LGA webpage

  • sandman
  • 23/10/08 31/05/09
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Posted: Tue, 04/11/2008 - 18:57

Take a look at the LGA webpage below. Potentially very interesting..

www.communities.gov.uk/statements/corporate/icelandicbanks

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Goverment seizing funds

  • shafted
  • 10/10/08 12/12/09
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  • Tue, 04/11/2008 - 19:46

Just a thought, did the goverment seize the funds to compensate the losses of local authorities which although they have said they were not covering, this would be a back door method?


LGA website

  • sandman
  • 23/10/08 31/05/09
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  • Tue, 04/11/2008 - 19:11

Sorry, forgot to add that paragraph 5 is the interesting bit. I've got so confused with the differing views on how much the assets of KSF UK are worth but thought this view from the liquidators may be significant.


KSFUK asset value

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Tue, 04/11/2008 - 19:37

I guess you're referring mainly to this:
The LGA reported on 14 October that, in broad terms, the administrators considered that the value of the book value of the assets of each business (KSFUK,Heritable) appeared to be of the same order of magnitude as the liabilities, but that the recoveries for the local authorities would be dependent on the final level of actual realizations.

I wonder why it is that the KSFIOM liquidator provisionally has not been able to give us this information..He has been silent for some 11 days now!


You're right...

  • sandman
  • 23/10/08 31/05/09
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  • Tue, 04/11/2008 - 20:00

I find it hard to believe that PWC have made no comment for a week and a half on where we stand if KSF IOM is liquidated on 27th Nov and think it's about time that Mike Simpson made an official comment on the assets that are available if the liquidation goes ahead.

Like many others, I'm temporarily working abroad and am unfortunately still a UK tax payer but have no UK address so had to put the sale of my house proceeds offshore and find it difficult to stomach Darling's pathetic performance in front of the TSC yesterday


Ally will get online in a

  • expat
  • 10/10/08 31/05/09
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  • Tue, 04/11/2008 - 19:56

Ally will get online in a hour and try to fill in some numbers for you, from memory the loan book described a good quality, is about £410m


KSF IoM Balance sheet

  • Ally
  • 13/10/08 31/05/09
  • unspecified
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  • Tue, 04/11/2008 - 22:10

Expat sorry for the delay in getting back on this, the damn phone line went down tonight!

In terms of KSF IoM figures are for 30 September and are included in Aiden Doherty’s second submission to the court on 24 October. This is available from the FSC website.

Now the cash figures change between 30 September and 8 October but the loan book was £410 million, this was good quality. The impairment charge at 31 Dec 07 on a loan book of £245 million was less than 1%.

Within the liabilities in a sub-participation loan from KSF UK of £164 million. This is basically money owed by KSF IoM to KSF UK. This is very important as if they can be offset the money due from London is only £390 million not £550 million.

I am not an expert in sub-participation but I have a basic understanding and usually sub participation loans are unsecured. I have obviously queried Mike Simpson on this but got what seems to be his standard reply

“I had raised a point into which they are taking legal advice”. Let’s see if we get any further than that.

This could be vital as if the amount owed from London after offsets is only £390 million I think this could make a big difference. The other thing to remember is £43 million of the liabilities on the balance sheet are share capital and revenue reserves (basically accumulated profits). I think it would be safe to assume the shareholders are going to get nothing back from this situation. Looking at this it is quite possible that the black hole is in the region of £350 million. I don’t want to get anyone’s hopes up on this but when you make the numbers smaller it would suggest the situation is more manageable. But like I say I have no definitive answer on the sub participation liability to KSF UK.

As for KSF UK all financial data is from 31 Dec 07 so a bit out of date. But it was a profitable and solvent bank. There is every indication that up until 8th October it had had a very successful 2008 and grew its depositor base quite substantially. The loan book was again quiet solid. The impairment charge at 31 Dec 2007 on the loan book of £3.9 billion was little more than 1%. As far as I can find out there is no sub prime lending in there. It was a good quality loan book mainly concentrated in the south of England.

