Parental Guarantee

  • iced
  • 21/04/09 31/05/09
  • a depositor
  • Offline
Posted: Fri, 10/07/2009 - 08:20

No one responded to this so I am reposting - the post had a lot of 5* interest so can anyone please answer this?????

Can anyone tell me why the PG is unsecured and why we are accepting that the return from the PG will be a percentage (25% suggested by Hopper). .

The guarantee does not sat it is unsecured and since it is very vague we should understand the message it sends just as it is written i.e. that Kaupthing hf will cover 100% of any shortfall.

Why are there assumptions we'll only get a (small) piece of what was promised by what was used as KSF's principle marketing tool to persuade people to deposit, to stop depositors from leaving the bank and all this right up to the last minute.

And lets not forget that the FSC were the ones that accepted this document - did they, do they, see it as unsecured?

4.923075
Your rating: None Average: 4.9 (13 votes)

Comment viewing options
Select your preferred way to display the comments and click "Save settings" to activate your changes.

KSF laon book exposed

  • dawes
  • 24/10/08 31/05/09
  • unspecified
  • Offline

Priorities

  • steveservaes
  • 13/10/08 31/05/09
  • unspecified
  • Offline
  • Fri, 10/07/2009 - 10:27

Didn't Iceland also introduce a law that the banks assets would first be used to pay off its individual retail depositors?
And that KSFIOM - as a non-retail creditor - would rank with the other unsecured creditors for a pari passu share of whatever might be left after the retail depositors were paid in full?
Very unfair - since while it would be OK for Iceland as a country to pay the retail depositors in full (as UK did) its not fair that they change the law so that this happens out of the Bank's assets, to the detriment of the other creditors (ie us).
Obviously one would have hped the MoJ would have stuck up for IOM in such an unfair law being made but of course they have abandoned any pretence of fulfilling their constitutional obligations.
Lets see how the judicial review re KSFUK goes today.


It's a good question. The LP

  • frog
  • 10/10/08 13/09/09
  • a depositor
  • Offline
  • Fri, 10/07/2009 - 10:22

It's a good question. The LP had checked this and confirmed that it is unsecured. It is a real shame because if just one word was added to it (the FSC should have checked this!), we'd be in a much better position!

As the moratorium still is in place until November (and PWC are saying they believe it won't be extended), nothing can happen there anyhow (even in making a claim). . I hope the CC would see the advice regarding this, but I would assume that unless this promise was specifically marked as secured, it would be viewed as un-secured.

The 25% suggested by Hopper is unfortunately the book value of the Khf assets - it may be we get much less!


The word "secured"

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
  • Offline
  • Fri, 10/07/2009 - 11:20

Well "securing" a debt isn't just about adding a word to an agreement.

For an obligation to be secured against a company, usually by way of a charge, there are usually registration formalities that would need to be complied with.

In order to give effect to the security these registration requirements would normally be arranged by the person potentially benefiting from the charge who would instruct lawyers to register in appropriately.

As you say there was no indication of security within the agreement.


original derbyshire parental guarantee was secured?

  • doubled
  • 12/10/08 31/05/09
  • a depositor
  • Offline
  • Sat, 11/07/2009 - 13:40

Derbyshire IOM savers were assured by both the Derbyshire and KSF IOM that the PG from Kaupthing was the exact equivalent of the PG from the Derbyshire Building Society, which presumably was legally secured?
To me this means 1) they were lying 2) that the FSC was seriously negligent in not assuring that the PGs were in fact equivalent when the 'campaign literature' transferring our savings to KSF stated that it was.
Enough to go to court?


original derbyshire parental guarantee was secured?

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
  • Offline
  • Sat, 11/07/2009 - 14:11

I thnk your "presumption" that the Derbyshire PG was secured is probably incorrect.
Its very unusual for parent/sub guaranteees to be secured.
I think it is unlikely that there was any material difference in the wording of the 'old' and the 'replacement; guarantee, but until you have a copy of the 'old' guarantee its mere speculation.


@manx-person

  • brokefirefly
  • 12/10/08 31/05/09
  • a depositor
  • Offline
  • Sat, 11/07/2009 - 17:16

For me, it's not that the original Derbyshire guarantee was unsecured, it's the fact that it was fro ma UK parent. So far, no UK bank has collapsed, so all the offshore subsidaries of UK banks are OK. But the guarantee from a UK parent was replaced by a guarantee from an icelandic parent at a time when there were already grave concerns in the industry about the Icelandic economy (Indeed, I think I read somewhere that Kaupthing was buying retail banks in Europe to get cash because it couldn't borrow on the money markets).

So this change represented a HUGE increase in risk for depositors, but depositors weren't told this: they were told that the new Parental guarantee was just as good as the old one. As we saw, this wasn't true: if the Derbyshore had kept it's IOM branch and not sold it to Kaupthing, the ex-Derbyshire folks would be fine.........


