A solution that answers everybody's interests

  • Podcarson
  • 25/10/08 31/05/09
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Posted: Sat, 08/11/2008 - 12:13

The only solution I can see that will answer everybody's intrests is DBB: Depositors Buying Bank.

Here are the principles of the idea:

Depositors Buying Bank Principles:
1. Those wishing to leave the bank will be treated under the DCS.
2. What’s left in the fund of the DCS will be poured into the bank.
3. Depositors wishing to stay with the bank (obviously people who have more than 50K…) will trade off a portion of their deposit with a share of the new bank.
4. The new share holders, the depositors, will be the new ownership of the bank.

Enclosed is an excel sheet where you can play with the numbers. Depositors will need to agree to a set back in their accounts of 23.85%, and the bank may regain solvency.

Would like to hear your opinion on this!

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Buy the bank?

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Tue, 11/11/2008 - 08:16

Actually I wonder what would happen if each and every depositor agreed on the spot to only draw interest on their money for say a year, the petition would fall flat on it's face, It would solve the immediate issues for many, and the door open for the possibility of a buy out. Just thinking.


I believe you are right

  • Podcarson
  • 25/10/08 31/05/09
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  • Tue, 11/11/2008 - 09:52

and we will have to have some kind of an agreement of this sort in the case of a run down or any thing similar


Why this idea is unrealistic

  • Lucky Jim
  • 13/10/08 31/05/09
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  • Mon, 10/11/2008 - 23:36

It is unrealistic for one reason alone .... a very large number of members are retired. Their life savings are for their retirment needs which I am 99.99% sure do not include the need to be running a bank at 70 + years of age.


Is counting on the British govt. realistic?

  • Podcarson
  • 25/10/08 31/05/09
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  • Tue, 11/11/2008 - 07:55

The members do not have to run the bank - they (we) would own it... there is a big differnce...


Bank on it and lose

  • Colin M Phipps
  • 18/10/08 31/05/09
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  • Mon, 10/11/2008 - 14:16

Lets be practical, most of our members are ordinary men on the street. albeit a few of you may be more educated. However, for me the thought of making another losing investment, is an non starter. All I want is my cash back, no more no less. Lets remain sensible, yes, I do have a lot more than £50 K at stake. yes, I do hope the three governments resolve this situation to the benefit of all.


Trying to be prctical

  • Podcarson
  • 25/10/08 31/05/09
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  • Mon, 10/11/2008 - 15:11

Hello Colin,

I emphasize with you position. Believe me, I'm not far from it.
In fact I agree with you on what has to be done at the moment - maintaining pressure on all three govt.
But i suggest we prepare to the eventuality that it is to no avail... and then we can only bank on ourselves...

If such a moment comes we may all have to accept a setback in our deposits in order to regain them back, hopefully, later on.


What's the deadline

  • Colin M Phipps
  • 18/10/08 31/05/09
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  • Mon, 10/11/2008 - 15:58

Dear Podcarson

How long does one wait, we are all basically relying on the politicians at the moment to either resolve the situation or cast us all to the wind. I feel that the 27th of November is my limit, [ unless something breaks before hand ] after which, I need to carry on with my every day plans, that were routine and straight forward before this scenario erupted. What I will do then depends on what's on offer. Talk to me then and I will be more open to suggestion.


I think the dead line is earlier

  • Podcarson
  • 25/10/08 31/05/09
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  • Mon, 10/11/2008 - 16:27

On the 27th the court will issue orders what to do with the bank.
If it is wound up at that stage than we all lost the battle (and more importantly - the money).
If there is to be a different course or route it has to be established beforehand...

I too would like to resume my routine way of life - I'm only trying to prevent my parents from losing the retirement money....

I plan to go to the Isle of Man the day after tomorrow, and see things from up close.

I hope I might help with making this idea, or any other good and better idea, work - for the benefit of all of us.


Lost the battle & money

  • manx-person
  • 17/10/08 31/05/09
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  • Tue, 11/11/2008 - 08:35

Podcarson,

I dont think this is the case at all!

Say, for example there is an order to appoint a liquidator on the 27th, and they say 1 month later the funds are received from KSF UK. These will then be used to pay depositors.

The appointment of a liquidator isn't a doomsday event at all !!!!!!!!!!