As for whether the bank was insolvent. I very much doubt it. It had severe liquidity problems. Simple example, e.g. KSF UK had £4 billion in customer deposits it would only keep between 10 and 20% of this in cash form, so let’s say £700 million. The other £3.2 billion would be given out as loans mortgage’s etc.

It seems there was a silent run on the bank, so the £700 million of cash soon ran out as let’s say 30% of customers asked for their money back. This could have been the trigger for the administration. The bank has run out of cash but it still has assets of £3.2 billion (the loans and mortgages) If these are good quality then even in a fire sale you’d expect to get a fair price for that. These figures are just examples.


Ally - sub-participation

  • Knife Edge
  • 10/10/08 31/05/09
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  • Wed, 05/11/2008 - 21:44

Ally - Thanks for your message above [edited rest of my original post out, as basically dealt with in exchanges below]


KSF IOM Balance Sheet from Ally

  • fight theft
  • 10/10/08 28/05/13
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  • Tue, 04/11/2008 - 23:32

You are a wonderful valuable member of this group along with expat colddose mike in france occamsrazor and others - I hope to shake all of your hands and thank you personally someday in a very heavily populated victory party one day in the not too distant future.

Thank you for such very valuable information. Its great support to have such intelligent strong real men and top proffessionals keep in touch with us so well. Stay well and stay strong...
You obviously work in the financial world. Do you know much about banking mergers and aquisitions? I'm so glad you are all hounding Mike Simpson.

Based on these figures what do you think the chances are of a Co-op bank bought by the depositors, bond holders etc (also suggested by a couple of other members in this group) with the main share holders being the the bigger finacial companies who sold the bonds and pensions etc. The Swedish Kaupthing was bought by depostors I think - maybe we should contact them and ask to how they did it? We can hope to get "Firesale Prices".

I as a large depositer would rather pay a percentage of my savings to this rather than only get back aroung 8% of my deposits maybe after two years (less than just the interest my accounts would have accrued)
I have a London Banking friend who worked in mergers & aquisitions in London New York and Ireland for big Investment banks - Does anyone want me to call on him for advice?
I know quite a few of you members are ex-laid off KIOM bank employees who have lost not only your jobs but savings too (and I think you were the best banking staff I've delt with as a whole) do you have any thoughts or better still knowledge of how to progress this potential deal forward well before the 27th? Best regards Suzanne


Thanks Ally, That sounds a

  • mikepapa
  • 10/10/08 n/a (free)
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  • Tue, 04/11/2008 - 22:32

Thanks Ally,

That sounds a little more promising.... good work.

Cheers


KSF UK

  • frog
  • 10/10/08 13/09/09
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  • Tue, 04/11/2008 - 22:22

Hang on a minute, if KSF IOM owes KSF UK £164M, then doesn't that make our situation worse? It means we can't retrieve £550M from the UK - only £390M - and if so, where is the £160M?


KSF IOM

  • Ally
  • 13/10/08 31/05/09
  • unspecified
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  • Tue, 04/11/2008 - 22:34

I should have further said if you don't have the liability to Kapthing UK you are left with the following postion

Deposits 840 million

Cash recovered 100 Million
Loan book 410 million

Funding gap 330 million


I am not saying the money

  • Ally
  • 13/10/08 31/05/09
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  • Tue, 04/11/2008 - 22:29

I am not saying definively the money owed from London is £390 million, its just a possbility and one for Mike Simpson to yet clarify.

What I am saying is that KSF IoM had a deposit for sub participation from KSF UK of £164 million. In normal circumstances this would be unsecured so there would be a case for offsetting, But as I say nothing definitive on this.

