Should depositors become shareholders in new SF IOM Bank?

  • Anonymous
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Posted: Wed, 22/10/2008 - 10:39

Dear fellow sufferers

I set out below parts of a letter we have sent the FSC

It mentions the issue of a takeover of the bank by us depositors to become shareholders.

This is similar to the UK bail out (in miniture!) - it would certainly slow down the liquidation process.

Idea came from a discussion we had with a senior banker who is affected yesterday.

Lots to do-- but what does everyone think about the idea? I certainly would prefer a pro rata share in a bank that is back on its feet and managed properly with potential long term rewards than a firesale of assets in the short term.

"The recent increase in depositor protection to £50,000, which has recently been announced, gained the IOM much needed good PR and is extremely welcome, but I believe that more needs to be done.

I would be grateful for your confirmation that personal pension schemes are covered or are under consideration to be covered by the Depositor Compensation Scheme (DCS), as well as small businesses. It seems to us that those who are prudent enough to save for their future retirement from their own personal funds so as not to become a burden on the State in due course should receive that same level of protection as individuals. Similarly small businesses that can ill afford to lose funds deposited for the very best intentions in banks regulated by you and secured by processes managed by Treasury should also benefit from compensation. This would bring the IOM into line with the UK where the Chancellor has maintained that no investor shall lose out, even for funds involving “passported” Icelandic banks.

I understand that The Channel Isles are experiencing an outflow of funds because of the lack of investor protection available, we do not want the same to occur to the IOM. In fact it might be possible, by some strong affirmations of providing 100% protection security for Depositors (to include small businesses as well as pensions and public monies) on the IOM, to enable the IOM to outflank and leapfrog the Channel Islands as an International Offshore Financial Centre. I believe that such a bold action could rescue the industry as well as providing the same level of protection as the UK. The UK really is not interested in the IOM’s financial industry other than to curtail its activities.

Should nothing be done in the required timescale, this would, in our opinion, pose a grave risk to the future of the Isle of Man continuing as an offshore International Financial Centre

Additionally we ask that you consider the wider implications of liquidating KSFIOM on Friday 24th October. So long as political and business options are still being evaluated to keep KSFIOM sold as a going concern, we ask you to defer any decision to liquidate the Company on 24th October. It has been suggested that Depositors’ assets could be converted into convertible loanstock in the bank- this would be preferable to a “firesale” of assets following liquidation. There are substantial secured loans in the book of business of KSFIOM, which will take a long time to reorganise /liquidate and which are very attractive to a third party buyer provided they are permitted to remain undisturbed. The Chief Minister has recently said that he would prefer a delay in these proceedings whilst negotiations both on a Country level and to prospective buyers continue.

There is still time to rescue this situation be it in the form of the terms of the IMF loans to Iceland or a potential buyer for KSFIOM itself. If the Liquidator Provisionally were able to recoup the inter company loan to KSF UK (and or the parent company), then KSFIOM would be back on an even footing and able to resume business as usual, so please give time for all avenues to be investigated before closing the door on KSFIOM"

Yours etc

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We take over bank

  • Anonymous
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  • Wed, 22/10/2008 - 17:22

I've been thinking of this too since I heard Iceland was selling of assets at 10% of value. I would rather own part of a bank than be left with the scraps. I guarantee any buyer that buys assets in our bank will turn a huge profit in the future. All investors in the current climate are only looking for rock bottom bargains, other people with no choice but to sell. I know, I was waiting to pick up bargains I knew of as the crunch starts to hit harder.
So lets research this as an alternative. The liquidator will have to consider an offer from us above all others if it is viable, even if it's not the biggest offer, as priority has to be given to us as major creditors. I will research to confirm what assets have been sold off in Iceland at 10p on the £1. Then post what I find.

If things go sour, turn this into long term profit instead! Could be good.


Should depositors become shareholders in new SF IOM Bank?