Parental Guarantee

  • peter and louise
  • 18/10/08 01/09/09
  • a depositor
  • Offline
  • Sat, 11/07/2009 - 14:47

I have in front of me the following from Aidan Doherty Managing Director of KSFIOM: "all deposits, including those of Derbyshire Offshore clients following completion (this is when Derbyshire was selling us to Kaupthing) are also fully guaranteed by Kaupthing Bank hf - with this guarantee customers have peace of mind that their savings are FULLY SECURE. So, my understanding is that my savings were FULLY SECURE, no 'ifs' or 'buts' I am not presuming anything here. I am being told that my savings are FULLY SECURE. Also, Aidan told me on the phone that my savings were FULLY SECURE. I also have an e-mail in which a bank employee tells me my savings are 100% guaranteed. I had wanted to take my money out but the bank. I had written to them and phoned them and each time they assured me that there was no need as my money was FULLY SECURE. So, what part of FULLY SECURE am I not understanding, or are THEY not understanding. As far as I am concerned I have been lied to, manipulated and sold into a bank that that I didn't want. I asked the question: Can I close my existing account with Derbyshire? The answer was NO. I asked who is Kaupthing anyway and they said to read their brochure which I did and this is what it says: "Kaupthing Bank is a Northern European bank..... The bank operates in 14 countries (Denmark, Faroe Islands, Finland, Iceland, Norway, Sweden Luxemberg, Switzerland, UK, US, Dubai, Qatar and the Isle of Man (notice, that although the parent bank is in Iceland, there is no mention of it and they slip in 'Iceland' somewhere in the middle). If this is not mis-selling I don't know what is! Surely PWC should look into this. Surely DST should pursue this too.


Parental Guarantee

  • Anonymous
  • Offline
  • Sat, 11/07/2009 - 15:49

I am not sure that it is mis-selling, since it appears that you did not have any choices in the matter. I think it is more likely to be a species of misstatement. In any event, DST has already sought and obtained some initial opinion from lawyers on Derbyshire position, which was favourable. Now that other matters have been cleared out (SoA defeated, DSC under control, first creditors meeting taken place, CC about to be dealt with), I agree that DST should consider doing something more on this matter. Also, there is an IoM regulatory overlap on this issue, which is of interest to all depositors.


Reply to Elgee and Manx person

  • peter and louise
  • 18/10/08 01/09/09
  • a depositor
  • Offline
  • Sat, 11/07/2009 - 17:25

It IS miss-selling, whether I had any choice in the matter or not. It is miss-selling because KSFIOM were selling themselves to me, they were telling me how good they were and why I should have no cause for concern. They were telling me my savings were 100% secure and guaranteed with them and that they were bestowing on me all the security I had with Derbyshire. What is that if it is not miss-selling? And why isn't a claim against KSFIOM the correct way to go? They are the ones who have been deceitful and obfuscated the truth about their so-called security and guarantees. Derbyshire sold us down the line to them true and they too should be held accountable but KSFIOM lied to me and I have it in writing! Regarding it being an uphill struggle, well by now I am used to that and so this is no reason not to pursue this avenue. I would like to know what kind of response DST had when they took up this matter. Can this be posted here or is this confidential information. This is of paramount importance now that everything else has been cleared up. Now we are in the stage of suing those who are GUILTY.


Reply to Elgee and Manx person

  • Anonymous
  • Offline
  • Sat, 11/07/2009 - 17:55

Peter and Louise: Neither Manx-person nor I are lawyers. I can't speak for him but I can tell you that I know enough law to know that it is no use your saying "but it is, it is" when the law says it isn't, and that if you do have a lawyer advising you then it is almost always better to rely on his/her advice than to decide for yourself what the law is, especially if you have not even troubled to look it up.

Now for the true legal position. It is highly unlikely that anyone has committed a criminal offence in respect of the Derbyshire business, so "guilty" doesn't come into it. The word you are looking for is "liable". EC have advised (not in the followng words) that misrepresentations (or mis-statements) may have been made by certain parties to certain Derbyshire customers and that in those cases there may be causes of action with a real prospect of success. As I have said somewhere else in this thread, there is no point in persuing a claim against the bank itself since it is insolvent and in liquidation and you already have a cast-iron claim against the bank (which is why you are a claimant in the liquidation).