Why does it make it better, look at the statement of affairs for 30 Sept 2008 given to the Court on 24th October (on FSC website)

Basically if you take away funds held in Iceland and on behalf of Icland and then take away the money held in London £550 million you find the balance sheet doesn't balance by £550 million so it is insolvent to the tune of £550. However if it is possible offset the liability to KSF UK with the £550 then the bank is insolvent only to the tune of £390 million.


So...

  • frog
  • 10/10/08 13/09/09
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  • Tue, 04/11/2008 - 22:56

I think I see - what you are saying is that £164M of the £550M should be moved into the loan book - KSF UK in effect gave back that amount for KSF-IOM to loan out?


Yes correct

  • Ally
  • 13/10/08 31/05/09
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  • Tue, 04/11/2008 - 23:03

Yes you are right, a subparticipation is basically that. KSF UK gave funds to KSF IoM to loan out, but the loan belongs to KSF IoM.

Usually sub participations are not secured, but we can't be sure here and when asked the question Mike Simpson did not commit.


Great

  • frog
  • 10/10/08 13/09/09
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  • Tue, 04/11/2008 - 23:11

And also only £10M of exposure to the parent.

That means that potentially only £390Mish is at risk - pending what percentage gets recovered from KSF-UK and the rest is mostly in the loan book or knocking around in spare cash or other small assets which are under control by the bank...

If so, then this should also make KSF-IOM quite attractive as a purchase to another (solvent) bank once the amount recoverable from the UK is clear because they won't care too much about people withdrawing cash from KSF-IOM, they'll basically be buying the loan book and funding it from their own cash reserves.


Great - Maybe!

  • Ally
  • 13/10/08 31/05/09
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  • Tue, 04/11/2008 - 23:24

Well yes someone would still have to fund that loan book so would still need £400 million or so to do that.

But when you make the numbers smaller the problem becomes more manageable. Yes if KSF Uk and KSF IoM amounts can be offset and say E&Y in London recover a conservative 50% of £390 that would be £195 the gap is £140 million.

These are all numbers that I am playing with there is nothing certain here. But if you look at the figures that are publicly available then it might be more manageable.


we are trying t set up a meet

  • expat
  • 10/10/08 31/05/09
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  • Tue, 04/11/2008 - 19:47

we are trying t set up a meet with PWC, but not getting very far to be honest, as to the asset value i think it was 60% cash, 14% assets on the iom and 25% in the loan book, but i'll get the numbers guys here (Ally!) to put you as straight as I can on that.


KSF London Assets

  • manksman
  • 01/11/08 31/05/09
  • not prepared to answer
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  • Tue, 04/11/2008 - 21:11

Assets showing up in the books as roughly equaling liabilities would be normal, especially for a bank, the real question is how much is tied up in Iceland? Then, if they have deposits in KSFIOM I assume that these will be netted off at each end, so reducing the amount of balances owed to depositors. Finally, of the rest, it will come down to market value, and non-performing loans.
PWC will know that the books showed Assets and liabilities, but like everyone else need to hear what they are actually worth. A larg(ish) portion of each class is possibly tied up in Iceland. If that is the case it would explain why HMG pulled the plug on them, and why no news has been forth coming.
By the way I note that the KSFUK website shows "UK Offices" and includes "Isle of Man" on the list. http://www.kaupthingsingers.co.uk/about-us/uk-offices . Very interesting!
This from the KSF UK website - showing the asset position at 31/12/2007. At that date the notes disclose very little exposure to Iceland.
http://www.kaupthingsingers.co.uk/lisalib/getfile.aspx?itemid=14564
Company Balance Sheet as at 31 December 2
As at 31
Notes Decem ber 2007
£0.00 %
ASSETS
Cash and balances held at central banks 14,16 256588 4.47
Treasury bills 15,16 382739 6.67
Bonds and debt instruments 16 −
Shares and equity instruments 16 18 0
Derivatives 16,25 223976 3.9
Derivatives used for hedging 16,25 7 0
Loans and advances to credit institutio 16,17 821322 14.32
Loans and advances to customers 16,18 3924518 68.42
Investment in subsidiaries 43 62829 1.1
Property, plant and equipment 21 24768 0.43
Investment properties 22 625 0.01
Intangible assets 23 11073 0.19
Deferred tax asset 31 8762 0.15
Other assets 24 18959 0.33
Total assets 5736184 100