Hopefully a rescue solution may be found; but all is not lost, at least that is what I believe


Deadlines

  • Julienne
  • 16/10/08 31/08/09
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  • Mon, 10/11/2008 - 23:58

Podcarson - I echo your sentiments that if we don't have a suitable resolution BEFORE 27th and the Court doesn't extend the adjournment again for further negotions to continue -- WE HAVE LOST the majority of our money---- I am in for a LOT of dosh and cannot afford to loose it -

I am sure that none of us on this site have lived a "normal life" since 8th October. It is my ONLY topic of conversation - we sit at home thinking about what we will do if scenario a) happens or b) or c) - all of wich are speculative but probable. I too want to return to what I used to call "normal"

I wish I could join you in Isle of Man but geographically I am too far away --- REALLY good luck over there - keep reporting on this site for the benefit of us all.
Many thanks


Podcarson Good luck and your

  • Colin M Phipps
  • 18/10/08 31/05/09
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  • Mon, 10/11/2008 - 16:55

Podcarson

Good luck and your efforts are, much appreciated.


solutions...

  • IceCrusher
  • 14/10/08 25/10/11
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  • Sun, 09/11/2008 - 14:19

I don't know if everybody's interests can be satisfied, but if the Government declares that it cannot get involved in another jurisdiction then it had better think again. The IoM depositors were not bailed out by Treasury funds like the UK depositors, but Darling would have the UK depositors see a return to 'their' Treasury from the proceeds of the IoM depositors assets by virtue of the distribution to creditors (Treasury being largest).

Darling wants it both ways, but there are only two real choices:

a. Return the assets belonging to depositors from another bank in another jurisdiction and let the authorities of that jurisdiction make their own arrangements in accordance with their own legislation and compensation scheme to reimburse those depositors. Ensure that Iceland pays all due guarantees to the IoM by way of a combination package with the UK.

b. Using the ultimate power of the UK to legislate in IoM affairs (particularly as there is an international element involved, and especially as the UK Govt precipitated the problem) work with the liquidator provisionally to include ALL assets of KSFIOM into the Kaupthing UK bank to come under the Adminstration of Ernst & Young. (UK already holds the single biggest part of KSFIOM assets.)
Treat all depositors of KSFIOM in the same manner as all UK depositors and pay 100% return of all retail deposits in exchange for KSFIOM depositors relenquishing any further claims on any assets of KSFIOM/UK. Proceeds from liquidating the combined assets of both the IoM and the UK banks would be distributed amongst all creditors including the Treasury. UK would negotiate unilaterally with Iceland for compensation on all deposits (for return to Treasury funds) without concerning itself with representing the Isle of Man.

Some rough edges to smooth out, but that's about it.

IceCrusher


Icecrusher - you are refering to the wrong government

  • Podcarson
  • 25/10/08 31/05/09
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  • Mon, 10/11/2008 - 08:46

The British government will not be the one to help us out here...
It is the IOM gov we need to adress...


we all have opinions...

  • IceCrusher
  • 14/10/08 25/10/11
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  • Mon, 10/11/2008 - 09:34

I would humbly suggest that without HMG, the IoM Govt. is pretty much strapped to do anything. The best result really needs the biggest part of that asset held in London. If, as some UK authorities seem to suggest, they anticipate a 'full' return of their monies, then the collective pot of assets under Administration would of necessity be big enough to accommodate those returns - and if that is so, then we get the better part of our asset back too - in one form or another. Your own plan I believe, is based on excluding those assets and assumes that they will be completely lost to us. Preparing for such an eventuality is fine, it shows possibilities even if there are a number of 'ifs'. Hoping for another possible result is OK too in my estimation.

The British Government may well come under increasing pressure from the Opposition for an independent inquiry, to avoid that, they may prefer to do something by way of appeasement - who can know? If Mr Simpson would be so kind as to enlighten us of the events taking place in London we would not need to spend so much time speculating!


ABSOLUTELY 100% Return of Our Money Nothing less!!!

  • Anonymous
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  • Sun, 09/11/2008 - 21:15

We must Not Stray Stick together stay focussed ON this Objective...
The money was taken illegaly it should be RETURNED to the IOM and Given BACK to the All Depositers 100%.

Anything Less is Unacceptable!!!


Sorry to say

  • Podcarson
  • 25/10/08 31/05/09
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  • Mon, 10/11/2008 - 08:40

Don't think that's gonna happen unless we agree for a certain setback for a while...

why?

1) The money was takes unjustly, but probably leagaly....
2) in order to make the British government to budge we need a lot of strength. The kind of strength we unfortunently don't have.
3) To maintain our claim against the Britihs and Icelandic government we need to be a legitimate entity. I mean: Not Wound up... we can achieve that objective if we proceed as I suggest... (I hope there are more ways, but I don't know)
4) Kepping the bank alive may lead us to getting 100%, but only in the long run.


