Its Obvious - No Parental Guarantee with No IOM Money

  • podather
  • 10/10/08 31/05/09
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Posted: Wed, 03/12/2008 - 13:45

Can't understand why it took so long to dawn on me....
The parent bank Kaupthing if was happy to offer a parental guarantee for 100% of the depositors finds in the IOM
because 80% of this money was being upstreamed back to them by the IOM.
No problem in offering somebody there money back when you have it to offer.
Soon as the FSC changed the direction of these funds and sent them to KSF UK in april this year the funds ceased to
be under the control of the parent bank that offered the guarantee.
NO funds sent here, NO guarantee to return them.
The FSC are surely in breach of the conditions of the parental guarantee by diverting the money away from Kaupthing if.

Looks like they broke the conditions and any chance of claiming under the parental guarantee by moving the funds to KSF UK and then failed to secure there return from there when they did!!!!!!!

How more negligent could they be ??????

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1) Does it make any

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Fri, 05/12/2008 - 01:17

1) Does it make any difference that the FSC advised/forced the transfer? I would have though that "force majeure" would have covered this, and in any case, the funds were not out of reach or control of KSF IoM or the parent until about the 6th of October.

2) If the PG is voided by the actions of the FSC, then the FSC having had sight of the PG would have a contingent liability in any losses caused by their actions.

3) KSF IoM could have of it's own volition deposited money with KSF UK, would the guarantee be void from inception in that case.

4) I see that the Directors of the bank and the FSC have a great deal of explaining to do, and possibily a great deal of liability in this matter.


parental bank guarantee

  • Anonymous
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  • Sat, 06/12/2008 - 04:14

I can't believe KSFIoM switch the money flow from away from its parent bank on the prodding of the FSC.
FSC "Your parent bank is about to go bankrupt, so you fellas shoud shift your inflow to another country, erm, like for example, England."
KSFIoM "Cool. We'll shift it to another solid bank, like to another subsidiary of the parent bank."

No way! When KSFIoM contacted its parent bank to inform the parent bank of its upcoming demise, Kaupthing Iceland did... did what? Nothing? What's the meaning of the parent bank / subsidiary relationship? If the subsidiary is totally free to go its own way, the parent bank cannot effectively guarantee the deposits of the subsidiary, so the parental guarantee was void from the start.

The people who actioned the transfer of so much money to another Iceland bank acted unreasonably. I want to know their names and roles.


PG is what we trusted when depositing

  • MichaelB
  • 16/10/08 31/05/09
  • unspecified
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  • Thu, 04/12/2008 - 23:25

Thank you Sleepless ..... the PG is now out in the open for all to comment on at last !!!

Go to : http://www.ksfiomdepositors.org/members-page/parental-guarantee#attachments to view.

In fairness Elgee your analysis is pretty good. Well done ! But still dont understand why it took so long.

Initially I would guess that we should be looking towards FSC, IOM Govt and the Directors of KSF IOM should all be asked to explain why this fairly limp guarantee was initially accepted and not strengthened as time went by when the state of the Icelandic problems became known 12 / 6 / 3 months ago.

Any opinions ??

The PG gets to the heart of why the Depositors trusted KSF IOM / FSC / IOM Govt with our money.

This trust clearly now is not worth the paper it is printed on.

It therefore follows that not only the KSF IOM let us down but by direct implication the FSC and the IOM Govt at worst let us down badly but more likely falsely let us to believe 100% of our money was safe.

This is a serious breach of trust that spreads its way around the entire finacial system of the IOM.

If we cannot rely on the FSC and IOM Govt we have no hope and the future of the IOM is at risk.

The only way out seems that under these circumstances the IOM Govt must find a way to return 100% of all our money or face serious litigation Iceland style


I wonder......

  • SgKZ
  • 10/10/08 31/05/09
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  • Sat, 06/12/2008 - 15:56

Just by way of contrast, I wonder what the preceeding guarentee given by the Derbyshire looked like. I wonder if that looked like an IOU scribbled out on someone's lunch break or a proper legal document. Surely these things would need to be sworn and registered in the jurisdiction to which they apply?

It doesn't even say according to which country's laws the guarentee is made!

Shoddy.


