State-controlled insurance company to release KSF UK from Administration?

  • ianw
  • 14/10/08 n/a (free)
  • unspecified
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Posted: Sun, 18/01/2009 - 20:03

From the BBC Website this evening:

"You will see tomorrow there are measures taken that will ensure that banks and non-bank institutions are able to resume lending or expand lending and in some cases to start lending." We as taxpayers will be insuring some of the bad loans made by our biggest banks, to limit their future losses from their reckless lending" - Gordon Brown

Robert Peston's blog: The new state-controlled insurance company would provide cover in the event of bank customers defaulting on their loans. It would allow banks to pay a fee to have their bad loans underwritten by the taxpayer up to a certain level.

I wonder whether this could help KSF UK get out of Administration to resume normal commercial operations? If this can be achieved, given that KSF IOM was solvent at the beginning of October, there should then be a way to get KSF KOM out of Administration.

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What actually happened in October

  • steveservaes
  • 13/10/08 31/05/09
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  • Mon, 19/01/2009 - 15:44

Was it as simple as this?
(1) UK gov knew Iceland couldn't pay the £20k per UK depositor they were supposed to pay under the EU Passport scheme for the dodgy "Icesave" accounts with Landesbanki;
(2) UK gov knew Landesbanki going to go bits-up any moment - leaving UK gov to carry the can for Iceland's liability in (1);
(3) UK decided to snatch all Landesbanki assets in advance to compensate UK for (2);
(4) UK thought Kaupthing might do a "Lehman Brothers" and go bust after whipping all foreign reserves back to Reyjkavic - in response to (3);
(5) To forestall this UK ordered all UK banks to dishonour Kaupthing payments;
(6) And then used (5) as a technicality to put Kaupthing UK into administration.

The whole idea being to prevent the Icelandics frustrating the UK's Landesbanki asset grab, by doing a Lehman Brothers runner with all the KSF UK assets - leaving UK to carry the whole can for KSF UK depositors with nowt in the KSF UK liquidation pot to compensate UK government, when UK govt stands in depositors' shoes.

Surely - in the light of all this - neither KSF UK nor KSF IOM should have been allowed to carry on accepting deposits, from a date some considerable time ago. I for certain would not in September have put my money into this big government sting!


I would say absolutley spot

  • thesunnysouth
  • 10/10/08 31/05/09
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  • Mon, 19/01/2009 - 20:35

I would say absolutley spot on. Now any assets recovered will be for he benefit of the two banks and not iceland.
At some point HMG will get itchy fingers regarding the £3b they have paid out to ING and now paying out to retail depositors. Either KSF UK gets back trading or gets dissolved either way HMG will want a return and the minute they get a return so do we.


that about sums it up Steve

  • skintagainnow
  • 10/10/08 31/05/09
  • a depositor
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  • Mon, 19/01/2009 - 16:04

In a nutshell -- I think you've done it --

with respect to deposit in september, mine would have gone anywhere but KSF


Is this a glimmer of a way out?

  • sambururob
  • 10/10/08 n/a (free)
  • a depositor
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  • Sun, 18/01/2009 - 20:11

Please, somebody who is clued in, tell me this is a possibility. I fancy a good night's sleep!! If it is not a possibility please explain that it is not in a nice way rather than leading off with cries of naive idiots!!


Sorry :- It's not a UK bank as such

  • skintagainnow
  • 10/10/08 31/05/09
  • a depositor
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  • Sun, 18/01/2009 - 21:53

Sorry :- It's not a UK bank as such, and it's already down the pan, but would have been a nice thought.


The criteria for assistance are not clear

  • ianw
  • 14/10/08 n/a (free)
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  • Tue, 20/01/2009 - 10:32

Skintagainnow,

I'm not sure you're correct about this. The link below says foreign banks CAN benefit from this arrangement.

http://money.uk.msn.com/investing/news/article.aspx?cp-documentid=12984784

Who will get the cash?
UK banks and foreign banks lending to Brits will get the money. The reason foreign banks are included this time around is that Spanish bank Santander now owns Abbey, Alliance & Leicester and half of Bradford & Bingley, meaning excluding foreign banks would create a two-tier system in the UK, with half of banks benefiting and half not.

Also, it's always seemed to me that the way out has to be a political face-saving solution and this will probably need a new "interpretation" of apparent rules. I just think this avenue might have a chance....


ianw - The criteria for assistance are not clear

  • skintagainnow
  • 10/10/08 31/05/09
  • a depositor
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  • Tue, 20/01/2009 - 16:27

I'd not seen that one, interesting.

However they have a ready made excuse for KSF UK - it's already in liquidation and their stake is £3.2b, Edge accounts have been transferred and all retail deposits guaranteed...

The wording in the article does offer a glimmer for the IoM - if IoMG get off their collective a**e's and try and get hold £500m of it for the "toxic loan" of KSF UK to KSF IoM... there's another angle we can pursue --- nice one Ian.

IoMG takes over KSF IoM (then it's not an Icelandic bank - but a wholly owned IoM bank) applies to UK for the Toxic loan payment - re- capitalise's KSF IoM ... we're back in business

Yes / No.....

or is that far to simplistic.....

Perhaps this is something that PWC should be looking too - I'll add it to the frog's question page

I've done some more checking on this one --- the new package from HMG only applies to new loans -- NOT existing loans -- no point in thinking down this route --- thought it was too easy --- dam shame


Too much fraud involved

  • dawes
  • 24/10/08 31/05/09
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  • Tue, 20/01/2009 - 14:51

I sincerely doubt any British taxpayers money would be given to any Icelandic institution give the massive levels of criminal activity involved in their operation. Billions of Euro's were stolen from the banks by Icelandic gangsters.


There is political capital to be made...

  • ianw
  • 14/10/08 n/a (free)
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  • Tue, 20/01/2009 - 16:17

Dawes,

But surely the political capital / brownie points are for appeasing the public outcry regarding the £40 million for Naomi House / Cats protection (+the local authorities) and if this can be fixed, there's no need to mention KSF IOM and all the rumours around the Icelandic activities?