KSF Megathread 2

[pongo]

how do we get it through your thick skull KSF in the IoM was only classed a branch of the UK section and not in fact classed as a IoM based division of that bank

 

That's not true. KSF(IOM) was a subsidiary of KSF, the Icelandic parent. The UK bank to which the funds were "upstreamed' was a sibling of the IOM bank.

 

BTW - a bank deposit in a properly regulated jurisdiction should not be considered a "gamble". You are undermining the industry here in general by suggesting that people looking for the best rates are somehow greedy gamblers. The purpose of financial regulation in this context is to ensure that banks are safe - in which case there should be no reason not to look for the best rate.

[bellyup]

An 11% distribution is expected in July:

 

http://www.kaupthingsingers.co.im/Pages/2010/June/9June2010.asp

 

This is correct.

It hasn't been distributed yet but when it is it will make the total amount recovered by depositors 51%.

[bellyup]

how do we get it through your thick skull KSF in the IoM was only classed a branch of the UK section and not in fact classed as a IoM based division of that bank

 

That's not true. KSF(IOM) was a subsidiary of KSF, the Icelandic parent. The UK bank to which the funds were "upstreamed' was a sibling of the IOM bank.

 

BTW - a bank deposit in a properly regulated jurisdiction should not be considered a "gamble". You are undermining the industry here in general by suggesting that people looking for the best rates are somehow greedy gamblers. The purpose of financial regulation in this context is to ensure that banks are safe - in which case there should be no reason not to look for the best rate.

 

 

This is absolutely correct.

With the new government in Westminster now it might be a time for the IOM government to rethink its original policy in dealing with the collapse of KSF.

The loan book is due to pay out most of its proceeds in the next two years.

The IOM still has time to approach HMG for a 2 year loan to cover this and pay out the depositors immediately thereby reducing the distress that waiting for years will cause to some elderly depositors.

It will not be a major outlay for the IOMG - in fact they could pay themselves out too!

Not only will it help depositors but it could only enhance the reputation of the IOM banking system.

[John Wright]

The interim Tynwald Select Committe report is now out on line. 64 pages. A good read. It fully explains the true causes of the collapse in my opinion, ie world banking crisis, bail out of Lehmans and the strange actions of the UK Treasury.

 

Link http://www.tynwald.org.im/

 

They now move on to the next question, the Depositors Compensation Scheme

 

My personal view is IOM has to decide

 

1. No scheme and tell all investors, same for Insurance as well, like Guernsey. In which case you have to advise all depositors that there is no safety net, cheapest option, but may not be liked by EU, regulators, our salesmen or the investing public

 

2. As is, but in view of the failure of set up, funding and administration of the present scheme that seems not a good idea

 

3. A scheme such as the current one (which is genereous as to compensation levels) but is

a. funded (eventually fully) by a bank tax or levy and maybe backed by insurance (possibly with a governmet laon to start with)

b. has an immediate hardship fund available for those in real need

c. is triggered by closure of doors and not the farce of a long wait until liquidation

d. requires all banks to send, regularly at account opening, and on anniversaries, a reminder that depositing money in a bank is an investment and that banks can collapse and that any bank compensation schemes will not result in the return of all funds above a certain level and to remind depositors NOT to put all their eggs (cash deposits) in one basket. Ie true fair and transparent

 

The Select Committee now expect everyone to get back at least 90%, probably more, within next three years so. This was my prediction as early as early 2009, based on the figures revealed by the provisional liquidators

 

Time for everyone to stop slagging off the local directors, the FSC and the IOM Government, if the findings are correct, also time to stop saying that investors in KSFIOM were greedy and some how taking a risk and deserved to have what happened happen to them. It was solvent, as was KSF London. It was the misunderstanding of the UK Government of the intentions of the Icelandic Government and the precipitate action the UK then took in closing London and transfering its deposits to ING and freezing the IOM banks money deposited with London that caused the collapse and liquidation. Time also for some of the depositors to stop their claiming that the IOM Government should have paid them out in full come what may.