17 th Sept 2007 ? What

  • margaretta
  • 22/11/08 31/05/09
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  • Sat, 06/12/2008 - 02:07

17 th Sept 2007 ? What brought this about ? The Derbshire acquisition ? What was going on before 17 Sept 2007 ? The IOM FSC saying Hi, please take our depositors money and don't worry too much about giving it back. We'll cover up for you if there is any stink? After all we need you to cover up for us just as much as you need us to cover up for you. And that's even before we start having to consider HMG and the FSA since if we have to start trying to cover up for them then we're going to need considerably larger buns.


forget the guarantee for now

  • sleeplessnight
  • 10/10/08 30/06/09
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  • Thu, 04/12/2008 - 23:44

Whether it was or was not executed correctly cannot change the content...focus all our attention on clause 27 of the uksi 2008 2674 document and spend every minute you can badgering your MP, MEP, PPC and milk man...


Be creative with which MP's

  • Alastair
  • 10/10/08 30/09/09
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  • Fri, 05/12/2008 - 00:30

I now have establish 5 different MP's that I write to. Ours, my sisters, my sister in laws, my father in law and one of my oldest friend. I draft the letter they ok it and either I send it for them via the site www.theyworkforyou.com or if they have replied by email my family/friend cut and pasting into their email.

I think I can double this number. One of the causes of the currently financial meltdown was the use of excessive leverage now it is our turn to use the leverage of our friends and family. This way 2000 of us can make a much bigger noise.


BC - good for you

  • sleeplessnight
  • 10/10/08 30/06/09
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  • Fri, 05/12/2008 - 00:43

that's exactly the course of action. I know we have been battered from pillar to post, we are all emotionally, physically and financially exhausted - but we must preserve the fight - this is it, as individuals applying the political pressure.


That's just a guess. Please

  • frog
  • 10/10/08 13/09/09
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  • Wed, 03/12/2008 - 20:49

That's just a guess. Please don't lead everyone to assume it is a fact (like the rest of this thread seems to)


When information is witheld

  • Bill
  • 13/10/08 n/a (free)
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  • Wed, 03/12/2008 - 21:41

When information is witheld people begin to speculate. I don't see this as a fact but am unable to understand why the guarantee is not public. Theories like this are inevitable - maybe true???????????


Proved to be wrong

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

Proved to be wrong though.

The key issue here is that the IOM Government have to be absolutely sure that if they do take the bank out of its current parentage, that all the skeletons are out of the closet and they are in no need to rely on the parental guarantee.


No Parental Guarantee with no IOM Money

  • Bill
  • 13/10/08 n/a (free)
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  • Wed, 03/12/2008 - 13:59

Tough decision for IOM to make.
(1) Allow the money to go to a black hole in Iceland or
(2) Send it to UK effectively nullifying the guarantee (if this is indeed true).

Solution - you make damn sure that the money that goes to the UK is securely ringfenced and that KSF (IOM) would be a preferential creditor without any doubt whatsoever. But in any case wouldn't you do that anyway?

After all we are talking about more than half a billion!


Nothing in Iceland

  • ItsTheft
  • 10/10/08 31/05/09
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  • Wed, 03/12/2008 - 15:50

Correct, though when the decision was made to divert the cash to KSF UK it almost certainly didn't occur to anyone that UK citizens would be stiffed. The choice probably was seen as either let it go to the black hole in Iceland or move it to the UK (and use it to cover UK depositors?). It is almost certainly gone now anyway. Recession = shrinking money supply = wealth/cash just vanishing.

The parental guarantee from KSF was very much a case of "yes, we can cover you based on the balance sheet". It was not a case of "oh sure, we can cover you no matter what happens because that's the kind of people we are".

So, the parental guarantee is pretty meaningless, and Iceland, even with all its rescue packages only ever intended to cover savers up to the EU compensation limit of about £15k. Besides, they have much bigger problems than us. KSF IOM won't be getting all owed monies out of KSF UK (or that would have happened by now). Where does that leave us? A very outside chance that KSF IOM is wound up and collects enough cash to combine with IOM gov money (comp scheme or whatever) to cover us savers. But I think it is a long, long shot. We should be expecting to get back something like 50% of our savings which is more than we would have gotten from a fire sale liquidation.

Sorry to be a pessimist but I can't see any other way. The KSF loan business can't be worth that much in today's climate, and anyone contemplating taking over the entire KSF business will be crystal clear that on day one about £860m of deposits will be withdrawn. I.e. the depositors will continue and complete the run on the bank as soon as they (we) are given the opportunity.


