Kevin Jones, 62, faces an anxious wait to hear what will happen to his deposit with Landsbanki Guernsey after the bank went into administration. (Picture by Tom Tardif, 0651776)
THE UK Government today announced a massive rescue package for the banking system worth a minimum of £50bn. It will initially make the extra capital available to eight of the UK’s largest banks and building societies to prevent any from going under.
The news, released at 7.30am, was of small comfort to customers of Landsbanki Guernsey Ltd, who queued yesterday to try to discover the fate of their savings with the bank, which has gone into administration.
And in the absence of a local depositor protection scheme, it was unclear if Landsbanki Guernsey savers would become the only depositors in the world to lose the whole of their savings. The bank confirmed that savings here were not protected by either the UK or Icelandic governments’ guarantees.
Landsbanki Guernsey is a casualty of the global financial crisis and its collapse comes one day after the Policy Council set up a panel to work on the urgent introduction of a bank-funded depositor protection scheme.
Kevin Jones, 62, who received half his pension as a lump sum and put it in the bank, was furious.
‘As soon as the UK started to think about guaranteeing deposits, the States should have done the same here,’ he said. ‘It’s ridiculous that something like this has been allowed to happen in Guernsey’
- Readers affected by the Landsbanki crisis are asked to contact the newsroom on 240220 or to email jdewoolfson@guernsey-press.com
Article posted on 8th October, 2008 - 2.30pm
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17 Article Comments
I understand that Isle of Man now has a £50,000 deposit protection scheme covering both resident and non resident depositors on the same lines as the UK - this means that we are one of the few jurisdictions without such a scheme - the channel islands will have to stop dithering or else the bank deposits will move quickly with big long term consequences for the local economy - job losses with less money and visitors to the islands
Monica
No nead to worry. In today’s Press Paul Maeder of GIBA says “However, we are relatively optimistic that Guernsey’s position as a major international finance centre will remain intact and, indeed, may be enhanced by recent events”.
No doubt Mr Meader is talking up the system which is badly needed.
However, most readers, including yourself, will realise the true predicament of local Guernsey depositors, who must feel upset at having no support from a Guernsey depositor protection scheme, in their time of need.
I am interested in finding out exacatly how many people are Affected by this as SKY news are interested in running a story, but they need to know how many people are effected approx in Guernsey and I will also E-MAIL jERSEY.I AM ALSO A RESIDENT EFFECTED AND THE MORE MEDIA HYPE MAYBE THE GOVERNMENT WILL START LISTENING TO US SAVERS.
We had £65,000 in a 1-year bond with Landsbanki Guernsey after they were advertising 7% interest rate, those were all our live savings and we are devastated. We just had a baby two weeks ago and now the joy has turned into a despair. All those years we worked hard just to be robbed like that in the daylight - what the Guernsey Financial Services Authority is there for! Where did my money go to? The responsible ones should be prosecuted and Guernsey government should act immediatly alongside the UK government to get our deposit back… key@london.com
Hi there Belinda, I am a resident of Jersey who has savings with the bank. Feel free to contact me if you want a chat. I am trying to get names of Jersey people who are caught up in this mess.
In answer to Belinda I am an affected custome with £1 million pounds in a 1 year bond that was supposed to mature on the 12th of November. I called the bank a couple of weeks ago to ask if I could withdraw the money early and said I was prpepared to forgo the years interest as a penalty. I was told no and was also told that the bank was very stable and that they were taking in new money that morning. Does any one know if Landsbanki Guernsey has any mone left in it at all?
I live in Jersey and my entire life savings are in Landsbanki Guernsey.
Today I have monitored the fortunes of all the other Landsbanki subsidiaries and seen them ALL rescued with NO loss to any depositor - Icesave customers had all their savings covered by the UK government and ING Direct rescued Heritable Bank customers. I have followed developments on the Guernsey States website today and have been astounded at the insensitivity of their comments regarding Deposit Protection - their statements make no reference to the Landsbanki collapse or give any comfort to either resident or non-resident Landsbanki depositors. It feels as though Landsbanki Guernsey customers will get nothing back whilst the States deliberates over protecting against future “unlikely” events.
In the meantime the only rational thing to do for other depositors in Guernsey banks would seem to be MOVE YOUR MONEY, perhaps to the Isle of Man who protect both resident and non-resident depositors
Mention has been made of the IOM. Their deposit protection scheme came into force in 1991 and can be found on http://www.gov.im/lib/docs/fsc/handbooks/guides/Banking/bankingappendixc1.pdf.
