I post this to show just how vulnerable are the IOM Banks in the current international banking crisis, & especially now after the demise of KSFIOM.

Despite what Tony Brown (Chief Minister) & the IOM Government is saying about the IOM being a safe place to deposit, this report shows that it simply is not true.

The writing is on the wall.

The report was written in Sept 2008 before the KSFIOM lost its licence. It was prophetic & is still relevant today!

.... The deleveraging of 2008 is painful and potentially fatal for some banks.
High leverage, low liquidity is an accident waiting to happen. It is picking off the
vulnerable one by one. It may only be a matter of time before there is a victim in the Isle of Man. ..............

So how safe are banks in the Isle of Man?
Let’s start with the position of the Financial Supervision Commission (‘FSC’):
‘It is a fundamental principle that anyone making a deposit with a bank should
first consider carefully the risks involved. No financial transaction is without
some risk... the important element is that depositors must use their own judgement in assessing institutions where they place their deposits.'

Not very encouraging, but it gets worse:-

‘I would reaffirm that it is not the role of the Commission to prevent failure.’

The FSC is clear that if things go wrong, they are not to blame: blame the directors of the bank and yourself because you did not first ‘consider carefully the risks involved’.

Let’s carefully consider the position in relation to Isle of Man banks and building
societies. The locally incorporated banks can muster only two credit ratings between them: Lloyds TSB Offshore Limited and Barclays Private Bank & Trust (Isle of Man) Limited. A number of UK incorporated banks have local licences and all havecredit ratings. Most of the locally incorporated banks are deposit gathering operations for overseas parent banks. In many cases, they lend the substantial proportion of what they collect back to their parent company, so their stability depends on their parent company’s ability to repay. What does the FSC know about the parent’s ability to repay?

We asked the FSC this very question suggesting in our question that the FSC did not have full information from the parent regulators. Our understanding of their replywas that they did not have full information from the parent regulators about the ability to repay. It would help if the FSC published what information they get from parent regulators, so we all know what they know and what they take on trust. There is a risk that the FSC does not really know whether certain parent banks can repay their local subsidiaries. We should be told. We should also be told which local banks have restrictions on their ability to send deposits back to their parent bank – are there any?
If so, how many and who are they? – we want to avoid those banks......
(continued) Unquote

Wow! Isn't this so very relevant to the issues raised in the TSC Meeting3/2 with regard to the role of the FSA versus the FSC in respect of the transfer of £550,000,000 of depositors' assets to KaupthingUK! ?

The DAG is right to warn other potential depositors of the risk of depositing in the IOM!

But Alas! it is a Catch 22 for the DAG, for in doing so the DAG offers up another nail in the coffin of the IOM ...& it could also fall into the big hole awaiting it! That's another reason why a SoA would be dodgy because it could be withdrawn when trhe mighty crash occurs.

Let's contact the banks to find out just how secure a deposit with any of them would be!

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Aspden was quick to point out

Aspden was quick to point out that the depositor's were to blame at the creditor's meeting in the IoM on October 9. I had flown over in a desperate dash to get my money, I spent the night in Starbucks at Gatwick, waiting for my connection, and discovered the news in the morning as I checked the internet - just before the first flight to IoM.

Aspden said two things that I remember at that meeting:
(1) Depositors were to blame because high interest rates = high risk
(2) Depositors were to blame because they should know what's happening

An articulate depositor answered the second statement saying that this was totally unacceptable since Joe Public is not sophisticated in financial issues and relies on the likes of the FSC to REGULATE.

As far as the first issue goes - I deposited with the Derbyshire and only with the Derbyshire. I was with them for over 10 years and they were winning awards for their role as a deposit taker on the IoM. Other banks offered equivalent rates and higher rates. Although I did not change anything after the KSF takeover I did ask to transfer my account to Derbyshire BS UK - you know the answer.

My mistake was putting my savings on the IoM - I will not repeat that error.

Posted by Anonymous on Thu, 05/02/2009 - 14:37