[Theodolite]

Direct link here click

 

Fair enough John.

 

But exactly how incisive can politicians Mssrs Watterson, Lowey and Houghton be though?

 

The young fella Watterson seems an able enough chap and Accountancy is after all his bag, but Eddie Lowey just seems to be the ol' woman of Tynwald (he can't half tell yer a good ol' tale or two of when he was a lad and that) and John Houghton is hardly a shining star of Tynwald and seems only good for whipping up the more parochial matters.

 

The KSF affair is *High Finance. It rocks the very core of this Island. So, we've had an Inquiry and that's that then.

 

 

 

 

 

*I looked up 'High Finance' and came up with this rather appropriate wiki page and this one regarding Iceland which I found very appropriate to the Isle of Man.

[Evil Goblin]

So, no generous helpings of whitewash over the local powers-that-be then? The Establishment speaks - all must believe without the slightest trace of scepticism about the boys looking after their own!

[John Wright]

My personal view is that it is correct and not a whitewash and that now is the time to move on to the real question, if such a horror happens again what do we do? We can't stop it from happenening again, any more than we could have stoped it last time, but we can choose whether or not, and if we do how, we ameliorate the position of depositors who deposit here and help our economy by employment and taxes. That was what really went wrong in the IOM. The DCS was a shambles

 

For that reason I won't comment on the quality of the Select Committee members, I too can be cynical, and am. But I think we now need to move on from the blame game to answer the what do we do if it happens again question. I have laid out my suggestions, why not debate them, or dismiss them, or make your own suggestions

[Theodolite]

Yep, let's move on and draw a line under it all John.

 

I s'pose we all get a bit sick and tired of this blame game thingy. We're pretty good over here at just moving on from finding the real blame and who has run off with bulging pockets. It all started in my lifetime with the Savings and Investment Bank. But even that hasn't been properly swept under the carpet yet.

 

History will parcel it all up and present the wonderful workings of the Isle of Man one day.

[Evil Goblin]

"My personal view is that it is correct and not a whitewash"

 

Given that you are a member of the Establishment, I can only give a Mandy Rice-Davies response.

[Evil Goblin]

The interim Tynwald Select Committe report is now out on line. 64 pages. A good read. It fully explains the true causes of the collapse in my opinion, ie world banking crisis, bail out of Lehmans and the strange actions of the UK Treasury.

 

Link http://www.tynwald.org.im/

 

They now move on to the next question, the Depositors Compensation Scheme

 

My personal view is IOM has to decide

 

1. No scheme and tell all investors, same for Insurance as well, like Guernsey. In which case you have to advise all depositors that there is no safety net, cheapest option, but may not be liked by EU, regulators, our salesmen or the investing public

 

2. As is, but in view of the failure of set up, funding and administration of the present scheme that seems not a good idea

 

3. A scheme such as the current one (which is genereous as to compensation levels) but is

a. funded (eventually fully) by a bank tax or levy and maybe backed by insurance (possibly with a governmet laon to start with)

b. has an immediate hardship fund available for those in real need

c. is triggered by closure of doors and not the farce of a long wait until liquidation

d. requires all banks to send, regularly at account opening, and on anniversaries, a reminder that depositing money in a bank is an investment and that banks can collapse and that any bank compensation schemes will not result in the return of all funds above a certain level and to remind depositors NOT to put all their eggs (cash deposits) in one basket. Ie true fair and transparent

 

The Select Committee now expect everyone to get back at least 90%, probably more, within next three years so. This was my prediction as early as early 2009, based on the figures revealed by the provisional liquidators

 

Time for everyone to stop slagging off the local directors, the FSC and the IOM Government, if the findings are correct, also time to stop saying that investors in KSFIOM were greedy and some how taking a risk and deserved to have what happened happen to them. It was solvent, as was KSF London. It was the misunderstanding of the UK Government of the intentions of the Icelandic Government and the precipitate action the UK then took in closing London and transfering its deposits to ING and freezing the IOM banks money deposited with London that caused the collapse and liquidation. Time also for some of the depositors to stop their claiming that the IOM Government should have paid them out in full come what may.