  • ng
  • 11/10/08 31/12/20
  • a depositor
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  • Wed, 22/10/2008 - 13:30

Definitely a good idea in the sense of full marks for creative thinking!

Would need careful consideration. Given the people we have in our "core" team (and we have some very good people) I think it could be viable, A lot would depend on the available assets, though external funding might even be possible if it's clearly a viable business.

It would be interesting from a marketing perspective - the phoenix that rises, a bank focussed on fairness, tuned for the needs of ordinary British people living abroad.

Worthy of serious consideration IMO.

P.S. Can I be IT director please? (note, no smiley.)


as it happens i would

  • Anonymous
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  • Wed, 22/10/2008 - 15:54

as it happens i would consider it, but i want to the risk assessment man!!!!


bank purchase

  • Anonymous
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  • Wed, 22/10/2008 - 16:08

This may sound daft but is there a case for the IOM gov borrowing to purchase the bank and continuing to run it as a going concern (similar to UK and rbs). Not sure if the numbers work but depositors would get their 50k immediately and the balance over a period of say 2 years. Those that required their funds urgently would receive an interest free loan from the bank secured on their property. As the profits came in depositors would receive sums similar to dividends to reduce the banks original liability to them. The borrowers would have the dividend type payment offset against their interest free loan.


Alternatives

  • Anonymous
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  • Wed, 22/10/2008 - 15:41

Certainly worth consideration although I suspect this all depends on just how much of the depositors assets look to be recoverable what with the provisional liquidator having caught up with 1/8th of the total, and some 70% presumably frozen with KSF in the UK. This obviously would determine the extent to which, any of the candidate banks that is in contact with the provisional liquidator now, would be prepared to offer material offers to take over the deposit franchise .


Buyout with institutional deposit holders

  • Anonymous
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  • Wed, 22/10/2008 - 13:14

Given that 300m is in institutional hands we would need them on board. Also isn't the 550 mil a catch 22. With this we have a viable bank and others will want to buy and without it we are looking at a black hole.


Good Idea

  • Anonymous
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  • Wed, 22/10/2008 - 11:59

Hello Coleridge,
This certainly seems a good idea to be considered in the light of nothing else.
We are definately interested to hear more.


shareholders in SF IoM Bank

  • Anonymous
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  • Wed, 22/10/2008 - 11:52

Sounds like a creative way to move forward...I'm certainly interested!


Depositors as shareholders

  • Anonymous
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  • Wed, 22/10/2008 - 11:28

Hi, Coleridge!
A few hours before you started this topic, I posted 'Alternative Solution?' on the General Discussions thread, making a tongue-in-cheek suggestion that we depositors take over the bank (with Expat at the helm, of course). I was just being facetious - I didn't know that something vaguely along those lines had actually been discussed as a viable proposal! I will watch reaction to your post with interest. :)
Kind regards,
Michele


Viable solution

  • Anonymous
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  • Wed, 22/10/2008 - 11:08

The subject of the depositors becoming the owners I believe is the way to go forward, given lack of any buyer materialising. This is the only way to guarantee the outcome. Anything else is a gamble. Given the outcomes of similar relates issues and the state of the global economy the outcome looks certain, in that we all will be given a miniscule percentage back. The rest is down to us to fight a lengthy and costly battle to recover the rest.....

This is all a big game and the decision makers know very well how to play the game. The question is whether we are ready for it?

P


Pension monies in KSF NOT covered by £50k IOMguarantee

  • Anonymous
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  • Wed, 22/10/2008 - 10:55

Does everyone realise this is the case, as your pension monies/savings have to be contributed through a Pension Trustee....as such they are not deemed "individual" and not covered by the £50k scheme (as is case in UK)
Same situation for small business
There is a meeting in the Tynewald TOMORROW to look at final amendments to scheme..urge you to lobby as future pensioners being left out in cold.
Best solution would be for IOM to simply mirror the UK FSCS scheme