It makes a maximum payout of £15,000 (75% of deposits up to £20,000 - nothing thereafter) and you give up all rights to the remainder of your deposit. It it is funded by a minimum annual contribution of £25,000 which can be increased to a maximum of £250,000 p.a. per Bank and if insufficient funds are available payments to claiments are delayed until the funds are received. The IOM government pays nothing towards it.
Frankly, it give me little comfort.
I would certainly be interested in running with what you have suggested Belinda. I stand to lose a six-figure ‘hard-earned’ sum in this Landsbanki fiasco and I too am quite frankly appalled at the resounding silence from our elected politicians just at a time when they should be err…..what was the word used back in May…. “representing” us. Yeah right…five months is clearly a long time in Guernsey politics. I couldn’t believe Charly Parky on BBC Spotlight earlier this evening when, whilst being interviewed on the introduction of a Deposit Protection Scheme, he added in mid-sentence and almost as an afterthought, that of course the introduction of any such scheme would be too late to assist those many depositors in Guernsey who are likely to get burned in the aftermath of the Landsbanki collapse, citing that the ordinance wouldn’t be introduced in time. Oh that’s alright then. Complete bollocks! If the will was there, it would be a matter of some simple procedural ‘tweaks’ to enable any imminent DPS to come to the avail of those individual investors who may end up losing their savings in the wake of the Landsbanki Guernsey fallout. What our dear Charly boy is really saying is that the States will put in place a DPS providing it cannot be activated by real people on the ground for at least the foreseeable future and thereby avoiding the States to have to deal with the awkward matter of funding it in practical terms. Indeed if, as local commentators are telling us this week, the Landsbanki Guernsey collapse is to be seen as a one-off incident in the local finance sector, is this not justification in itself for ensuring that those ‘exceptional’ depositors who may end up losing their money are assisted through a local DPS? Or would that come too close to being effective government and therefore in danger of really confusing the populace? Of course, it also suits the Policy Council not to make any supportive statements at this point in time (as indeed they have done in Jersey), because it would then mean that they couldn’t rely on the time delay issue (for getting the detailed scheme to the House) as an excuse for the scheme not being available to those very individuals it is apparently intended to assist. And we can’t have that now can we?
Lets be honest - the banks will but and run and protect their larger stakes and the ones which are being propped up by the UK Government.
Do you think the UK Government will prop up say Barclays UK and allow the Guernsey branch to operate at a loss? I very much doubt it.
I’m afraid the end is in sight and it’s back to growing tomotoes for Guernsey.
Still - no one can complain, the local population have had a very cushy lifestyle, me included, on the back of the banks, and all the foreigners that we use under the 3 and 5 year licence schemes - not to mention a lot of us Guernsey folk renting out multiple properies for a massive income.
Our greed plus world greed = crash.
Next week I predict the US will cease trading.
Belinda
Have just seen a financial expert discussing Landsbanki collapse on BBC morning show.
He is suggesting that Landsbanki Guernsey has ended up with no assets.
This leads me to believe that all local banks with parent companies located off the island are being fleeced of their assets when the parent bank is in trouble.
Therefore in my view the guarantees given by the parent bank are pretty worthless, which doesn’t bode well for our finance industry.
Good luck with your cause.
Given the overnight news of UK councils depositing significant sums with the Icelandic Bank I wondered just how much care had been shown before making the deposits.
A simple Internet search would have thrown up enough to scare off many depositors who like me knew little or nothing about Landski other than it was offering high rates of interest.
Amongst my trawl I found gems such as Seeking Alpha, a provider of stock market analysis and opinion reported on 31 March 2008
“The risk of Iceland’s biggest banks defaulting rose above 49% based on credit-default swap [CDS] premiums. Since November 6, the krona has fallen more than 40% against the euro, dropping to a record low against that currency putting carry trade investors seriously underwater…
Credit-default swaps on the Icelandic banks are more than 10 times higher than the average for European lenders as the credit market freeze prompted investors to shun all but the safest assets. Premiums on the krona indicate very distressed levels according to Matthew Hegarty, a credit analyst at Barclays Capital in London interviewed by Bloomberg. “Credit spreads are implying there’s a chance of default over the next five years. Not a probability, but a real possibility.”
