Creditors meet to learn cost of Kaupthing's loans

Yachts and private jets are exactly what well-heeled customers of the Café Royal would be expected to own. Indeed, these playthings of the rich and famous will be the subject of discussion in the venue's plush surroundings today.

But the talk will not be so much about exotic holidays on fabulous yachts reached by private airplanes but about the loans handed out by a collapsed Icelandic bank to buy them.

Creditors are scheduled to attend a meeting at the Piccadilly venue to learn about their chances of recouping losses from the British arm of Kaupthing - known as Kaupthing Singer & Friedlander (KSF).

Kaupthing is one of three banks to have been seized by the authorities on the north Atlantic island that once prospered on the back of the financial engineering that dominated the credit boom but has since been hit by the unravelling of the global financial system.

Documents sent to creditors before the meeting with administrator Ernst & Young show how KSF capitalised upon the boom times. Some £300m of its loans were granted for yachts and aviation - a quarter of all loans granted by the group's private banking operation.

KSF's private bank had 400 customers who were loaned a total of £1.2bn. The largest single component of the private bank loan book - 33% - is exposed to British properties.

KSF also had a £824m corporate book, where a quarter of all loans have turned sour, and a £937m property book, where 11% of the loans are on its recoveries list.

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