expat.KSFUK assets

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Tue, 04/11/2008 - 20:06

expat, referring to this:"The LGA reported on 14 October that, in broad terms, the administrators considered that the value of the book value of the assets of each business appeared to be of the same order of magnitude as the liabilities, but that the recoveries for the local authorities would be dependent on the final level of actual realizations." (referring to KSFUK & heritable.)

I take this to mean that the assets of KSFUK are of the same level as its liabilities which to me, as a complete layperson, suggests that the bank could continue trading or that all creditors can expect to receive 100% Including us! Am I missing something /or is this just wishful thinking?


the line of thinking is

  • expat
  • 10/10/08 31/05/09
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  • Tue, 04/11/2008 - 20:53

the line of thinking is braodly there, the situation is not that simple sadly, but there does seem to be a basis that can br used to rebuid the deposit base. There are many factors in play here and a lot of work being done and still to do, but as a road to travel it certainly has merits, sorry to be a bit vague here, but there is a lot of sensitivity about this. sadly darlings contradictions got in the way of an iom statement today that I hope will begin to clarify this, its their turf not mine!


KSF UK

  • annespension
  • 19/10/08 31/05/09
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  • Tue, 04/11/2008 - 20:11

As far as I remember KSF UK was stopped from trading because its level of capital fell below the level required by the FSA for Banks. This doesn't necessarily mean that it is insolvent as the capital requirement includes a buffer to stop banks going insolvent. Thus potentially there could be enough assets to pay all creditors but not enough to allow the bank to trade.


Was it insolvent? Please

  • Anonymous
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  • Tue, 04/11/2008 - 21:04

Was it insolvent? Please read the 1st affidavit of Aidan Doherty if you don't think it was.


KSFUK Insolvent

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Tue, 04/11/2008 - 21:24

Doherty's 1st affadavit makes no reference to KSFUK


my mistake

  • Anonymous
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  • Tue, 04/11/2008 - 23:01

Sorry, my mistake. I read the post above too quickly.


Indeed....Lets not get

  • mikepapa
  • 10/10/08 n/a (free)
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  • Tue, 04/11/2008 - 20:33

Indeed....

Lets not get carried away.

There may well be funds available for substantial recovery of our deposits once E&Y and PWC have completed their determinations.

Remember neither KSF IoM of KSF UK has been wound up yet!

Cheers

PS: I see little point in going down the litigation route until E&Y and PWC have published their figures.


I don't think anyone is

  • Anonymous
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  • Tue, 04/11/2008 - 21:15

I don't think anyone is proposing litigation yet - at most what is being proposed is obtaining advice from counsel.


elgee - sensible comments

  • manx-person
  • 17/10/08 31/05/09
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  • Tue, 04/11/2008 - 21:55

How can anyone object to taking advice?
Unless they know it all already.
An hour of wise counsel by a Manx lawyer would I am sure be good value.


Litigation on the Cheap: Small Claims Court as a Trojan Horse?

  • VikingRaider
  • 10/10/08 31/05/09
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  • Tue, 04/11/2008 - 21:52

Few here seem to mention that for those resident in the United Kingdom with small deposits, small claims procedures are available up to £5,000 in England and Wales, £3,000 in Scotland and £2,000 in Northern Ireland, all of which are subject to the European Convention on Human Rights and the Human Rights Act, 1998. If all other avenues should fail, the sight of a old lady from Aberdeen taking on HMG in small claims court would hit the headlines worldwide and open the gates for the rest of us.