LANDSBANKI Guernsey went into administration last night.
The directors of the bank applied to the Royal Court for it to appoint an administrator.
The court has appointed Rick Garrard of Deloitte and Touche LLP with a view to the bank surviving, and the whole or any part of its undertaking, as a going concern. The administration is on a temporary basis until 6 January 2009 or an earlier order of the court.
The move follows the deepening problems of the Icelandic economy and, in particular, the Icelandic banking system. Pending clarification of the uncertainty around liquidity and the ultimate recoverability of certain assets, the directors have sought ‘to ensure that all depositors of Landsbanki are treated equally and fairly’.
It is hoped that the administration will help to ensure that all depositors in the bank, including those with deposits which can be withdrawn immediately and those who are locked into fixed term deposits, can get their funds back on the same basis.
The decision was taken in consultation with the Guernsey Financial Services Commission, which supported the appointment of the administrator as being in the best interests of depositors.
Concerned customers are advised to contact the bank’s customer service department on the routine number for further details.
Article posted on 7th October, 2008 - 9.50am
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26 Article Comments
This company has been promoting yearly fixed rate bonds for the past six months and only last week announced a Interest Rate change on one of its best performing products. The question has to be asked, how long has this bank known it was in trouble while marketing product ranges?
Reminds me of the XL collapse taking books up until the minute the tour operator collapsed. Cynical and wrong.
As usual, Gsy States fiddle while depositors burn. Are you going to take up the cudgels on behalf of the local victims of Landsbanki’s Administration?
Guernsey States & GFSC - What are you doing?! Local depositors most are likely to lose their savings. What signal does this send? - For me if you have cash with any Guernsey branch of a bank, get it out while you can and place it somewhere that has a deposit protection scheme.
Very good point James, this could be a political and economic disaster for Guernsey and its banking system. I haven’t seen deposits lost anywhere so far in other Countries/jurisdictions as Governments have protected them. With the Guernsey dilly-dally people may be left without protection meaning that those with funds at Landsbanki will be left without their savings. If and when that story breaks…. then what for Guernsey as a major deposit taker??
Jackie obviously doesn’t read the news outside of Guernsey.
In case you did not notice the Government of Iceland have a 75% stake in Landisbanki.
It was announced on the BBC World News hours before the announcement was made about Landisbanki that the Icelandic Government was about to issue a statement to say their WHOLE COUNTRY was about to be declared bankrupt.
I’m no fiscal expert but you don’t have to be a scientist to figure out why they went under so quickly.
Also Jacki - you need to think about those poor people who worked there; no jobs , no income.
Try and be a little less selfish and more objective.
Well said james, the States are still dragging their feet, whilst local savers lose their money, what do they want total destruction of Guernsey, we are meant to be a financial excellence of offshore banking and we can’t even get our own house in order, by the time they’ve held their meeting and decided what to do it will all be too late, as a guernseyman I never thought I would say this, but at least Jersey acted swiftly to protect their residents.
A word of comfort from the Guernsey States would be very welcome to savers who may have their life savings frozen in Landsbanki accounts. The Administrator apparently does not need to make any statement concerning the administration for 28 days.
I’m shocked by how quickly this has happened; the bank has only opened its brand new and shiny offices on the Grange in the last week or so. The speed at which the bank’s fortunes have changed is indicative of the volatile times in which we live. How sad for the people who worked there and what a worry for those waiting to hear how their investments are secured: my sympathies are with all of them.
One hopes that Guernsey follows the UK’s recently announced example of legally pursuing the Icelandic Govt for the return of depositors cash - maybe UK & GSy can luanch some sort of co-ordinated action - see story below
LONDON — The U.K. government said Wednesday it is taking legal action against the Icelandic government in an effort to recover British taxpayers’ deposits in Icesave — a subsidiary of Iceland’s Landsbanki Island HF — including amounts over £50,000 ($87,410).
