OFFICIAL IOM GOVERNMENT STATEMENT following Decision of High Court 27 November 2008

  • Lucky Jim
  • 13/10/08 31/05/09
  • not a depositor
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Posted: Sat, 13/12/2008 - 21:10

This is an extract from the IOM Government's Chief Secretary's Statement dated 5/12

Why is the Isle of Man Government getting involved?

The Isle of Man Government (the Government) is committed to protecting the interests of the depositors, the creditors and the reputation of the Island in the difficulties being experienced with Kaupthing Singer & Friedlander (Isle of Man) Limited (KSFIOM). By our actions we are demonstrating that the Island is a responsible International Finance Centre and we take this matter seriously.

As you will be aware, the Government has already committed significant financial resources to support the payout of up to £150 million in case the bank is unable to meet its obligations.

The Government believes, given the evidence that we have at present, that the depositors could be better off under the alternative plans being considered. However, much further work is required in this respect which is why we have requested an extension.

What has the Isle of Man Government been doing since the last adjournment?

Treasury has appointed AlixPartners (Financial Advisors) to identify and develop an alternative plan for KSFIOM so that depositors could be better off than if the court simply made a traditional winding up order.

An alternative plan for KSFIOM will seek to achieve the following objectives:

-- Preserving part of KSFIOM as a going concern and thereby enhancing the value for depositors;
-- Orderly and timely realisation of KSFIOM assets in the ordinary course;
-- Fast-tracking claims through a single channel and expediting payments to depositors;
-- Supplementing KSFIOM recoveries with Treasury and/or third party funds to provide recoveries sooner than might be available under the Depositors Compensation Scheme (DCS).

Why has the Isle of Man Government asked for an extension?

A number of potential options are being considered. These range from a sale of the business by the Liquidator Provisional to a restructuring plan. These options aim to deliver the objectives set out above.

More time is required to progress discussions with third parties and to fully consider and plan for these options.

What about the assets held in the UK? Have you given up on them?

Absolutely not. The Liquidator Provisional is still actively pursuing them and is regularly talking to Ernst & Young, the Administrators of Kaupthing Singer and Friedlander (UK), about the assets held in the UK.

Despite the ongoing uncertainty of the payout from the assets held by Kaupthing in the UK and the value of the guarantee made by Kaupthing hf, Government wishes to ensure that any solution preserves the depositors’ and creditors’ access to recoveries from these two sources.

How much will the depositors receive under any alternative plan?

The Isle of Man Government is looking at ways to increase payout and guarantees to depositors and creditors as well as ensuring funding arrangements are in place to expedite payments to depositors in an orderly manner.

Just as in any subsequent liquidation the final outcome is materially dependent on recoveries from the UK and the orderly realisation of other assets of the bank. At this point, the Liquidator Provisional has been unable to obtain any quantification of the asset recovery from the UK.

The KSFIOM loan book is likely to produce a better outcome if it is managed, as far as possible, as a banking and refinancing activity rather than a distressed sale or winding up exercise.

Is this just an attempt to avoid responsibilities under the proposed liquidation or the DCS?

No. All parties are committed to fulfilling their responsibilities for the benefit of the depositors. All depositors and creditors will have their rights protected and improved if possible.

Why not just go straight to liquidation? At least depositors will be paid out more quickly.

Traditional bank liquidations can stretch over many years, and can be costly. It is also unclear how promptly the DCS would pay out. If there is an approach which can deliver a more speedy and cost effective solution for creditors, then it seems most desirable to pursue this.

What about those people who may be suffering financial hardship?

We are acutely aware of this problem. A Payment on Account approach to recognise this problem is being worked on.

What exactly is the UK Government doing to represent the Island in its negotiations with the Icelandic Government?

We have been advised that the UK Government is actively pursuing the Isle of Man’s claim with the Icelandic Government but no additional information can be provided at this time.

What might this mean for Life Company policyholders whose policies are linked to deposits in KSFIOM?

If the arrangement is approved by the Courts, it may provide more timely and/or increased distributions to depositors, including Life Companies, than a traditional liquidation would achieve. Life Companies will be treated equally with other depositors in any distribution. This means the distribution of available liquidated assets to individual accounts held by Life Companies (including policyholder-linked accounts) will be determined pro-rata by the value that such accounts represent in proportion to the total value of deposits. The individual policyholders would need to refer to the specific terms of their policy to confirm this treatment.

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

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Thanks

  • Nixi
  • 20/10/08 31/05/09
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  • Sun, 14/12/2008 - 22:49

Thanks Lucky Jim,
This is now also up on the Public site under Tynwald documents


Depositors' & IOM interests are complementary

  • Lucky Jim
  • 13/10/08 31/05/09
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  • Sat, 13/12/2008 - 21:56

I feel that this statement strongly suggests that the interests of depositors and those of the IOM Government are mutually compatible..

Put another way you could say that if we were to sink so would the Isle of Man !


