Second bank failure on the IOM

  • gerry paul johnson
  • 13/10/08 31/05/09
  • a depositor
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Posted: Sat, 14/02/2009 - 18:00

Before we run off, all gung-ho and decide that the SOA is a definite non starter, perhaps someone could explain to me just what would be the effect on the DCS versus our SOA in the event of a second (or god help us, subsequent) bank failure on the IOM.
Would it be the case that the SOA would apply to KSFIOM in isolation?, (in which case, would we have some protection) whereas, under the DCS we would have to "share from the same DCS pot" as any new victims? (further reducing the individual amount available, and increasing the time it would take to get it).
This scenario has played heavily on me since the very beginning, and It could possibly be very, very important in helping us to make the right choice.
From today's news about Lloyds, I am fearful that there WILL be further casualties amongst the banks before this disaster is over, and whilst the SOA may be imperfect, it could just prove to be the lesser of two evils.
Informed comment invited.

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2nd bank failure v liquidation.

  • follow_the_tao
  • 11/10/08 31/05/09
  • a depositor
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  • Sat, 14/02/2009 - 23:18

It makes a lot of difference to difference to me.
Under the SoA I suffer.
The SoA is a stitch-up, the IoMG is looking after it's own.
Another bank goes down, what difference is that to a liquidation, in global terms rather than IOM's parochial terms? None. The IoM has problems, well they deserve them. Let them pay, as everybody else is paying, for their problems.
I'm tired. I'm tired of listening to what I perceive to be the lies of the IoM government and the lies of HMG.
I want clarity.
And I will lobby for clarity.
Liquidate.


23 year payback-Liquidation!

  • Hampnew
  • 22/01/09 31/05/09
  • not prepared to answer
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@Hampnew: Wow that was fast.......

  • follow_the_tao
  • 11/10/08 31/05/09
  • a depositor
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  • Sat, 14/02/2009 - 23:50

Wikipedia entry:

http://en.wikipedia.org/wiki/Savings_and_Investment_Bank

"In the light of this the IoM set up the DCS."

you've got to be kidding. In my opinion, and I'm using that phrase rather a lot, the IoMG appear to be cowboys.

Now that isn't much different to be the public perception of the finance "professionals at the moment."

Your response was a reply to my comment. And I'm DAG. Where is OUR response to the IOMG history of previous failures and, here I go again, in my opinion, their incompetence a second/thierd/fourth? time.

As far as I can see they are doing it again. How do they get away with this?

But more importantltly what are we going to do about it?


New Forum topic?

  • coldlightofday
  • 20/10/08 31/08/09
  • a depositor
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  • Sat, 14/02/2009 - 23:37

IoM, PWC, 23 year liquidation !!!!

I had been searching other forum topics for discussion re liquidators taking excessive time and therefore the assets
ending up in the liquidators pockets! This is much closer to home!

Would SoA be any better?


This is the sort of

  • expatfrance1
  • 15/10/08 31/05/09
  • a depositor
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  • Sat, 14/02/2009 - 21:44

This is the sort of information we really need to understand before accepting or rejecting the SoA. There seem to be a lot of knee jerk reactions on this forum without people really understanding the full impact of what they are suggesting.


Second Bank failure on the Isle of Man

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Sat, 14/02/2009 - 18:54

I think you make a valid point.
In the UK the FSCS levies on the banks and building societies are particularly punitive, so its reported on some of the building societies that have a large retail deposit base and they claim that they are low risk and accordingly the FSCS levy is unfair.

I have said before that hopefully a SoA will provide a more certain 'future' than a DCS or SoA, although I accept that the depositors in KSFIOM may feel that neither is acceptable.

Once a scheme document is produced then a comparison could be made showing the relative merits, but there are many uncertainties at the moment making a comparison difficult.

If time for the devleopment of an SoA is not allowed by the court then of course any need to make a comparison falls away.

The whole counterparty risk and institutional trust model has changed now. If you would have suggested even 12 months ago that in one day one of the top 5 banks in the UK could have a 40% hit on its share price then you would have been laughed at.

I think the risk of one of the UK clearers not being able to meet its obligations (or that of its subsidiaries) is lower than those outside of this group due to the availability of Government support, but who would be prepared now to say that a bank was as "safe as houses" - which come to think of it is why the banks are in this mess in the first place.

The other point is that without knowing what the asset base is of KSFUK then you don't know what exposure there could be in the future to other Institutional failures making it even more difficult to consider a range of possible recoveries


DCS

  • Anonymous
  • Offline
  • Sun, 15/02/2009 - 03:16

But the DCS is statutory. It will pay out because it has to. The only questions are when will it begin to pay out and when will it finish paying out. So I hate to lose this statutory protection. Really, the protected depositors (sub 50k) should be considered separately in any discussion of winding up v SoA.

I am suspicious of the SoA because the IoM likes it. The IoM is either stalling or acting for self-interest; for example, Kaupthing UK is under administration, but all UK depositors have been compensated 100%, already! I am really angry. I expected the DCS to pay out as soon as I was unable to access my money. A compensation scheme fails to compensate if the period of delay in granting the compensation lengthens beyond a reasonable period of time. I am desperate for my money!

How can another bank fail, you scaremongers! Heh! Let's take this one step at a time, ok?