Many of these are general figures available from many other sources. These are just a few of the many.
Also Bloomberg 25 March 2008 says of Iceland “The central bank also took steps to boost bank industry solvency as a global credit crunch makes access to funding difficult. Banks will no longer be required to include obligations at foreign branches when setting reserve levels.
“It can be expected that this change will considerably lighten the reserve requirements of those banks that operate branches abroad,” the bank said”
When banks lighten their reserve requirements taken with the other information it was enough to scare me off Landski.
If someone who doesn’t understand finance (a label given tome by fellow poster to these blogs can discover this information, how did these fact and many others, escape the Guernsey regulator?
I suggest the GFSC uses a Google search as part of the bank evaluation process as well as a subscription to Private Eye. Both appear more competent at rooting out financial dangers than the existing procedures.
On the IOM guarantee scheme, it has been increased to £50,000 from 7 October - I understand money is moving there from the Channel Islands rapidly
Also today I read that the Icelandic Gvt is to discuss the situation as to how to pay depositors with UK following threats of litigation - also authorities in Holland and Luxembourg where Landsbanki also have depositors are pursuing the Icelandic Gvt over its guarantees to the local subsidiaries - but to date very little information from the Guernsey authorities as to what it is planning to do - if it continues to keep silent there is a big risk nothing will happen whereas other depositors elsewhere may well get their money back - also the Icelandic Gvt has reputational issues to consider as it currently focuses on refinancing its banking sector - Guernsey needs to get into the negotiations or its reputation as a sound financial centre is likely to disappear
Thank you very much for all your responses the lady that i spoke to at Sky is Amanda Walker telephone 0788158561. I also got an response from Lyndon Trott(Guernsey Chief Minister),well NOT really a good enough one informing me to get in contact with the court administrator, pass the buck Guernsey government.
Keep fighting. Belinda
One should also bear in mind that the parent company of Landsbanki has a lot of good quality assets in UK and EU and the reason it has been nationalised is due to the difficulty in raising short term cash which is effecting a lot of banks
Below are quotes from one of the financial websites today that indicates that the Icelandic Government will be able pay out the UK depositors - lets hope someone from the Guernsey depositors perspective is actively pursuing the same dialogue as part of this process ….
The British government said on Wednesday that it is planning to sue Iceland over the loss of deposits held by thousands of Britons in IceSave, the internet banking operation of Landsbanki.
But Geir Haarde, the Icelandic prime minister, said that there is a “good probability” that the total assets of Landsbanki will cover the deposits in IceSave.
“The government of Iceland is determined not to let the current financial crisis overshadow the long-standing friendship between Iceland and the United Kingdom,” he said in a statement.
It is a travesty that so many depositors in Landsbanki Guernsey have been cheated of heir cash. As a British national (currently working in Indonesia & therefore too remote to act directly) with a six figure investment locked in a 1 year bond,I am frankly outraged that our elected representatives are not stepping
in to protect the depositors’ interests. The Guernsey states also seem to be disarmingly reticent in the wake of this crisis. I would imagine that this turmoil will indelibly scar Guernsey as a financial haven as a result.
I also believe that the directors of LG would have (or ought to have) known of the banks financial instability for some time. I would proffer that they have acted in a breach of trust in actively promoting their attractive deposit schemes whilst the bank’s solvency was in question. As an investors in a normal deposit account in a financial institution which has exisetd since the late 1800’s , it was reasonable to expect that there was no risk exposure to that investment (conventional commercial wisdom does state that bank deposit accounts present no risk to the investor at all). It is not as if the depositors had invested my six figure sum in a high risk business start up in a banana republic run by an unstable militia government - in this instsnce I would have deserved to lose the capital injected. I think that us depositors should lobby the UK government & the GFS to intervene in this matter to properly protect the depositors interests & I support Belinda’s pro active initiative in this regard (Belinda - anything else I can do to further this issue); I think that it important that we depositors should raise our voices together to spur our political bureaucrats into immediate decisive action.
Although LG is only in administration & not in liquidation, you can be assured that the receiver will be looking at defending his interests as a priority as opposed to be concerned about the depositors. And you can be sure that the directors themselves will not be adversely affected financially by this cataclasm.
Correcting mistakes -
1)Cheated of their cash (line 3)
2)It is not as if the depositors invested THEIR MONEY (line 18/19)
Apologies.