100%, nothing less

  • peterthailandudon
  • 18/10/08 n/a (free)
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  • Sun, 14/12/2008 - 04:40

Although there is some comfort in the IoM govt statement, until now they keep talking of depositors doing better under re-structuring than via liquidation, but they NEVER say - we'll get 100% back. Better could mean 20p in the pound rather than 15p. And they also don't give any indication of timescale. 1% this year, 1% next year for the next 20 years ??.
They are trying not to trigger the compensation scheme or put their hands in their pockets for the 150 million they say they have.


Extreme positions

  • alrod7
  • 12/10/08 31/05/09
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  • Sun, 14/12/2008 - 07:36

During negotiations, EXTREME positions should be avoided - people just pick up their papers and go home.
The EXTREME position in our case are:
a) IOM compensation scheme if the bank is liquidated - £150m +£200m from IOM banks paid in drips over many years

b) 100% recovery of our funds - will require the UK government to release our funds from Kaupthing UK - not going to happen unless we see U-turns by HMG or legal action against HMG (too costly, will take time )

Any large settlement between these two is the desired outcome and this will come about only through face saving compromises for HMG ( political pressure, media coverage etc) to return our money.
I stand to lose like everyone else but lets face it , we had the choice of IOM banks and we picked Kaupthing IOM and will need to accept a penalty for our own decisions.
So 100% is desirable but least likely


alrod.. your extremes

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Sun, 14/12/2008 - 12:39

alrod7 I take exception to your assertion that anyone should "accept a penalty" for putting money into a bank, any bank, wherever it might be !

As regards your a) you forgot to add on the amount which the liquidation of the bank would produce.
as regards your b) the liquidation of KSFUK will produce a percentage of the £600..anything up to 100% is possible but at this stage we don't know how much it will be.


picked ksf

  • Anonymous
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  • Sun, 14/12/2008 - 09:06

No, alrod7, I did not pick Kaupthing IOM. I was with The Derbyshire. They sold out to KSFIOM.
No, alrod7, I will not accept a penalty. Why should we be penalised - we are not criminals!
100% is likely.


100% return not Extreme

  • peterthailandudon
  • 18/10/08 n/a (free)
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  • Sun, 14/12/2008 - 09:05

I really don't understand how a return of ALL our money can be seen as extreme. Anything less would be injustice.

Is this the start of a negotiation, an attempt to wear us down ?

Do others believe less than 100% is ok


Justice? there is no such

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Sun, 14/12/2008 - 10:16

Justice? there is no such thing ! None of this is anything to do with what is right or fair, and while I completely understand someone stating that they want 100% and interest back, there is a time for realism.

I've heard figures of 66% and 83% recovery wafting about, I'll be honest and say that if I was to get the better end of 83% back I would run for the hills and start again, putting this crap down to experience, and making sure that the UK never sees a penny of my taxable income ever again.


100% is not extreme

  • Alastair
  • 10/10/08 30/09/09
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  • Sun, 14/12/2008 - 12:44

This is what retail savers all over Europe have received.

If the amount returned is less than 100% then the IOM knows that the energy that has gone into this organisation (at least some of it) will continue to be directed against it and also the UK Govt (whichever party is running it).

This is not extreme and the IOM Gov't knows this. That is why I have confidence that they are truely aligned with our aim of 100% return even for prudence sake they do not explicitly write about it.


They dont care

  • steelwood
  • 24/10/08 31/05/09
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  • Sun, 14/12/2008 - 11:33

They are not looking for your taxable income, and not care for such tiny things.
when they need money will simply highjac an other IOM bank and put hand on another 600 million as they have done with KSFIOM.
I could not understand what we can extract from these recent explations and Q & A .
It looks that there will not be any liquidation, orderly rundown or any restructuring. The statment did not give any time or state of current progress or a news for partial payback to the depositors . Just a long time to wait and see.


I agree with both of you

  • bellyup
  • 10/10/08 09/01/10
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  • Sun, 14/12/2008 - 11:03

I agree with both Capt W and Peter-( sorry cant be doing with these long names)

I want 100% of my money back its mine I saved it prudently and foolishly - and as soon as I get my hands on it again I will run for the hills and never darken a bank door again.


Justice. Don't make me larf

  • peterthailandudon
  • 18/10/08 n/a (free)
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  • Sun, 14/12/2008 - 11:01

Of course there's been no justice. If there were we'd already have our money back from HMG plus interest plus personal apologies from Brown and Darling
We're the victims of brute force and injustice by HMG. We've seen the weak response by the IoM govt to UK govt threats. We also need to use force, not only on HMG, but particularly on the IoM govt. They are in a weak position, their economy's at stake and to quote a US president " get them by the balls and their hearts and minds will soon follow" Only once they are really scared of the consequences will we see 100% of our money back.


Nice

  • bellyup
  • 10/10/08 09/01/10
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  • Sun, 14/12/2008 - 11:06

'They are in a weak position, their economy's at stake and to quote a US president ( not GB I hope) " get them by the balls and their hearts and minds will soon follow" Only once they are really scared of the consequences will we see 100% of our money back.

Nice turn of phrase Peter!

What course of action do you propose?