If only that were true, but

  • IceCrusher
  • 14/10/08 25/10/11
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  • Mon, 10/11/2008 - 05:07

If only that were true, but it was the management of KSFIOM under counsel from the FSC that chose to place the assets on deposit in Kaupthing bank UK - nobody stole them. It is strongly conjectured that the FSA advised the FSC to do so, but even so, the FSA are in no position to issue a direct order to the FSC. Once the UK bank went under Administration, the assets were basically impounded. Negligently, they were not secured by bank management so there is no super priority status afforded to them for return to the IoM - the assets are for all intents and purposes earmarked for distrubution to all creditors in proportion to their deposit.

Chancellor Darling has already announced that the IoM assets do not belong to the Government, that's because all assets of the UK bank belong to the creditors (eventually). The only way to pull them out would be a legal one - and that would set a precedent for a non-secured deposit to be removed from a pot from which all creditors expect a return.. As I have mentioned in another forum, this pot may well turn out to hold more than enough for all creditors and there has recently been positive statements emanating from some UK local authorities that might support this notion. If that is true then we should get our asset back, if not true we get a proportion of it.

If the UK Government were to accept that by their very actions KSFIOM bank was brought down and that they oblige a moral duty to the bank's depositors to underwrite the full amount of their savings then they would likely expect recovery from the total sum of assets from both banks. (See above.) If HMG was to accept this position, then there is a team of top notch lawyers acting on behalf of Kaupthing Hf waiting to pounce on any admission that HMG was culpable of effecting that action. Somewhat of a cleft stick for the Government?

IceCrusher


100%

  • Relentless Posse
  • 14/10/08 31/05/09
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  • Mon, 10/11/2008 - 01:40

Only 100% (one + zero zero) is acceptable folks - peiod,no discussion no compromise


Ice, I don't have any

  • skintagainnow
  • 10/10/08 31/05/09
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  • Sun, 09/11/2008 - 15:08

Ice, I don't have any proposals, I'm pinning my colours on Tynwald - restructure / run off solution, just my thoughts on your points - (a) would solve everything at a stroke I agree.

a. Return the assets belonging to depositors from another bank in another jurisdiction and let the authorities of that jurisdiction make their own arrangements in accordance with their own legislation and compensation scheme to reimburse those depositors. Ensure that Iceland pays all due guarantees to the IoM by way of a combination package with the UK.

That would be an ideal solution, but I think we can all agree that's not going happen, certainly not through the front door, back door termed as a loan or something else to IoM eg: economic aid, maybe. Then does that also apply to all the other countries that had deposits in the KSF UK, just how many billions would UK be able to / or would want to commit to. How many countries would that involve and what regimes are in place in those countries, could be in some cases they are quite happy to deprive some of funding.

b. Using the ultimate power of the UK to legislate in IoM affairs (particularly as there is an international element involved, and especially as the UK Govt precipitated the problem) work with the liquidator provisionally to include ALL assets of KSFIOM into the Kaupthing UK bank to come under the Administration of Ernst & Young. (UK already holds the single biggest part of KSFIOM assets.)
Treat all depositors of KSFIOM in the same manner as all UK depositors and pay 100% return of all retail deposits in exchange for KSFIOM depositors relinquishing any further claims on any assets of KSFIOM/UK. Proceeds from liquidating the combined assets of both the IoM and the UK banks would be distributed amongst all creditors including the Treasury. UK would negotiate unilaterally with Iceland for compensation on all deposits (for return to Treasury funds) without concerning itself with representing the Isle of Man.

Lumping all IoM assets with E&Y in UK, means everything including IoM loan goes into the same pot and a "fire sale" of all those assets, keeping separate means we can try and avoid at least one fire sale option, thus a better return for us, the shared pot of KSF IoM is significantly smaller than that of KSF UK.

The second part of (b) effectively means throwing all corporate accounts to the wolf's that includes bonds / SIPPS etc,. again that requires excluding 50% of our membership, I'm not one of them but neither do I want them excluded from any ongoing negotiations.

Our critical issue's are 2 fold, rely on two main assets and effectively one set of liquidators and that's not PWC, in reality E&Y hold all the marbles in terms of assets and time.

Assets - the dissolution and sale of KSF in it's entirety and in particular the sale of the loan book (of the top of my head I can't the actual figure) but I think it was around £1.3b - anyone please feel free to correct.

Time scale - Whenever E&Y decide to start releasing information and reparation of funds from the UK operation, it is only then that PWC or Tynwald can really start getting to grips with our predicament.


Skint Thanks for replying

  • IceCrusher
  • 14/10/08 25/10/11
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  • Sun, 09/11/2008 - 15:37

Skint
Thanks for replying with your very good points; this is what its all about, brainstorming ideas.