“We are taking legal action against the Icelandic authorities to recover the money lost to people who deposited in U.K. branches of its banks,” Mr. Brown said, speaking to journalists at Downing Street
Darren, you are missing the point. A company has aggressively marketing deposit services for the past 6 months. The question must be asked how long did they know that they were in trouble? I doubt it was a minute before Administration.
I say it again, cynical, immoral and wrong.
The Guernsey Financial Services Commission has, in the past, put out statements that, while there is no binding contract,it has undertakings or letters of comfort from all of the parent banks with offices in Guernsey confirming that their subsidiaries would be supported in case a bail out was required.
Do they still stand by this statement?
Well neither undertakings or letters of comfort are of any value in the Iceland catastrophe.
The word is that Iceland will have problems meeting the £16,000 figure let alone anything else.
If there is nothing binding there is no obligation other than perhaps a moral one. And we know too well that morality is a tad scarce in banking land.
Jackie - I’m right on the money.
Do you think people who run such establishments, on such a small island would act so unethically as to promote business knowing they are about to close down?
You need to read the international news I’m afraid.
As an investor I was on-line looking at schemes one minute and the next the website was down; I called the offices but everyone had been sent home.
I doubt that equates to pre-meditated milking of investors money.
Money is never safe (unless it’s in UK premium bonds) so people need to think a bit wider.
What about the people of Iceland?
If all you can focus on is something which you can’t prove then I think you must have been brought up and conditioned to by a cynical naysayer.
Will the Balliwick of Guernsey be the only country to provide no deposit protection for their onshore depositors in the Landsbanki Guernsey Bank?
Stephen John is 100% right and picked upon my point correctly. Undertakings and letters of comfort are as much use as the famous piece of paper that Neville Chamberlain’s waived after coming back from Munich.
These turkeys at the GFSC need to be held to account for the harm they have done, are doing and will do to Guernsey’s reputation once people around the world realise how little use their rules and regulation really when the worst happens.
there should be a States organised fund which all deposit taking financial institutions operating in guernsey have to contribute to. the object of this fund would be to cover any loss to a depositor.
The London Stock exchange had a similar fund prior to big bang and no member of the public ever lost money as a result of the default of a member of the Stock Exchange. It would also be a good idea if the contributing institutions assisted the G.F.S. in deciding whether a new entrant to the Island was considered to be a good risk.The reason for this WITH DUE RESPECT. would be that they would be more likely to be able to rate the credit worthiness of an institution than the G.F.S.
All new members of the S.E. had to be vetted by existing members not by an outside authority.Because their own money was at risk they would have been extremely diligent to vet a proposed new member.Dictum meum pactum was a motto well deserved.
Aeschylus says “These turkeys at the GFSC need to be held to account for the harm they have done”
Two points
1 Bit hard on poor innocent turkeys (LOL)
2 The GFSC took great care circa 2002 to persuade the turkeys in the States to grant them an retrospective and future indemnity agsints any of the GFSC , commisioners or offciers incompetence.
Shame they weren’t so concerned about depositors.
At great cost to many islanders the GFSC has been shown for what it realy is.
Perhaps they will do the right thing and resign
the local politicians will strugle to get re-elected and the loss to the local economies will be big as foreigners will not put money into the CI as much
Landsbanki Guernsey -> Disgraceful. Guernsey & UK Government -> Don’t fail us. Signed, a patriotic and very concerned UK ex-pat.
Darren, you really aren’t understanding this at all. Concepts such as ‘bank’, ‘fixed’, ‘year deposit’, ‘guaranteed interest’, ‘deposit’ and even ‘award winning’ were used in the marketing of Landsbusted’s marketing. To Jo Blow with his/her savings for all intents an purposes it was a deposit account with no exposure. We are talking about share delaing, which of course, risk is part of the game. We are talking about a deposit account where Jo Public expect to be able to withdraw it. I’ve seen the caveats that read ’share can down as wel las up’ but I don’t remember anything on the ads that read ‘depostis are wholly unsafe, iceland’s in trouble, you might not get your deposit back and please don’t believe any of the advertising terms we use’.