Time to change your comic

  • gerry paul johnson
  • 13/10/08 31/05/09
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  • Sun, 15/02/2009 - 11:55

"How can another bank fail"???? What are you reading?
The precarious state of a number of banks is a matter of recorded fact. Just look at the losses announced last week, and tell me that you consider these to be sound institutions. Look at what is hapenning to their share prices and tell me that you would invest in them!.
I am not proposing the SoA per se, but I am not prepared (nor should any others be) to reject it out of hand, until such time as we have the opinion of our legal eagles.
Uninformed and reactionary comment does not progress this important issue.
I too am desperate to be reunited with my hard earned money, and the posting above that shows that 23 years after an other IOM bank failed, that the depositors had recieved the princely sum of 29p in the £ does not endear me to thinking that liquidation is the preferred route.


2nd bank failing...

  • IceCrusher
  • 14/10/08 25/10/11
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  • Sat, 14/02/2009 - 18:45

I attended the last court hearing in the IoM and was quite surprised when the Deputy Deemster made all comments relating to the advantage of the SoA over the DCS relate to the small time gain supposed by the SoA - he made no comment on that which I considered more important - and as you indicate gpj - that any SoA agreed between all parties will be unaffected by another bank failure, whereas that sum offered by the Government (£150M) will be so reduced by sharing with another failed bank's creditors under DCS. This might be an important aspect, especially when the financial component from the banks is still unknown/unreported, but the £150M is seen as a loan by the IoMG in relation to the SoA, which is to be repaid from any realisable assets over and above a 60% return to the creditors. We can't be sure how the £150M would be treated under DCS (to my knowledge) as IoMG haven't yet properly explained it!


DCS £150 million

  • Tricky Dicky
  • 24/10/08 30/05/09
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  • Sat, 14/02/2009 - 19:58

The DCS as presently operable can be found here, http://chat.ksfiomdepositors.org/blog-entry/dcs-iom-those-who-wish-read-it .
Regarding the £150 million, it is a maximum figure, quote " (2) The total sum provided under paragraph (1) in respect of all defaults shall not
exceed £150,000,000.]6"
So its not a figure that IOM is just going to throw into the pot.
In the same way the maximun to be levied on banks in IOM for the DCS is £350,000, again it is only a maximum, the minimum is £35,000 as per the DCS Levies on participants
12. (1) The amount of contributions which may be levied from a participant in any one
financial year of the Scheme is the greater of—
(a) £35,000; and
(b) a sum calculated in accordance with paragraph (2).
(2) The sum referred to in paragraph (1)(b) shall be the sum, not exceeding
£350,000, that represents 0.125% of such amount as the Scheme Manager determines as
representing the average, over such period preceding the levying of the contribution as appears
to the Scheme Manager to be appropriate, of sterling and foreign currency deposits of the
participant.


DCS £150M...

  • IceCrusher
  • 14/10/08 25/10/11
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  • Sun, 15/02/2009 - 06:25

The IoMG will have conservatively calculated that the sum required to fulfill the three tranches of payments to depositors over two years will not exceed their contribution of up to £150M. The levy on banks according to the DCS is quite clear, but whether the Treasury is able to convince the banks that they should enter into a contract to provide similar sums to an SoA appears to be in some doubt. From the banks perspective, if they enter into a contract to provide monies for an SoA for KSFIoM depositors, then what is their liability if another bank fails? (And for another poster, one of our legal advisors on the Island told me that there were 3 banks in a 'precarious' position - but I cannot vouch for the validity of that comment.) It would seem to me that banks could not pay out unlimited funds over decades to pay for such an eventuality. Entering into a formal contract with the SoA should safeguard the offered entitlements under this scheme (if the banks play ball). It also seems (though we await confirmation from our appointed advocate) that our rights to take further legal actions against persons/entities will be retained in one way or another. I am certainly not promoting the Scheme and haven't made up my own mind, but its something to consider.


Second Bank failure on the Isle of Man

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Sat, 14/02/2009 - 19:36

duplicate post


If another bank fails....

  • Lucky Jim
  • 13/10/08 31/05/09
  • not a depositor
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  • Sat, 14/02/2009 - 18:42

IF?..... more like when another bank fails I think that if a SoA is implemented it will come to a halt.The DCS will then kick in. But the mind boggles as to how it will work when there is another group of depositors queuing up for compensation.

I find it hard to believe that the IOM Government hasn't considered the 'worst case scenario'; but it looks as though they haven't. It prefers to 'muddle through', opting to be led by events rather than taking control of them. Frightening !


If another bank fails....

  • Anonymous
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  • Sat, 14/02/2009 - 19:12

LJ: If there is an SoA then whether it fails or not, as things stand, the DCS cannot kick in because depositors rights to the DCS would be lost as soon as the SoA was voted in. The giving up of depositors' rights in the DCS would be irrevocable and binding on all depositors.


The Question

  • gerry paul johnson
  • 13/10/08 31/05/09
  • a depositor
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  • Sat, 14/02/2009 - 19:38

was'nt what would happen if the SOA failed (although I would welcome your thoughts on just what would cause such an event given that there is the matter of £550 million to be recovered), but what would happen in the event of an other bank failure?