manshimajin Posted October 7, 2008 Share Posted October 7, 2008 As someone mentioned above, it is a bit of political posturing for Juan Watterson et al to press IOMG to up the compensation scheme and to 'do something'. The extent of the problem and how far its ramifications go globally is just beyond what the IOMG can respond to. So, perhaps sitting on its hands is the best course for IOMG at the moment. However, I would hope Mr Bell and his mandarins are having daily, if not hourly, consultations with the FSC and the other major players so that they can quickly see when corrective action is needed. Whether it will be in a position to make the corrective action is a different matter, it seems to be beyond the likes of the US so far. Worrying times, but perhaps we are just a little cork on a tempestuous sea; the super-tankers may founder around us, but when calm returns this insignificant little cork will still be bobbing around, a bit battered and bruised, but still afloat. I think you have made a good summary of the situation. As the FSC point out on their website, because the compensation scheme here is bank funded it might take a long time to actualy pay out compensation. In any case you can't pay out more than is in the fund - unless the Government decided to subsidise the fund. But where would the money to do that come from? I still think our best 'guarantee' is the very negative international publicity that would be incurred by any bank whose subsidiaries failed to honour deposits. Imagine the impact on an RBS size bank if the media got hold of a story that they were unable to return money to depositors. I think that they would have gone to the UK Treasury long before that and that the EU would be bolstering their balance sheet. It really does come down to a confidence thing. Link to comment Share on other sites More sharing options...
caprineus Posted October 7, 2008 Share Posted October 7, 2008 Okay, so how often is Andy Capp quoted on here?Today's cartoon: Andy (looking miserable as he speaks to bank manager): "You're right - I'm useless at handling money. Because of my incompetence my finances are in a terrible state" Then, brightening: "So tell me - how are the banks doing these days?" "Shares in Royal Bank of Scotland (RBS) plunged by more than 35 per cent today to less than £1 on fears that a £40 billion bailout of high street banks would result in a partial nationalisation of several household names. RBS shares fell to a record low of of 95p on suggestions that it had approached the Government about a capital injection that would dilute the holdings of existing shareholders. It later rose back just above 100p. " It will be interesting if the (UK) Government nationalises the Isle of Man Bank in the process! Link to comment Share on other sites More sharing options...
bluemonday Posted October 7, 2008 Share Posted October 7, 2008 Isn't all this exciting. It's like a mass barn dance in a very big minefield. Link to comment Share on other sites More sharing options...
bluemonday Posted October 7, 2008 Share Posted October 7, 2008 http://www.iomtoday.co.im/news/Manx-Govern...tion.4566940.jp So subject to Tinpot approval, the IOM limit goes to 50k but is that the full 50 or 75% of 50? Link to comment Share on other sites More sharing options...
thesultanofsheight Posted October 7, 2008 Share Posted October 7, 2008 http://www.iomtoday.co.im/news/Manx-Govern...tion.4566940.jp I have to say it is good policy, but inevitable really. They couldn't have delayed this move much more. Link to comment Share on other sites More sharing options...
TerryMcCann Posted October 7, 2008 Share Posted October 7, 2008 http://www.iomtoday.co.im/news/Manx-Govern...tion.4566940.jpSo subject to Tinpot approval, the IOM limit goes to 50k but is that the full 50 or 75% of 50? 100% The Minister went on: ‘However, I am also aware that people both on and off the Island are looking to me for leadership and clarity on the specific actions we intend to take. Therefore I am announcing today that I intend to raise the limit of protection for deposits of individuals to a maximum of 100% of £50,000. http://www.manxradio.com/readNEwsItem.aspx?id=26518 Link to comment Share on other sites More sharing options...
Mutley Posted October 7, 2008 Share Posted October 7, 2008 http://www.iomtoday.co.im/news/Manx-Govern...tion.4566940.jp I have to say it is good policy, but inevitable really. They couldn't have delayed this move much more. Compensation is paid out of levies collected from other banks. Levies are collected at a maximum of £250,000 per bank per year at the moment - if they increase that by the same amount as the increase in coverage (333.33%) then the banks would have to contribute a maximum of £830,000 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. So nothing really changes. The goalposts move slightly. Smoke and mirrors. To make it a significant benefit they'd have to increase the levies by a lot more than 333% and/or offer some Govt assistance to actually make it worthwhile. It will be interesting to see exactly how much the banks have agreed to put the levies up by. 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). So unless they increase the levies by at least the same percentage you're possibly in a worse situation than when it was £15k. Link to comment Share on other sites More sharing options...
Slim Posted October 7, 2008 Share Posted October 7, 2008 It's still better than any other offshore currently, though Jersey did announce details of their scheme today too: http://www.thisisjersey.com/2008/10/07/rai...ckstop-savings/ Link to comment Share on other sites More sharing options...
oldmanxfella Posted October 7, 2008 Share Posted October 7, 2008 Compensation is paid out of levies collected from other banks. Levies are collected at a maximum of £250,000 per bank per year at the moment - if they increase that by the same amount as the increase in coverage (333.33%) then the banks would have to contribute a maximum of £830,000 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. So nothing really changes. The goalposts move slightly. Smoke and mirrors. To make it a significant benefit they'd have to increase the levies by a lot more than 333% and/or offer some Govt assistance to actually make it worthwhile. It will be interesting to see exactly how much the banks have agreed to put the levies up by. Mutley. You've not grasped the nub of this crisis at all. Its all pure unadulterated bullshit. So the Isle of Man bank levies can't support the new guarantees - so what! Ireland can't afford to guarantee its deposits, neither can Greece or Germany, or Iceland yet they've all said they will and people accept that. Nobody is looking at the fine print they are just looking for nice words and action, and IOMG have given them what they want to hear. There is no shame in that - maybe it will come to nothing anyway. I happen to agree with what IOMG has said. It makes no real difference to the security of any deposit based here BUT they've now joined the international 'promise club' before the other offshore Islands. It's a meaningless commitment that nobody can afford but that is all the market is looking for. If push comes to shove Allan Bell can say 'Were a Triple A rated jurisdiction and we take our commitments seriously' ...... more cheers. This is pure bullshitville, and they've got the message about what they need to do. Link to comment Share on other sites More sharing options...