Ostensibly, I was figuring a way that UK HMG could treat us as though we were all in the UK. Heritabl, Landsbanki IceSave, Kaupthing Edge and Kaupthing UK customers have all had their deposits underwritten by the Treasury - and all recoverable non-retail assets will be distributed between the creditors. To put us in the same situation we need to have our deposits paid, and pitch all KSF assets into the general pot. I regret that I never fully considered the impact this might have on our non retail colleagues, but the DCS is doing them no favours either. We simply have no idea how big the pot may be, it could be that the longer it takes Ernst & Young to sort out, the more there is to sort out!

Ice


Ice - the simplistic approach - snag politics / politian's

  • skintagainnow
  • 10/10/08 31/05/09
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  • Sun, 09/11/2008 - 16:01

The way I see things, it's very simplistic and the way out is quite easy -- barring it involves politics and politian's and that's where nearly all our practical idea's fall down.

The bank (KSF IoM) was in no difficulty until Oct 8th, in fact it was in a very strong position, the loss of access to £400m (offsetting - the 200m deposit from UK), and the Iceland loan & offset = £10m

Therefore the bank only really requires £400m back, holds onto the £200m KSF UK deposit (which will be invested anyway).

Tynwald have earmarked £150m for DCS - side step that into the bank

£250m adrift,

If the UK were to stump up a loan / aid package of that £250m to be repaid when E&Y get themselves organised.

KSF IoM has all the necessary funds to hand to start operating again.

If reports are correct from UK (councils / TFA / charities) E&Y are hopeful of nearly 100% recovery,

Then UK gets back £250m loan / aid / whatever, Tynwald also gets it's £150m loan back + it's £12.5m deposit + a working bank, for it's trouble

What could be easier

&
what a fantastic deal

hell on those figures if I had the money I'd do it myself :-)


Here are the numbers as far as I know

  • Podcarson
  • 25/10/08 31/05/09
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  • Mon, 10/11/2008 - 08:32

I base my calculations on the Balance sheet of the bank as of 30/9/08 that i recieved from a member of the action group.

After striking out the assets in the hands of British and Icelandic governments, and of course our debts to Kaupthing hf and KSFUK (which were smaller, of course) the bank has these assets:

182M cash and certificates in other banks
410M advances to customers

the banks' liabilities:

927M to depositors (that's us!)
10M to other creditors

this means we are missing the minor sum of 345M GBP.

If we proceed according to the principles I have layed out in this post than first of all people with less than 50K will go under the DCS. If the poll we have on the site is correct than about 35% of depositors will leave the bank at taht stage, taking from the DCS 115M GBP (averege sum I calculated being 40K a depositor.
Note - the banks liabilties will shrink by 115M and we are missing "only" 230M.

At this point, if (and that's a big if), we have the co-operation of IoM authorities, than the rest of the DCS will be "poured" into the bank - 35M.

Where will the rest of the 195M GBP come from?
That's right folks - us.

We will have to agree to deduct 195M from our deposits. that's 24% of each deposit (you can do the math for your account...).
if we do so - trading our deduction to a share of the bank - the bank becomes solvent, with enough capital equity to mange itself.

that's the idea. all I can say is: "YES, WE CAN".


Numbers

  • Ally
  • 13/10/08 31/05/09
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  • Mon, 10/11/2008 - 10:18

I'd agree in broad terms with the numbers. The balance sheet would have changed between 30th Sept and 8 Oct but we are all hoping that the main components are broadly in line.

I have tended to think along the lines that the black hole is approx £350 million perhaps a touch more if you be prudent and impair the loan book and obviously give youself a cushion to work with.

I think that is why restructure / orderly run down should not be dismissed as impossible.

The IoM have said they will make £150 million available for the DCS does this mean some or all of these funds are available for a restructure? Also, yes the funds in the UK are currently inaccessible but even working within the administration there will be a time when Ernst and Young will make a distribution. The sounds coming out of the local councils in England are they expect quite a high recovery. But lets be pessimistic lets say recovery is only 60% of £390 million, well that’s £234 million. If IoM government can throw £100 million at the problem, you are almost at the point of being solvent. Then you have the big institutions. 4 Insurance companies alone are in for £220 million perhaps a deal can be struck with them, e.g. if they contribute £20 – 30 million they make a full recovery? Then there could be things we’re not thinking of. Could a contribution come from Iceland? Yes it seems unlikely but if you go asking for £50- 75 million instead of £300 million it makes it easier for them to help out and gives them a bit of good PR. At the end of the day even if you only got £25 million it could be very important.

These are just my ideas that have been bouncing around my head for a few weeks, I don’t want to get anyone’s hopes up.