What I have in mind is 2

  • peterthailandudon
  • 18/10/08 n/a (free)
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  • Sun, 14/12/2008 - 12:08

What I have in mind is 2 things.
1) A serious examination of taking the IoM before the courts for failing to properly supervise KSF. They told KSF IoM to send our 500+ million to the UK rather than keep it under its own juristriction. ( with UK govt collusion ???. Will we ever know )
2) A publicity campaign worldwide, stating simply that if you keep money in the IoM it isn't safe.
- They fail to properly supervise their banks;
-they have a depositors compensation scheme that has no money in it;
-they use every strategy to make sure they don't trigger the penniless fund by saying we're working on something to help depositors, but it's confidential. We can't give you informaqtion on what we're working on, or even a date by when we will tell you. This, despite 2 months having passed.
Just as an aside I wonder how many depositors have died since this saga began. Maybe their trying to wait us out until they outnumber us

The threat of such a publicity campaign should focus their minds as, if it were successful, it would threaten about 1 in 3 jobs in the IoM. Hopefully this twin approach might extract some guarantees from them plus a concrete timescale rather than the flannel we are constantly being fed.

PS. Apologies for the long name. It was chosen by the e-mail system, not by me. "Peter" works just fine.


pete thai how about..

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Sun, 14/12/2008 - 13:41

pete how about also calling upon the IOM to put its money where its mouth is and initiate the DCS without having the prerequisite of KSFIOM going into full liquidation.This would require a change of legislation but that's not impossible. They would get their money back from the restructuring of the bank which they are championing and perhaps that would concentrate a few minds on satisfactorily achieving that goal, so as to be sure they would get their money back.


yes yes

  • peterthailandudon
  • 18/10/08 n/a (free)
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  • Sun, 14/12/2008 - 13:51

Agree with you totally. So far all we've had out of the IoM is fine words and lots of excuses. If they've really got 150 million, show me the money. We're being strung along. They got us into this mess and now all we get is " sympathy,understand your difficulties" etc with "we're working on something but I'm afraid, children we can't tell you what."
If they really wanted to help, if they were really sympathetic, they could make payments on account, NOW, an off-set such payments against the final settlement. How difficult can it be to send a cheque to all depositors if they REALLY wanted to do it.


Peter, I agree with all you

  • IceCrusher
  • 14/10/08 25/10/11
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  • Sun, 14/12/2008 - 15:21

Peter,
I agree with all you have said; we have played the waiting game long enough and if these people were truly serious instead of stalling for time, we'd have regular updates and confirmations to keep us sweet.
Ice


hardship payments NOW

  • Pat
  • 10/10/08 30/11/12
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  • Sun, 14/12/2008 - 18:40

I agree that some distribution for hardship needs to be acyioned immediately - there is no excuse. (I assume that the inability to issue statements of Oct 8th - I still have not received one for Sept 30th - is indicative of the incompetence of PWC and is the root of the problem with the hardship payments).

The other part of the statement that grates with me is :
What exactly is the UK Government doing to represent the Island in its negotiations with the Icelandic Government?

We have been advised that the UK Government is actively pursuing the Isle of Man’s claim with the Icelandic Government but no additional information can be provided at this time.

Having seen Lord Bach at the treasury committe meeting I am convinced the the UK government ain't doing dinky doo for us - he knew nothing about us and coouldn't stop looking to his colleague for help. (they had obvously been too busy choosing office furniture for their 130 mill renovations as per the Telegraph: http://www.telegraph.co.uk/news/newstopics/politics/lawandorder/3741400/...


100% peterhailandudon

  • Anonymous
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  • Sun, 14/12/2008 - 09:58

Nothing less than 100% (of Deposit + Interest) is acceptable.

That was the agreement.


100% not extreme

  • Anonymous
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  • Sun, 14/12/2008 - 09:13

I'm with you peterhailandudon (that's a looonnngg handle).
Anything less than 100% is an injustice.
A lot seems to be happening. Some of this must be going our way. I am worried about the DCS (depositors compensation scheme - for new members). I was expecting it to kick in straight away and that IOM would reimburse the banks from the receipts of liquidation / sale of KSFIOM loan book, etc. I thought all of us would begin to see the beginning of GBP50,000 in our non-KSFIOM bank accounts sharpish. IOM is avoiding initiating the scheme.


steenjp.. DCS now

  • mikeinfrance
  • 12/10/08 28/09/09
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  • Sun, 14/12/2008 - 13:00

steenjp I have been of the opinion from day 1 that there's no reason why the DCS could not be triggered without waiting for the bank to be liquidated, and without affecting the ongoing efforts to restructure the bank etc.It would need a change of legislation but the IOM has already modified the DCS twice during October so changing the law shouldn't prove too much of a problem unless of course the will is not there,which is what I suspect. I had thought that something along those lines was going to happen when a payment on account was talked about but it remains to be seen if this will actually happen and if it does it's likely to be a pathetically small amount I fear.
is it not possible to call on the IOM to put the DCS into operation,start collecting money from the banks etc but without affecting the restructuring efforts ? I fail to see why this might not be possible.