Mutley Posted October 7, 2008 Share Posted October 7, 2008 Mutley. You've not grasped the nub of this crisis at all. Its all pure unadulterated bullshit. Oh i have I'm just pointing out that it's even more meaningless than it was. Link to comment Share on other sites More sharing options...
oldmanxfella Posted October 7, 2008 Share Posted October 7, 2008 Mutley. You've not grasped the nub of this crisis at all. Its all pure unadulterated bullshit. Oh i have I'm just pointing out that it's even more meaningless than it was. Great then I'm not agruing with you but agreeing with you! Its meaningless words but I think that is all global investors are looking for. If they can't trust the banks they believe that they can trust the governments. The next issue being the Icelandic government is most likely totally bankrupt. If a whole economy can go bankrupt overnight, and that government has told you they guarantee your savings, who picks up the tab next? God? Maybe he doesnt exist but I'm guessing he's next on the list of guarantors. Link to comment Share on other sites More sharing options...
Slim Posted October 7, 2008 Share Posted October 7, 2008 Mutley. You've not grasped the nub of this crisis at all. Its all pure unadulterated bullshit. So the Isle of Man bank levies can't support the new guarantees - so what! Ireland can't afford to guarantee its deposits, neither can Greece or Germany, or Iceland yet they've all said they will and people accept that. I think you're being a little unfair here. The government can't afford to guarantee all deposits, no, but that only matters if all the banks go bust. The local scheme would protect people if one or two of our banks went under, which is better than nothing, isn't it? Link to comment Share on other sites More sharing options...
oldmanxfella Posted October 7, 2008 Share Posted October 7, 2008 Mutley. You've not grasped the nub of this crisis at all. Its all pure unadulterated bullshit. So the Isle of Man bank levies can't support the new guarantees - so what! Ireland can't afford to guarantee its deposits, neither can Greece or Germany, or Iceland yet they've all said they will and people accept that. I think you're being a little unfair here. The government can't afford to guarantee all deposits, no, but that only matters if all the banks go bust. The local scheme would protect people if one or two of our banks went under, which is better than nothing, isn't it? Yes. In reality its likely better than that - all the Irish subsidiary deposits are covered anyway and the UK banks are unlikely to let their offshore subsidiaries go down - therefore the risk is either zero or everything so why didn't they agree to do this last week rather than saying that they are putting the scheme back out for consultation? The cost of all of this is probably next to zero but if things go really wrong (Ireland can't pay, the UK banks don't bail them out) like everyone else they can't pay anyway so who cares. If you offer a guarantee you should be guaranteeing the worst case scenario not the likely outcome. Landsbanki is a prime example http://www.guardian.co.uk/money/2008/oct/07/banks.savings You tell me who pays what and which scheme you claim under Link to comment Share on other sites More sharing options...
bluemonday Posted October 8, 2008 Share Posted October 8, 2008 http://www.manxradio.com/readNEwsItem.aspx?id=26586 Tynwald emergency session tomorrow!!!!! Hoard them baps now! Link to comment Share on other sites More sharing options...
laxeygal Posted October 9, 2008 Share Posted October 9, 2008 I guess the UK Government did a very similar thing when it underwrote all the deposits in Northern Rock 100%? Maybe the Irish Government learned a lesson from them? I understand that Northern Rock still has stronger guarantees than the other UK banks. Funny you should mention that: http://news.bbc.co.uk/1/hi/business/7647914.stm Definitely It's a nationalised bank with double the rates of National Savings, no surprise people have been falling over themselves to open savings accounts. One gets the feeling that Gordon and Alistair are upset they did not think of this first - a comparison of two different Celtic cultures - one 'wise' the other 'smart'? As of today I know where I would rather keep my money - and funnily enough I am a client the category of person that seems to get forgotten in all this. One gets the feeling that the UK and the EU are fiddling whilst Rome burns which opens up a need to take action in Ireland. I'm not sure it's a great idea, why should banks operate without risk? It'll just encourage them to behave worse than they have before, and they've created this situation we're in. The existing protection offered is enough in my view. Sadly Northern Rock is trying to make itself as unattractive a place as possible to put your money. It chimes with the governments desire for an ordered run down of the bank. No new business. Plus it has become one of the most aggressive reposessers for people who are falling behind on their mortgages. As more people who can switch, move their loan.... http://news.bbc.co.uk/1/hi/business/7437100.stm ...N Rock is stuck with the rump of crap mortgages (125% Together mortgage deal) where people cant move the loan and cant keep up their repayments as the intro deal comes to an end and they are put onto the SVR. Plus I heard that people with Kaupthing bank accounts held here were flying into Douglas from Zimbabwe and Hong Kong yesterday to find out whether their money was safe. Link to comment Share on other sites More sharing options...
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