But the black hole is not as bad as it could have been and if there is a will there could well be a way out. Yes there will be problems e.g. how do you make the pay out from administrator in the UK liquid now? i.e. how do you speed it up? Also how do you stop all depositor’s withdrawing the minute the bank reopens?


Ally or Skintagain

  • thesunnysouth
  • 10/10/08 31/05/09
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  • Mon, 10/11/2008 - 15:03

I seemed to have missed something. Until recently we have been talking about £550m deposited with KSF UK but recently talk has been of £390M. Is there an offset somewhere and if so where is that £160m ?


thesunnysouth

  • Ramsey resident
  • 22/10/08 31/05/09
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  • Mon, 10/11/2008 - 15:06

on balance sheet threre is a £164 sub participation shown from London which needs to be offset against funds deposited in London


Ramsey, Am i right then that

  • thesunnysouth
  • 10/10/08 31/05/09
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  • Mon, 10/11/2008 - 15:19

Ramsey,
Am i right then that we deposit £550m with UK and they have deposited £160 with us, which means E&Y will want that back whilst at the same time we want the £550m. If so that is similar to the arrangement with the Iceland branch which in effect only shows a £10m deficit to Iceland.
What I am confused about is where is the money sitting? If KSF UK have given (broadest term) £160m to IoM and Iceland have given £185m where are those deposits? Taken together they amount to circa £340m. Given that we have £100m in cash £400m in loan deposits and a possible £150m from the IoM that alone would seem more enough to pay back depositors???
Surely we would not give the money back until agreement for us to get our money from them?


thesunnysouth

  • Ramsey resident
  • 22/10/08 31/05/09
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  • Mon, 10/11/2008 - 15:39

I am not a banker or accountant but sub-participation is not hard cash but a sort of shared exposure to liabilities. The £160 mill is not therefore cash sitting here but still needs to be deducted from what they owe us

Also your figures are incorrect. If you go to the IOM FSC website and look up Aiden Doherty 2nd affadavit you will see the banks balance sheet as at 30 Sept and the deposits came to much more than the £650mill that you quote


Ramsey, i know this is all

  • thesunnysouth
  • 10/10/08 31/05/09
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  • Mon, 10/11/2008 - 15:52

Ramsey,
i know this is all very confusing but if IoM gave, over time, £550m and we cannot get this back becuase its been loaned out, then surely the same must apply to money given by UK to the IoM (or is it part of the IoM loan book? in which case we are double counting). Likewise if we (IoM) gave Iceland £190m ish and they gave back £180m where is the money? Someone must have it in order for it to be liquidated to repay depositors. It is either sitting in a bank in london, in Iceland or in the IoM?

If there is someone who can do a janet & john on this aspect I would be grateful as i cannot get my head round where the cash is?

Finally, deposits amount to £850m. the loan book is £400m and cash recovered £100m. Thats £500m. If IoM govt were prepared to put in £150m (DCS Scheme) we are now at £650m. Finally the two sums i have mentioned above from uk & iceland coming in at circa £340m takes it to about £1b more than enough to repay depositors?


Sunnysouth,Yeah it's a bit

  • skintagainnow
  • 10/10/08 31/05/09
  • a depositor
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  • Mon, 10/11/2008 - 16:24

Sunnysouth,

Yeah it's a bit difficult to get your head around, the cash doesn't exist anywhere except on paper,

try this, A lends B £10.00, B is required to pay A back £11.00, however C steps in and offers to guarantee 50% of B's dept if B defaults on the payment to A, but requires £0.50 of B's £11.00 repayment to A, therefore if B can not repay for any reason A only loses £5.00 and £0.50 interest.

In your second questions - you have answered it yourself - ie if we get the 100% return on the loan book and from UK then even take out the DCS money thus assets = liabilities


thesunnysouth

  • Ramsey resident
  • 22/10/08 31/05/09
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  • Mon, 10/11/2008 - 16:01

I agree if money from Uk and Iceland is returned the bank is not insolvent and could meet its liabilities and conrtinue trading

It is because we cannot get at those monies that we are where we are

I see no point in further speculation - we are just going to have to wait until hard news comes from whatever source


Well not actually true - the

  • frog
  • 10/10/08 13/09/09
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  • Mon, 10/11/2008 - 16:48

Well not actually true - the bank can't keep trading as the part of the bank that loans out our deposits is not there anymore - if it ever was there in any material form as they were after all a deposit-taking entity for its parent. What would happen would be the IOM government would put in place a management group who would either sell off the long-term loans or wait for the short-term ones to mature, refuse new cash coming in (as it is more bother than it would be worth!) and run down the non-liquid assets until they became cash assets - then pay them to the depositors (as much as possible.

