AN EMERGENCY States meeting to introduce a depositor compensation scheme has been ruled out.
Treasury minister Charles Parkinson is chairing a working party looking into one, but said the timeframe to have it debated at the end of November as previously indicated was tight. He updated members on the work undertaken so far.
‘I’d like to reassure the Assembly and the public that good and rapid progress is being made towards the introduction of a depositors’ compensation scheme,’ he said.
He said there were two broad workstreams: preparing an ordinance to start the scheme and its terms. The ordinance was at an advanced stage, he said.
The steering group had decided that, with certain limited exceptions, deposits eligible for compensation would be those held by individuals, not companies or trusts, and the help would be up to £50,000 per individual per licensed entity.
It would cover deposits placed in Guernsey by both residents and non-residents.
All licensed banks would be required to pay an annual contribution to the scheme and also to contribute in the event of a bank failure.
The group is considering a captive insurance company to underwrite the first tier of resources.
Beyond the insured first tier, it is likely that banks will contribute equally to the second tier because they would all derive reputational benefits and beyond second-tier liability they would contribute based on the degree of risk they brought and size of deposits.
The overall liability of the scheme could be capped at £100m., with provision for banks to make contributions over a period of time.
The scheme would not retrospectively cover Landsbanki Guernsey, he said.
With deputies being bombarded with emails, Deputy Parkinson said that queries from Landsbanki Guernsey customers were generally being dealt with centrally and advised other members to refer them there.
He confirmed that the industry was keen to have an input over who was licensed to bank in Guernsey and on the question of imposing more conditions on existing licences.
Article posted on 30th October, 2008 - 12.00pm
12 Article Comments
You can bet your bottom dollar that whenever a scheme is introduced it will be after we’ve lost all of our life savings, even if it means putting it back until next year.
How do you sleep at night Mr Parkinson?
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you cant ask a so called states member to do somthing that helps the locals ,its not in there own intrest there is nothing in it for them ??
they should not be asked to do this they should be told they are to do it ,its about time they did somthing of intrest to guernsey people
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Excellent!
The States are rushing this in to help those poor Landsbanki Guernsey Limited deposit holders right?
After all, it is those people that a scheme like this is intended to protect, right?
Surely, that must be the case. Otherwise, introducing a scheme at a time when 2000+ deposit holders stand to lose their life savings would, well, just be a huge political stunt.
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BLA . BLA . BLA..
No emergency meeting..
Ha Ha ha !!
What a load of codswallop!!
It is so obvious that the “states” is doing all it can to delay the implimentation of such a scheme until the Landsbanki Guernsey branch of Landsbanki has been fully liquidated and is no more..
To anyone in their right mind the savings scheme should be set up and implimented as soon as possible so as to ensure proper compensation for those depositors who trusted in the reputation of the island of Guernseys financial security, regulation and governance.
Disgusting..
Disheartening..
Down right appalling!
Landsbanki Guernsey depositors need to be included.
Otherwise, everyone shall see this new scheme to nothing more than ..
Humbug and blarney..
Unprofessional actions and reactions can only result in a lack of professional appearance for Guernsey.
And.. Banking reputation lost is almost never regained.
Think hard on it.
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To Steve the UK ex-pat
If you are a Landsbanki customer and are concerned about compensation why did you deposit in a bank not covered by a scheme.
I am not a Landsbanki customer but could have been, and instead deposited with Northern Rock as I had done my home work and found that all deposits are covered 100% by UK government hence better than a compensation scheme, now why didnt other people find that out.
Do I want the compensation scheme to cover to cover Landsbanki customers, no problem as long as it is bank financed and in no way taken out of the Islands finances.
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Just hold hard here lads.
Let’s get things into perspective.
Landsbanki made it clear to depositors that they were not protected by any deposit protection scheme. Depositors knew Guernsey had no deposit protection scheme.
Yet, they made the deposits.
There might be the resposne we didn’t know.
So. it seems there is no real justification for Guernsey and its taxpayer to finance a retrospective deposit protection scheme.
All of this destroys the assumption that the depositors were in some ways robbed. by the intent of the Guernsey protection scheme, not to be retrospective. They had no rights, so have lost none.
However, should Guernsey banks finance a scheme that might include the LG depositors?
Whilst there is no obligation to do so, it would be a positive gesture for the Guernsey banks to use some of the tax gains they will receive, each and every year; as a basis of offering Landsbanki Guernsey depositors some retrospective protection.
The money is there. Is the will to make appositive moral gesture there?
A form of ex gratia deposit protection payment, rather than entitlement.
The trashing and insulting of the people who might have made this happen can’t have done the LG depositors cause any good.
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Stephen
A very sensible suggestion. The time to really evaluate the extent of any ex gratia payment would of course be after the situation re. the ownership of the Heritable Bank monies has been clarified, which may well take some time.
It may perhaps be the case that depositors lose more than say 30% of their deposits, not the 70% being assumed by many at the moment, and so it would have been and indeed would be entirely reckless for the States of Guernsey to say anything at all on this front until the facts are known, if indeed they are inclined to think that way.
Naturally the depositors want answers and assurances NOW, but the whole process is inevitably not going to be an overnight one. Some bank collapses take several years to unravel in terms of proceeds being distributed. This one may well be no different.
As a matter of interest, does anybody know how many jurisdictions paid out government funds in respect of the BCCI collapse ?
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We Landsbanki depositors wre reassured by their parents bank guarantee – which turns out not to be a guarantee – but a ‘letter of comfort’
Some comfort…NOT
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Compose
I can understand your concern and the belief that the gusrantee was exactly that.
Why the GFSC and Adminsitrator have chosen to call what is stated by Landsbanki as a parental guarantee is something you should ask the GFSC.
As I have pointed out on these threds before a letter of comfort is very difficult to enforce unless is is correctly worded.
I have no idea of the exact wording of the parental guarantee but GFFSC clearly have.
You might want to ask GFSC why they were content to accept a so called letter of comfort where the legal precedents are not favourable, when they should have known depositors expected it to be an enforceable. guarantee.
Will Mr Foot, the regulator, adjudicating on a regulator, spot this apparent lack of the duty to properly protect the depositor and criticise his client, or will he fllow the time honoured consultants approach of the nodding technique?.
If I were to open a book I would favour the latter.
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After all the criticism of the GFSC arranging the investigation into its own conduct, and the Treasury Select Committee’s criticsm of the FSA for doing the same thing re Northern Rock.
I wonder why there is such a deafening silence from deputies for a truly independent inquiry into the GFSC and LG.
I seem to recall mass outrage over the Clinical Block contract. Odd about the silence over Landsbanki Guernsey.
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Spot on Stephen.
When are States Members going to do something !
Tony Webber
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Simply remove your money from Guernsey to IOM where there is a depositor protection scheme. Move it back to Guernsey if you want to when they have set up a similar scheme.
Both Jersey and Guernsey seem to think somewhat arrogantly, that reliance on their expertise in selecting only reputable organisations for licensing should be sufficient comfort for investors. I look forward to seeing how much depositors` money has been moved out of the Channel Islands in the last few months.
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