So the choice was..

  • dawes
  • 24/10/08 31/05/09
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  • Wed, 03/12/2008 - 18:31

Send it to Iceland and get 0% back in liquidation (the Icelandic government has asset stripped th banks to cover the Icelandic depositors) or send it to the UK and get some %age back in Liquidation.


Letter of comfort ?

  • 9-10
  • 12/10/08 31/05/09
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  • Wed, 03/12/2008 - 19:49

Yes and we'd be learning to beg in icelandic.
The parental guarantee for Landsbanki Guernsey ( their situation parallels ours closely ) was regarded by their administrators
( Deloitte & Touche LLP ) as a letter of comfort .
Don't know about Kaupthing but someone posted earlier that it was for PWC to decide on publication of this guarantee.
A comment on it by PWC, as Deloitte & Touche LLP did , would stop speculation.
I'm exasperated that 1/2 billion would not demand more protection.
see...... http://en.wiktionary.org/wiki/letter_of_comfort

Alas i think banks and governments should hang their heads in shame.
It seems that at the last resort, depositors are expendable .


Letter of comfort?

  • IceCrusher
  • 14/10/08 25/10/11
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  • Thu, 04/12/2008 - 07:47

I have no idea of the wording in the Landsbanki guarantee, but the 'letter of comfort' example does not contain the word 'guarantee'. There are many definitions and here is one of them:

http://www.answers.com/topic/guarantee
Financial & Investment Dictionary: Guarantee
Home > Library > Business & Finance > Finance and Investment Dictionary

To take responsibility for payment of a debt or performance of some obligation if the person primarily liable fails to perform. A guarantee is a Contingent Liability of the guarantor-that is, it is a potential liability not recognized in accounts until the outcome becomes probable in the opinion of the company's accountant.


Why did the money in KSF IoM have to anywhere ?

  • MichaelB
  • 16/10/08 31/05/09
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  • Wed, 03/12/2008 - 16:58

Perhaps I am missing something major here ?

Why did the money in KSF IOM have to transferred anywhere .... to the UK or Iceland ?

Could it have not stayed in the IOM ?


Moving of funds

  • icdbrazil
  • 10/10/08 30/11/09
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  • Wed, 03/12/2008 - 17:05

Limited opportunities for investment in IOM. Hence like many banks IOM ops are mainly deposit taking, then Banks have to make monies work in order to remunerate deposits, hence need to move cash elsewhere.


MichaelB

  • Ramsey resident
  • 22/10/08 31/05/09
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  • Wed, 03/12/2008 - 17:05

To eran the interest the bank pays you your money has to be put to work earning further money. It will not do that sat in the banks own coffers. That is why banks lend to each other via wholesale money markets


I understand that ...but

  • MichaelB
  • 16/10/08 31/05/09
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  • Wed, 03/12/2008 - 17:12

I fully understand that the Bank is not going to make any profit just holding onto our cash in the IOM.

The question is .... and I may be wrong .... how much , how often and when was the £550m of KSF IOM sent to the UK.

Reading all this it sounds like KSF IOM sent a huge lump sum to the UK a few days prior to the UK going down ?

Was this total sent over a long period of time ?


I understand from recent

  • chipmunk
  • 13/10/08 31/05/09
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  • Wed, 03/12/2008 - 18:13

I understand from recent posts that the money was sent to Uk over a period of many months and as far back as April large deposits were transferred..


Comes down to who knew what and when

  • Bill
  • 13/10/08 n/a (free)
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  • Wed, 03/12/2008 - 19:15

It seems that those in the know knew that Iceland was high risk - I posted an academic paper here a while ago that said that they reported on the potential of banks failing in early 2008 but also said the potential crisis in the Icelandic banking sector was clear to see years ago - the authors state

"This was clear in July 2008, as it was in April 2008 and in January 2008 when we first considered these issues. We are pretty sure this ought to have been clear in 2006, 2004 or 2000."

see for yourself:

http://www.voxeu.org/index.php?q=node/2498

By Spring 2008 these fears became high on the agendas of HMG and of course IOM/FSC knew what could happen. Hence the out flows of cash to UK at that time and on.