The benefit of doing this is that the shorter term assets would be repaid at more than 100%, while the longer term ones could either be subordinated or renegotiated, pulling in close to 100% - but it could take some time.

The 100M GBP cash would be needed to run the operation and pay out some percentage to depositors who need cash immediately. My guess will be that they will offer a % to get all your cash back immediately (to a limit), or offer a mix of a % for a small chunk, plus a much higher % if you take a bond for the likely lifetime of the wind-down (say a year or two).

All of this is highly dependent (and what is all I'm really waiting for) on what the KSF UK bank can repay to KSF IOM.


Ramsey, I think we are going

  • thesunnysouth
  • 10/10/08 31/05/09
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  • Mon, 10/11/2008 - 16:06

Ramsey,
I think we are going round in circles. i am trying to establish where the money given to the |IoM by UK and iceland banks is now sitting? It is £340m and must be somewhere?


It's likely in the loan book

  • frog
  • 10/10/08 13/09/09
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  • Mon, 10/11/2008 - 16:50

It's likely in the loan book or as part of the cash.


Hello ally

  • Podcarson
  • 25/10/08 31/05/09
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  • Mon, 10/11/2008 - 14:38

As you have written: keeping the bank alive may well be the only way to keep the banks demands from Iceland and UK to go on... that way we can deal with the governments and agree for 60p to a pound they owe us or what ever other deal we can close with them, at due time.

For sure this is a much better path than screaming at the British govt. "Give us our money back" for no avail... as of Nov 27th they don't have to deal with us any more...


Ally, Pod re numbers

  • skintagainnow
  • 10/10/08 31/05/09
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  • Mon, 10/11/2008 - 12:14

Ally, Pod yes I'm with you and really we are agreed the initial black hole is the £400m stuck in UK, if the IoM can entice support from the "players", UK gov or Icelandic Gov to all chip in, then perfectly do-able, all it needs is that short term loan until E&Y start reparations.

Depending on which way it goes, but if a full restructure then I would hope at least some of the under £50K's would stay with it, Yes there's the once bitten, get it out and away while you can - but where too, we already know for expats the difficulties of opening accounts and at teh moment risk abounds wherever. Of course I wouldn't blame any of them to snatch the hand off and run, in that position even I would have to think long & hard and certainly not an easy decision. Even for of us over £50k some sort of hardship payment will have to be arranged soon for many.

Will add another bit to divers legal rep shortly as there's other issue's we as a group need to discuss, been thinking about it for a few days and time's running short.


DCS won't work like that.

  • Captain Mainwaring
  • 11/10/08 31/05/09
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  • Mon, 10/11/2008 - 08:41

DCS won't work like that. There are currently two schools of thought as to whether the DCS will top up (as you suggest) or just pay out any deficit. If and it is a huge IF, that the IoM government chose to allow the DCS to supplement whatever the liquidator recovers and we agree (don't have any choice) to accept what accounts to 75P in the pound less expenses, then it could work. Possibly the IoM could also suggest to the bank contributors that they have to pay say x years of contributions, based on the fact that their industry has been shored up and there is no run on the IoM banks which there surely would be.


I don't know about the DCS

  • Podcarson
  • 25/10/08 31/05/09
  • unspecified
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  • Mon, 10/11/2008 - 15:17

but I'm positive that this is in the best intrest of the Isle of Man. why?

1) They can maintain a reputation of a solid financial center
2) People working for the bank don't lose their jobs.
3) They have a chance of getting back any money the pour into bank, as apposed to money taken be depositors as compensation, which they will never see again.

So,
even if the DCS doesn't work that way, I hope the FSC, or the honerable Allen Bell, or Chief Minister Tony Brown, will find the way of making this work - for them and for us.


Skint Indeed, but the Darling

  • IceCrusher
  • 14/10/08 25/10/11
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  • Sun, 09/11/2008 - 20:35

Skint
Indeed, but the Darling boy is dead set against returning the assets! Lending money to perceived 'tax dodgers' does not sound up his street either. One way or another any return from HMG will come from the general pot and not by way of a favoured gesture (IMHO). Whether that pot gets 'massaged' upwards as necessary to enable adequate recompense and thus dampen our noise is a matter of speculation.

I am afraid that I am of the 'once bitten' variety and should fortune smile upon us, I will take mine far from that place. We are basically unrepresented, only the media gives us clout; we cannot threaten our vote because we don't have one; we cannot sue anyone because they claim no money. Although I am indebted to the Isle of Man Chief Minister and other members of office for their continued stand against HMG, at one end there is a tail and at the other a dog and no matter how you might wish it otherwise that is the way things are. Big brother ukay has the power to step in and exercise it's residual power - or indeed even to make hint of same may be enough to ensure compliance.