Answer to Elgee

  • peter and louise
  • 18/10/08 01/09/09
  • a depositor
  • Offline
  • Sat, 11/07/2009 - 20:06

The word I am looking for is not 'liable' it is 'guilty.' 'Misrepresentations' as you call it, or go along, with is another of those pathetic words used to obfuscate. All this 'maybe' 'perhaps' is also a load of you know what too, or at least should with all your legal knowledge. It is KSFIOM I was referring to, not Derbyshire, it is they who made the so-called 'misrepresentations' you refer to. And it was the FSC that went along with, indeed endorsed and approved these 'misrepresentations' and they should have known better. They had been told by a top official of Derbyshire that they were not 'fit and proper for purpose.' When someone has been stripped of their life-savings by an institution, whatever institution, this is a criminal offence at least in my eyes. And whomsoever did this is GUILTY of theft by deception. I have no respect for bankers, nor lawyers, nor politicians, nor anyone who will try to duck and dodge these issues. There are thousands of people out there who have lost everything. Do not assume or pretend you know the 'true legal position'.


answer to Elgee

  • Anonymous
  • Offline
  • Sun, 12/07/2009 - 00:56

P&L: Disception (disceit), if that is what you are alleging rather than misrep, is both a tort and a crime. Please look up the relvant law and see if you can make the facts fit the elements of each of these. Meanwhile, as I indicated above, I have encouraged the DAG to allocate specific funds to pay the lawyers to look further into the Derbyshire issues.

You seem to suggest I am making excuses for those who are liable (guilty if you insist). You could not be further from the truth, but I prefer to be a little more sure of my ground before going off with all guns blazing.


Elgee, I trust that when you

  • barrona
  • 17/11/08 31/05/09
  • a depositor
  • Offline
  • Sun, 02/08/2009 - 12:14

Elgee, I trust that when you say you have encouraged the DAG to allocate specific funds to look further into the Derbyshire issues, this will also include those of us who placed funds direct into KSFIoM.

I too have specific correspondence from KSFIoM which makes it abundantly clear that in the event of KSFIoM not having the funds to do so, the Parental Guarntee would cover any shortfall.

This definitely needs looking into in order to ascertain how far, if at all, the IoMGovt examined and vetted this guarantee, or was it just simply pushed through without proper checks being made in order to a make it a marketing tool for depositors to open accounts with KSFIoM.

In any event, I agree with the other correspondents that there is mileage for DAG/DST to pursue this most vigorously.


Parental Guarantee

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
  • Offline
  • Sat, 11/07/2009 - 16:08

A misrepresentation claim against KSFIOM isn't much help though, far better to have such a claim against the Derbyshire.
If a complaint was made on this matter to the FSC their remit is to consider it in respect of the "fit and properness" of those making the (mis)representation, i.e. they wouldn't have the power to make any compensation award.
Of course there is a possibility of making a claim against the FSC for negligence/breach of statutory duty, but I am sure that the DST/Elgee will confirm that it is quite a steep hill to climb.


Parental Guarantee

  • jr
  • 10/10/08 31/05/09
  • a depositor
  • Offline
  • Sat, 11/07/2009 - 15:56

Irrespective of whether or not the parental guarantee is legally binding, it is clearly ‘implied’ as such, and so if not honoured is legally actionable under contract law as a misrepresentation.

Definition: Misrepresentation
An untrue statement of fact or law made by Party A to Party B which induces Party B to enter the contract thereby causing Party B loss. An action for misrepresentation can be brought in respect of a misrepresentation of fact or law.


Parental Guarantee

  • Anonymous
  • Offline
  • Sat, 11/07/2009 - 17:24

Jr: You misunderstand. We all have a claim aganst the bank anyway, that is why we are claimants in the liquidation. I am talking about claims against third parties.


Parental Guarantee

  • jr
  • 10/10/08 31/05/09
  • a depositor
  • Offline
  • Sat, 11/07/2009 - 21:28

I was actually under the impression that the FSC had a hand in approving/drawing up the KSFIOM Parental Guarantee following Kaupthing’s takeover of Derbyshire. If this is the position then they have a case to answer.

Also Kaupthing hf are the party who are ultimately responsible for honouring it and although the Old Kaupthing may or may not have enough assets to fulfil this, it would be reasonable to look to the Icelandic government for recompense, as they brought Kaupthing hf down.


Parental Guarantee

  • peter and louise
  • 18/10/08 01/09/09
  • a depositor
  • Offline
  • Sat, 11/07/2009 - 21:44

jr: I concur with your observations about FSC's overseeing and fianl approving of KSFIOM's guarantee to us, and that, in spite of the warnings against going into dealings with Iceland and Kaupthing. Let's hope our DST get their teeth into this. Let's hope they intend to sue FSC.


Secured

  • iced
  • 21/04/09 31/05/09
  • a depositor
  • Offline
  • Fri, 10/07/2009 - 16:44

Thanks for these answers. And so, correct me if I am wrong, this is a glaring regulatory failure that, if not resolved, will derprive depositors of a 100% return. What can be done to get those responsible to admit they are indeed responsible and pay up?


@manx-person.

  • frog
  • 10/10/08 13/09/09
  • a depositor
  • Offline
  • Fri, 10/07/2009 - 14:26

Well just only knowing about contract law (a bit), I thought it would have helped - specially as the Khf group CEO signed the paper - but I defer to your knowledge about financial legalities - it certainly makes sense what you say.

I guess anyhow, if the word 'secure' was in the contract, then it would have followed on that the registration would have happened.