The management, the regulators must have known somethign was afoot yet they continued to take deposit.
If I wrote a cheque for my chinese knowing it was going to bounce, I’d have the police knocking on my door.
PS
“Do you think people who run such establishments, on such a small island would act so unethically as to promote business knowing they are about to close down?”
That’s exactly what I think, until proven otherwise.
In the Isle of Man a public meeting about the collapsed bank Kaupthing Singer & Friedlander is to be held at the Gaiety Theatre in Douglas this afternoon. The meeting will be chaired by Mike Simpson who is provisionally the liquidator.
Is this going to happen in Guernsey for the Landsbanki depositors?
If not, why not?
Landsbanki Guernsey was originally Cheshire Guernsey they sold to landsbanki and was very safe originally.
Landsbanki Guernsey has huge deposits with it and have heard rumours it may have been used to try prop up the less secure parent company! Landsbanki (g) told me and others am sure there was no problems and was very solvent, which does beg the question where has all the money gone.
Landsbanki (the parent company) have stated “they have no risk directly or indirectly from sub prime” also I have spoken to Landsbanki (g) and asked them again on the day went into administration there were no problems and they have no risk from sub prime, SO where has all the money gone.
Guernsey Govt and Icelandic Govt are jointly liable for this, if this isnt sorted Guernsey will have a run on all its banks and will never be a financial centre again also legal action will have to take place if we lose against individuals and organisations.
We will not rest until we have our money, there has to be a full investigation and the wrong doers have to be brought to book and the depositers rescued.My last word is if Guernsey goverment and its other banks dont act Guernsey’s banks and its economy will be wrecked.
Mike, UK
(depositors MUST fight back any way they can, the guernsey government, Guernsey regulators, Landsbanki London and Iceland plus the Iceland government are ALL at fault and all should feel the heat)
Tom Wright mentions the downgrading of Landski by Moody’s. Tom also mentions problems real but hidden.
There were enough problems with Landsbanki to make a depositor, especially one using Guernsey as an offshore bank, run a mile.
The lack of depositor protection in Guernsey should have been a factor in exercising especially as the Icelandic protection was only £16,000.
In addition there were the significantly high prices for credit insurance for debts Landsbanki, which was priced at 610 points. It is no consolation that at the same time (March 2008) Comment at the time was “These banks are now seen as the most unsafe in the developed world”. (source Iceland’s banks top ‘riskiness league’ by Simon Watkins, Financial Mail
16 March 2008, 12:36pm http://www.thisismoney.co.uk/investing-and…amp;expand=true
Comparable edit insurance costs for UK banks were HBOS 235, Alliance and Leicester 342
HSBC at 145 points.
Earlier this year Matthew Hegarty, a credit analyst at Barclays Capital in London interviewed by Bloomberg.said ““Credit spreads are implying there’s a chance of default over the next five years. Not a probability, but a real possibility.”
There was also the fact that the central bank of Iceland took steps to boost bank industry solvency as a global credit crunch makes access to funding difficult, and that Icelandic banks were no longer required to include obligations at foreign branches when setting reserve levels.
The implication of this was that “It can be expected that this change will considerably lighten the reserve requirements of those banks that operate branches abroad,” the bank said”
Source Bloomberg 25 March 2008 Rather worrying in itself and a few months later we know what happened.
It has been claimed that GFSC ask Landski to put additional assets into Guernsey some three months ago. If this is true it suggests concerns at the GFSC, and the apparent consolation of having letters of comfort, something notoriously difficult to enforce and apparently seen tby the GFSC as not being legally binding.
All of this begs the question why were Landski allowed to continue banking and was the regulatory supervision adequate? Perhaps it would be reasonable to assume it wasn’t until GFSC prove that it was adequate.
Does anyone know what the Landsbanki deposit bonds default ratings were, say, a month ago?
Good letter in the Press today.
Question: What would the cost be of a deposit protection scheme?
Answer: More than our taxes pay for.