I inferred in my letter to Lord Bach that our group is being made a scapegoat in the Labour Government's endevours to sop up to other parties upping the ante against so called tax havens. Today we have such an announcement from President-elect Barack Obama. There are billions of dollars being moved from one jurisdiction to another flouting tax laws and denying honest tax payers their rightful dues, but picking on a group of (mainly) pre-retirees who have spent years saving their nest eggs as an example of this Government's strong stance against tax evaders is utterly pathetic and in a realm beyond the wit of mindful men. We must continue to press and educate UK MP's in the hope that they become those mindful men and bring justice to this situation.

IceCrusher


Are there any

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
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  • Mon, 10/11/2008 - 10:07

quoting Icecrusher

'There are billions of dollars being moved from one jurisdiction to another flouting tax laws and denying honest tax payers their rightful dues, but picking on a group of (mainly) pre-retirees who have spent years saving their nest eggs as an example of this Government's strong stance against tax evaders is utterly pathetic and in a realm beyond the wit of mindful men.'

I like this, are there any ministers for the elderly or pre elderly who might take interest in this aspect?

Have we contacted the magazines for the retired such as choice i wonder?


Ice - don't know if this will make any sense of it.

  • skintagainnow
  • 10/10/08 31/05/09
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  • Sun, 09/11/2008 - 22:30

He is at that, that's why it would have to be via the back door - with a different name attached to it.

As with bits & pieces I've posted, once funds have been allocated or guaranteed, side stepping those funds from one budget to another isn't a major problem, the headache is the initial procurement of those funds, and remember this dosen't have to be actual funds of the folding kind, a promise or guarantee of those funds is sufficient.

an example that I can equate too and possibly others in the group, although this type of fund transfers are never this simple in real life and other factors and many, many hrs of work / persuasion has to go into them, but will hopefully give an idea to how it may operate :-

Site A requires a refurbishment estimated cost £OOOm, Site A's maintenance budget is £OO m / annum, refurbishment is expected to take 3 years,, therefore 3 x £OOm is not required, but it's still there in a budget, project gets into difficulties and requires 20% additional funding, now we have the maintenance budget for year 1 @ £00m or 10% of the funds still in the pot, we know next years maintenance budget is also available and can be brought forward - hence 2 x £00m the required 20%. Costs covered, although we don't actually have next years budget, but's it's the guarentee of it that counts and in any case it's not going to be required until near the end of the project 1maybe 2 years down the line, hence it is there when needed.

same applies here, IoM commits a guarantee of £150m, UK agrees to guarantee to IoM £250m for short term aid (can be termed as anything) - to be paid back "in next years" budget ie when E&Y wind up KSF UK, these guaranteed sums would only be called if all other parties wanted instant access to their money

In the short term it would be IoM's guarantee that would be used, hence that would have to be of a ready folding type, the term bonds SIPPS etc,. would most likely have to stay, those of us with a lot more than £50K again would more than likely have to leave in situ too or at least a substantial part of it. Corporate accounts they are going to be in the same position as over the £50K depositors, leave a substantial chunk or get nothing - it's a no brainer.

Folks that want to get out quick, I can't and don't blame them. but I'm in this for everything and nowhere else to go, for me this would be more or less a chance to come out at best on a break even footing.


We have less time than we thought

  • poppytwo
  • 06/11/08 31/05/09
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  • Sun, 09/11/2008 - 20:45

I think BO's announcement will have great impact on our case. Come January the IOM authorities will no longer worry about out groups influence on things. We need to make the IOM authorities take action in respect of us NOW. KS&FIOM was an IOM Bank and the IOM Government are responsible for it.


Dont scaremonger Poppytwo

  • manx-person
  • 17/10/08 31/05/09
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  • Sun, 09/11/2008 - 20:56

Poppytwo,
Do you know anything about the history of these things?
Do you know that the IoM has signed a tax information exchange agreement with the USA?
There has always been posturing with the Americans...
Do you know that very little of the Isle of Man's business comes from the US?
Most of the institutions in the IOM havent done work with American citizens or nationals in years.


Don't scaremonger Poppytwo

  • poppytwo
  • 06/11/08 31/05/09
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  • Sun, 09/11/2008 - 21:03

Sorry manx-person. Thanks for putting me on the straight and narrow. Did try to edit my posting but got denied.
Due to the press releases we obviously need to educate many more.
Feeling a little bit down, probably due to too much red medicine and not enough food, can't afford both.