Given the shambles that is the international regulatory regime for banks (hence the regulatory arbitrage which goes on) the FSC is completely unable to guarantee the safety of any Bank on the Island and indeed is not capable of properly regulating any of them. No-one is. The whole system needs a revamp so that one Regulator (the home one) is completely responsible for a bank with all its branches, subsidiaries, etc. wheresover they are operating. i.e. we really wouldn't need to be responsible for regulating any bank on the Island. All we'd need to do was ensure that any bank operating here was within a satisfactory compensation scheme.

 

As for compensation schemes - the old question of "moral hazard" arises and unlimited compensation is not therefore wise or fair. All banks should be subject to a compensation scheme organised by their home regulator, the scheme to apply to worldwide operations and be funded by the Banks. Restricted maximum compensation - say, £20k or equivalent. If you've more than that you should either satisfy yourself as to the bank's safety or get someone capable to do so for you.

 

As for the IoM under the present system - scheme pre-funded by the Banks, compensation limit £20k.

[Theodolite]

"My personal view is that it is correct and not a whitewash"

 

Given that you are a member of the Establishment, I can only give a Mandy Rice-Davies response.

A good post.

 

Although despite best efforts, not having been made an official member of the establishment, certain a member of that tight nit mutual back scratching community of which over the years is able to command as much work as they can possibly handle at hundreds, yes hundreds, of pounds per hour.

[John Wright]

I'm an outsider as far as they are concerned, and as far as I am concerned. I read the report, and the evidence, sad, I know, before making my own mind up. I happen to have reached the same conclusion. I also agree with Evil Goblin that banks are still virtually impossible to regulate and that compensation must be industry funded and limited.

 

Problem is who is the home regulator and relevant compensator whan you have locally incorporated subsidiaries. We need a convention that everyone signs up to so we have set rules for this

[bellyup]

Yep, let's move on and draw a line under it all John.

 

I s'pose we all get a bit sick and tired of this blame game thingy. We're pretty good over here at just moving on from finding the real blame and who has run off with bulging pockets. It all started in my lifetime with the Savings and Investment Bank. But even that hasn't been properly swept under the carpet yet.

 

History will parcel it all up and present the wonderful workings of the Isle of Man one day.

 

How we would all like to move on and draw a line under it all.

Unfortunately for many of the depositors of KSF this is not possible.

They cannot move anywhere as their capital - ie from a house sale was there and without it they cannot go anywhere.

Many are elderly they cannot start again.

The directors are all alright aren't they?

They are not on the street they either managed to get their savings out ( when hundreds couldnt) or they continue to work for the liquidators ( paid for by the depositors) and will continue to do so fro some years to come.

The only people who have suffered are the innocent depositors and they will so for years.

But confidence has gone.

Who is ever going to trust any bank in the IOM ever again?

[Amadeus]

How we would all like to move on and draw a line under it all.

Unfortunately for many of the depositors of KSF this is not possible.

They cannot move anywhere as their capital - ie from a house sale was there and without it they cannot go anywhere.

Many are elderly they cannot start again.

The directors are all alright aren't they?

They are not on the street they either managed to get their savings out ( when hundreds couldnt) or they continue to work for the liquidators ( paid for by the depositors) and will continue to do so fro some years to come.

The only people who have suffered are the innocent depositors and they will so for years.

But confidence has gone.

Who is ever going to trust any bank in the IOM ever again?

[When Skies Are Grey]

Who is ever going to foolishly put all their money in one basket with an unrealistically high interest rate anywhere ever again?

 

Quoted for truth.....