Thing is, knowing that Iceland was so risky, why send 60% to KSF UK without having it secured in the event of a problem since that potential was all apparent to those in financial and government circles. Okay so this money probably had to stay in-group but if the IOM had insisted that it be secured we'd have the 550m and be in good condition right now. So what were the IOM regulators doing?

And as far as the guarantee is concerned - it must be pursued despite the negative speculation, and if there is negligence in setting up that guarantee that error needs to be paid for too. We should not accept an argument that since Iceland can't pay anyway then the failure to do due diligence is no longer relevant which is maybe a road that this is going down.


Can we please seea copy of the PG

  • MichaelB
  • 16/10/08 31/05/09
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  • Wed, 03/12/2008 - 20:14

Last night a few people got very upset because they claimed to have a copy of the PG and when asked to publish it they refused to do so. ...... and they claimed the CORE group also had a copy of the PG .... but for some reason nobody explained why we all cannot see it ???

What is the big deal here folks ?

If somebody somewhere has breached the conditions surrounding it we must know how and why.

May the PG is not worth the paper it is written on as many have suggested but to deny us a chance to view a document in which we all put our trust and money is crazy.

So is there a copy of the PG amongst us or not ?


I have asked elgee to "post

  • cottesmore
  • 21/10/08 16/07/12
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  • Wed, 03/12/2008 - 20:19

I have asked elgee to "post it" or "shut it."No one has come forward with the PG,so i guess it was all bullsh*t.
I dont understand the "game" some are playing,unless it's outsiders stirring it big style.If that is the case, why dont they, 'F' off!


I agree ..... I am impressed by delivery not talk

  • MichaelB
  • 16/10/08 31/05/09
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  • Wed, 03/12/2008 - 20:33

I agree .... all this cloak and dagger rubbish that some like to play here. ..... all secrets behind closed doors and "for your eyes only" crap.

Again .... if anybody has a copy of the PG please let us all see it !

We are all reaching the end of our patience as I watch the interest on my credit cards mount up daily.

I will have to start taking furniture to the auction house soon so we can all eat .... heart breaking after 60 years of hard work and saving.

No Christmas for us this year ..... same for many I know.


please see this blog:

  • sleeplessnight
  • 10/10/08 30/06/09
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Stress

  • 9-10
  • 12/10/08 31/05/09
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  • Wed, 03/12/2008 - 22:42

If there's no statements by the end of this week on interim rescue payments somethings gotta blow.
Immediate hardship was avoided in the Landsbanki Guernsey administration as most got 30% back within 3 weeks.
So despite blowing trumpets for the iom comp scheme we are worse off in the short term.
I wish i could put some constructive thought into the forum , but i have immediate obligations and worried about them
and it concerns me that PWC is safe keeping some of our money with no regard for many ( some abroad and isolated ) who live from these accounts.
Anybody got knowledge of upcoming events.
ie 1.date for meeting to approve interim payment scheme
2.date for release of application forms
3.timeline for processing thousands of claims
gee it'll be already january before we see a penny.
sorry too stressed to help - i'll try the bank again tomorrow.


IOM mention payouts they are working on it

  • Spanishfly
  • 25/10/08 31/05/09
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  • Thu, 04/12/2008 - 00:16

Came across this you all might have seen it at least someone is thinking about it

http://www.gov.im/cso/faq_gfs.xml


http://www.manxradio.com/listenagain.aspx Keys 2

  • skintagainnow
  • 10/10/08 31/05/09
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  • Thu, 04/12/2008 - 00:47

The question is when, propably not before xmass - http://www.manxradio.com/listenagain.aspx

Keys 2 - 1min 20secs in - Question 9 KSF IoM


manx radio

  • sad
  • 10/10/08 31/10/09
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  • Thu, 04/12/2008 - 01:04

Hey, don't tell people 'exactly' where to hear this.....they will miss out on the taxi company, overpaid opthelmic doctors etc etc......


LOL - Sad

  • skintagainnow
  • 10/10/08 31/05/09
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  • Thu, 04/12/2008 - 02:15

I guess I've spoilt their fun for a good 11/4 hrs listening then..


I agree

  • bellyup
  • 10/10/08 09/01/10
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  • Wed, 03/12/2008 - 23:12

I agree and don't see what difference it makes in the long run
It will help those in need now.