Poppytwo - its ok didnt mean to be so harsh

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

USA compliant tax planning is still very tricky, and the annuity planning that is done is mostly done out of Cayman/Bahamas I think.

The IoM shys away from this sort of work, in most cases.

The US is a big tax haven though; it has been heavily criticised by the OECD.

And it refuses to let the IMF review its financial system.

The IoM has recently visited Washington to discuss matters and if necessary I am sure will go again.

Talk about Pot Kettle Black (the USA talking about tax havens)


THanks Manx-person

  • poppytwo
  • 06/11/08 31/05/09
  • a depositor
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  • Sun, 09/11/2008 - 21:21

I am starting to think of spin doctor politics in the USA. It would be 'very interesting times' if only we hadn't been caught in the rotten middle of it.


Believe it or not poppytwo

  • expat
  • 10/10/08 31/05/09
  • unspecified
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  • Mon, 10/11/2008 - 15:28

Believe it or not poppytwo the whole idea of trying to find a way to put the bank back would be intersting if we weren't in the middle of this! Hopefully thought you might see by Allys posts a way it might be done. There are variations of course, there might be a white knight somewhere in this, its a possibility we don't discount. But for the moment we concentrate on what is "do-able", not what we'd like it to be. 100% return is great, but the real situation makes that a difficult thing to bank on, if you'll excuse the phrase. So we discount that for now, maybe and hopefully we underestimate it, but that's better than kidding ouselves.

Nonetlheless the amazing amount of political pressure London have applied might well "oil the wheels" a bit.

We have also had contact from another group of depositors who are totally independent of us and represent a sizeable sum of money, they are also looking at this and we are laising with them this week. More of skints brainstorming really to try to add a bit more structure to this type of thinking. But I would empahise they are independent and will act as they see fit, although we seem to have a lot of common ground.


Expat - can you relate to the idea of buying

  • Podcarson
  • 25/10/08 31/05/09
  • unspecified
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  • Mon, 10/11/2008 - 16:32

bank by depositors?


Depositors Buying Bank/Run-off

  • DXB
  • 12/10/08 31/05/09
  • unspecified
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  • Sat, 08/11/2008 - 20:08

PC,
I'm not sure DBB is feasible. Some issues:
i) The DCS is unfunded - there isn't currently a pot of money earmarked for depositor compensation.
ii) Even if the funds were there in the DCS, they couldn't just be "poured into the bank". I doubt the DCS managers/trustees have the power to do that - and, as a matter of policy, I can imagine there would probably be a stronger case for building up reserves for other banking contingencies.
iii) Why would depositors want to swap their debt in an insolvent bank for equity in an insolvent bank? Equity is riskier than debt, particularly equity in a private (as opposed to listed) company. A debt-for-equity restructuring would only work if the insolvent bank could somehow trade its way out of its difficulties - is KSF IOM as a standalone entity a viable prospect in the current trading environment?
iv) Assuming we agreed to the debt-for-equity swap: what would the exit strategy be? When are the shares in the bank likely to be worth the deposits they were purchased with, plus interest?

On the other hand, the run-off idea being explored by the Manx authorities is interesting. Skintagainnow has posted some comments on this in another thread. I am aware of insurance/re-insurance companies being run-off - I wonder if is a precedent for the run-off of a bank?


Thanks DXB

  • Podcarson
  • 25/10/08 31/05/09
  • unspecified
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  • Mon, 10/11/2008 - 07:39

First - i must say: I am not a proffesional, and i don't have enough information. what I wrote is based on common sense - and that may not be the way things work... However - I believe that the principles should be maintained, and a just solution can be found. As for your remarks:

1) The DCS is unfunded - well, I read differently. I read that the they have Earmarked 150M GBP.
2) It cannot be poured into bank - May be... but it is in the best intrest of the IoM givernment so i hope, for their sake and ours, they'll find a way...
3) Rather have debt than equity - that's true if you have less than 50K... if you have more, and especially if you have over than 30K more, than you would want to be able to see the money again one day, and cannot be satisfied by the DCS...
4) Exit strategy - I have no idea... we need a proffesional eye on this... but I do know that any one with capital today who is willing to hold on to his assets will gain when the world finance turbulance quiets down... I guess we will have two years of low profits if any, but building up the banks' capital seems (again, as a layman) preety safe.

This has to be done!


I wouldn't want to buy the Bank

  • Lucky Jim
  • 13/10/08 31/05/09
  • not a depositor
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  • Sat, 08/11/2008 - 16:47

Hi Podcarson -- a good idea in theory but not a viable & profitable option in practice.

As the Titanic went down I don't think anyone heard a broker shouting: "All stay aboard to buy the ship" !