Bank Deposit Protection Scheme

[Gladys]

But it is more than just a question of a reimbursement scheme, it is also how it interfaces with the various guarantees given by Governments for their national banks.

[bluemonday]

Gladys, obviously as I've picked your brains privately on a few issues recently, I'll defer totally to your knowledge of the complexities involved.

 

However.

 

IMPO some sort of confidence boosting action is required.

 

Specifically to the small local saver.

 

Possibly I'm being simplistic but I do think Bell et al could be doing more to show and instill confidence to the small manx savers.

[ai_Droid]

IMPO some sort of confidence boosting action is required.

 

£66 billion is deposited in IOM regulated banks. For the manx government, ie, the manx taxpayer to underwrite this in the nature of these other guarantees could cost each of us £825,000 if the banking system failed.

 

That might nip into your savings a bit eh?

[bluemonday]

Very slim chance, I moved my tiny piggy bank a few weeks ago. And I'm not alone there. Security is more important at the moment.

You're missing the point, I'm on about reassuring the small local saver.

[ai_Droid]

Very slim chance, I moved my tiny piggy bank a few weeks ago. And I'm not alone there. Security is more important at the moment.

 

Doesn't matter where your dosh is, as a Manx taxpayer you'll take the liability. Doesn't matter if you actually have it or not.

 

Icelands a good example of how this can go. They lent massively overseas, huge expansion, now they're fooked. 15% inflation, government can't afford to prop up their banks, they're goosed, they really are.

[bluemonday]

Can't disagree about Iceland.

[GD4ELI]

IMPO some sort of confidence boosting action is required.

 

£66 billion is deposited in IOM regulated banks. For the manx government, ie, the manx taxpayer to underwrite this in the nature of these other guarantees could cost each of us £825,000 if the banking system failed.

 

That might nip into your savings a bit eh?

Surely the £66 billion is not all private money but includes investments such as shares stored with the investment banks?

 

Anyway unless the Island's top brass does something soon the financial sector will be hit hard and IMO may not recover. Alan Bell is no fool - let's see what he says this week.

[bluemonday]

http://www.iomtoday.co.im/news/Savings-gua...ward.4560598.jp

A SCHEME to guarantee savers' money up to the first £35,000 is being proposed by five politicians.

The proposal, by MHKs David Quirk, Tim Crookall, Bill Malarkey, Graham Cregeen and Juan Watterson would bring the Island in line with the UK, but the guarantee would only be for individual or corporate local investors.

 

Good.

 

JUAN WATTERSON: 'It is no-longer sustainable for the Treasury Minister to sit on his hands and say it is under constant review. We call on him to agree with this initiative to allay concerns of Manx depositors'

 

Double good plus.

[GD4ELI]

All five MHKs agree no public money should be put at risk to protect bank deposits.

 

So how would it work then? Rob come-overs?

[ai_Droid]

Iceland: £450bn ish deposits, 300,000 citizens, ouch.

 

Surely the £66 billion is not all private money but includes investments such as shares stored with the investment banks?

 

Nope, that's just deposits in banking as far as I know not shares or fund managers/administrators.

[ai_Droid]

So how would it work then? Rob come-overs?

 

Like the current scheme I guess:

 

"Compensation is paid out of levies collected from other banks in the Isle of Man. Levies are collected at a maximum of £250,000 per bank per year. As there are a limited number of banks which pay levies, it may take many years for compensation to be paid to depositors. This period will also vary according to when liquidation proceeds are collected from the failed bank and how much is recovered. There is no "standing fund" of compensation (i.e. money is not collected before a bank failure)."

 

We're getting some reasonably good press at least, because we're the only offshore to have a scheme. Not sure it's a great time to be putting extra financial pressure on the banks though, so the plan of making a guarantee without any taxpayer liability is bonkers.

[GD4ELI]

Iceland: £450bn ish deposits, 300,000 citizens, ouch.

 

Surely the £66 billion is not all private money but includes investments such as shares stored with the investment banks?

 

Nope, that's just deposits in banking as far as I know not shares or fund managers/administrators.

£66 billion managed investments I can understand but £66 billion in pure bank deposits earning 5% interest (or whatever it is) seems rather high.

 

I wonder whether Stu for President will talk about this on his MR prog this week?

[Albert Tatlock]

It seems Angela Merkel the German Chancellor didn't say anything serious about backing all deposits at all, it was a mistranslation - only that they were safe, as has been said in the UK.

 

The BBC et al was heavily reporting this 'statement' backing of all German savers yesterday, and as a result billions are being wiped off the stock market i.e. FTSE, this morning - for what? There are relatively few people causing rumours that seem to be leading governments by the nose at present. It just goes to show how powerless governments can be in all this, and more importantly, who actually runs the economy after all. Denmark and Sweden have put out statements now due to the 'alleged' German statement yesterday, with Denmark backing all savers, Sweden increasing the protection.

 

European leaders need to have their heads banged together and issue a co-ordinated statement, and stick to it. Moreover, those rumour mongers, and those listening to the rumours, need to realise that it is impossible to back all savings - there isn't, never has been, or never will be, enough public money available to do so.

 

It's like watching Lemming TV at the moment.

 

Edited to add: ...and Juan Watterson...learn to keep your gob shut for now, and leave it to the grown ups to agree what the overall action is first. Attracting the wrong type of attention is the last thing we need here - and could lead to ill-thought out consequences, just because you feel you have to say something now. Shut up, shut up, shut up.

 

 

.

[ai_Droid]

Good god, I agree with Albert again, the bandwagon jumping isn't helping. Instead of our thick elected jumping up and down saying we need MORE protection, they should be strongly highlighting the fact that we have protection at all to the market. We're the only offshore that does.

[manshimajin]

I assume that the IOMG is waiting to see what the UKG will do today and maybe also what the EU will do if they co-ordinate their positions which looks to be more and more necessary. Let's face it what happens here is a small sideshow that is dependent on what the big boys do.

 

A lot of the problem seems to be the lack of confidence in banks lending to each other. Is this where governments need to act?