RECOVERING Landsbanki depositors’ money is down to the administrators, not the States, according to the chief minister.
Deputy Lyndon Trott said his role was to give political support in conjunction with the court-appointed joint administrators.
Landsbanki Guernsey savers have accused the Guernsey Financial Services Commission of allowing the bank to advertise a worthless parental guarantee.
It follows the Icelandic Winding-up Board rejecting savers’ claims because Landsbanki Guernsey did not have a guarantee from its Icelandic parent company to back its deposits.
Deputy Trott (pictured) said the GFSC had advised the Policy Council it had never required parental guarantees.
The GFSC does require subsidiary banks to have letters of comfort in place but it has always recognised that these are not legally binding and made that point plainly in the same consultation paper.
Deputy Trott said they had no legal responsibility for the recovery of monies on behalf of the Landsbanki Guernsey depositors.
‘It is clearly incorrect for the LGDAG to “question the validity” of the chief minister’s recent assurances that Landsbanki Guernsey depositors would be treated fairly by the Winding-Up Board, as claimed by the LGDAG.
‘I regrettably cannot do anything other than to express my disappointment that the LGDAG has sought to personalise the matter and in doing so misrepresent our position.’
Guernsey savers have so far had a little over two thirds of their money back.
Article posted on 22nd February, 2010 - 2.29pm
136 Article Comments
Of course the GFSC will not give an interview, that will mean too many questions that they are unable to answer. Did you notice that they are quoting a consultation document from August 2008.
Landsbanki Guernsey purchased the Cheshire in August 2006, that’s exactly two years, that landsbanki was promoting a totally worthless undertaking (Guarantee). It was one of the main reasons depositors either remained with Landsbanki after Cheshire and new depositors decided to use the bank. All this was going on right under the nose of the GFSC and they just allowed it to happen , knowing that the undertaking on all the paperwork was worthless. That amounts, in my book to “bad faith”.
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So, in other words the States of Guernsey have completely washed their hands of the whole Landsbanki affair. They are perfectly happy to accept anybodys shilling, but not prepared to face the consequences of their irresponsible actions.They had no checks or guarantees in place for Landsbanki whatsoever, and kept very quiet about the whole sorry state of their non-existent checks and balances of financial doings within the Guernsey finance sector.They should never have allowed Landsbanki to operate here in the first place. Greed is King it would appear.
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Another political double speak from the Chief Minister:
‘the GFSC had advised the Policy Council it had never required parental guarantees.
The GFSC does require subsidiary banks to have letters of comfort in place but it has always recognised that these are not legally binding and made that point plainly in the same consultation paper.’
the consultation paper came out in August 2008 – 2 years after Landsbanki bought the Cheshire.
what the Chief minister NEGLECTS to mention when quoting this consultation paper is:
para 4.3:
‘The Commission will require that banks should be transparent about the level of
support provided by its parent. Depositors should know at the outset whether or
not this is in the form of a letter of support which the local bank can draw on in
the event of a problem at local level.’
tell me where that disclaimer apprears in the below extract from LG MD to a depositor on 3rd October 2008:
‘our parent Landsbanki Islands hf has given an undertaking to discharge those liabilities of Landsbanki Guernsey Limited which Landsbanki Guernsey Limited is unable to discharge from its own assets, whilst it remains a Landsbanki subsidiary.’
when will the Chief Minister and those hiding within the GFSC finally reallise that the damage being done to the Guernsey Financial sector in supporting their constant misdirection and disingeneous pontification will be much greater than a clean and clear Inquiry which closes off the issue and makes sure that the lessons of LG have been learned.
Until that time any saver in Guernsey should be worried as to the regulation of their bank and the professional standards of administration that Guernsey provides. The well publisised Depositors compensation scheme is an ill thought out knee jerk reaction with will 100% cover only a few accounts in very small banks.
why has the Chief Minister not followed the US president or even UK Primeminister example of applying a windfall tax on banks, curtailing their speculative business or ensuring that a legally applicable insurance policy is in place to cover potential savers losses?
16 months later and still no tangible evidence that the States of Guernsey or the GFSC have assisted the savers of LG in any way – as they prevaricate depositors die – A Shame on You!
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That’s how the great unwashed get treated by those elected to look after them. The money’s down the drain, and it seems nobody has the moral strength to accept the responsibility for it. Not a single individual, or an institution charged with ensuring that such things don’t happen. Thousands of mostly retired people who worked hard to ensure a retirement without the dependence on either their children or the State will suffer. What seems to matter to the likes of Deputies like Mr. Lyndon Trott is that Guernsey attracts the billions of the super rich and the institutions. Why should he care about the little man.
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Is there any wonder that the Depositors’ Action Group are angry with the continued, totally contrasting statements that the Chief Minister, Lyndon Trott continues to make?
