceland review online.

icenews.is Has details of EU negotiations.


Blacks fight for rescue

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Thu, 29/10/2009 - 09:00

Would somebody please post the article in the Evening Standard. I really should learn how to do it myself!


Hi arny - which article?

  • glen07
  • 21/10/08 n/a (free)
  • a depositor
  • Offline
  • Thu, 29/10/2009 - 09:33

Which article do you mean. I have joined the E-Evening Standard subscription ( it's free) but can't find the article to which you are referring. Can you give me any other details and then will post onto site.


London Evening Standard online

  • arny
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Thu, 29/10/2009 - 10:19

In the Business section. Blacks fight for bank rescue as losses soar. Their is more on The Times.


@London Evening Standard

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Thu, 29/10/2009 - 14:08