In January 2009 he was waxing lyrical over the somewhat dubious Promontory Financial Group Report which concluded that:
‘The GFSC clearly and consistently maintained the highest international standards of banking regulation’
yet in February 2010 he is telling us that the Guernsey Financial Services Commission has adviced the Policy Council it had never required parental guarentees.
To further compound the confusion we are told the GFSC does require subsidiary banks to have letters of comfort but has always recognised that these are not legally binding!
Just what kind of message are we giving to all bank depositors in Guernsey? It certainly gives little or no confidence to the consumer and cannot conceivably fit into the ‘highest international standards of banking’ category!
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As each and every sad event unfolds about the conduct of the GFSC in allowing the Cheshire Guernsey bank to be sold to Landsbanki bank, all we ever hear is the same story from the Chief Minister.
When will the states of Guernsey accept that they are responsible for ruining the lives of depositors and then actually do something about it?
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Hasn’t the parent company gone bust too? So does it really matter about any guarantee’s? Even the UK government isn’t being paid back!
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Deputy Trott went onto say that, it was clearly incorrect for the LGDAG to question the validity of the Chief Minister’s recent assurances that Landsbanki Guernsey Depositors would be treated fairly by the winding up board as claimed by the LGDAG.
I think we have every right, when you read the statement below.
Wednesday 28th January 2009, at the Guernsey States Meeting in answer to a Question by Deputy Matthews, Chief Minister Lyndon Trott replied, “ One specific outcome of our dialogue has been clarification of her majesty’s Treasury’s support and action in assuring that the Icelandic Authorities treat all creditors equally. This has been confirmed by the Economic Secretary to the Treasury in response to a Parliamentary question of the 23rd January 2009.”
A further material outcome is that her Majesty’s Treasury is assuring that the Icelandic authorities are fully aware of the call of the Guernsey Financial Services Commission for Landsbanki Islands hf to honour its public undertaking for support for its Guernsey subsidiary.
“Treat all creditors equally”, well that hasn’t happened, whilst the UK Government and the Dutch Government enjoy Priority status, Landsbanki Guernsey has been assigned to the dustbin. So Much for UK Treasury representing us.
“Call from the GFSC for Landsbanki Islands hf to honor its public undertaking,” but they are saying above that these things are not legally binding. How come they have appeared on all Landsbanki Guernsey’s stationary since it purchased Cheshire. Do any of you depositors out there remember being told it wasn’t a legally binding statement?
I think we have every right to question the way this has been handled right from the start, through a select committee type inquiry.
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Chief Minister Lyndon Trott travelled to Iceland in the Summer of 2009 alledgedly to enter into talks with the Icelandic authorities regarding the failure of Landsbanki Guernsey and the recovery of depositors savings. Why then is he saying that it is not the job of the Guernsey Government but of the Administrator? Did those talks ever take place? or once again has he misled us all?
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Both this and our previous government has let us the electorate down badly by either lying or being economical with the truth.
I like many believed what our government told us.We are a safe banking community.
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Forget for once all the politics, the blame and counter-blame, and the posturing of Guernsey’s Chief Minister.
Remember that the people who saved (not invested) with Landsbanki Guernsey did so in good faith, and each and every one of us were given a parental guarantee which we were reassured by and therefore believed would protect us should the worst happen.
This parental guarantee was approved of and circulated by GFSC – and it turns out it was not worth the paper it was printed on!
Members of GFSC, Guernsey Deputies, and Mr Trott – how do you sleep at night?
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Is it any wonder that Guernsey’s financial reputation is in tatters, with reserves held by the Island’s banks leaching away each quarter, when all that our GFSC and politicians can do is try and spin their way out of trouble..
In their statement “The GFSC does require subsidiary banks to have letters of comfort in place but it has always recognised that these are not legally binding”…so basically it encourages guernsey banks to use misleading language to attract their customers, knowng that the money is not guaranteed. Makes it simple, invest elsewhere and your money may be safe, invest locally and we’ll wash our hands of you.
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Chief Minister Trott may claim that LG did not have a guarantee from the Icelandic parent company but that did not stop the GFSC allowing LG to give us a guarantee as
individuals when we opened our accounts.
Chief Minister Trott may claim that his role is to give political support. One could argue that he has given us little support of any kind and despite accruing quite a few air miles on our behalf he has been very reluctant to report back on his endevours. It would be good to think he was fighting our corner to get us equal treatment in Iceland.
He may be right in his claim that Guernsey has no legal responsibility for the recovery of our stolen funds but, considering the states of Guernsey has gained fiscally from retail deposits over many years, I respectfully recommend that he adresses himself to the concept of moral responsibility. Remember, Guernsey is the only administration not to come to the aid of victims of the Icelandic banking debacle on their soil.
We are not misrepresenting anything, simply trying, with very little help from the CM, to recover our savings deposited in a bank which is seems did what it fancied under the blind eye of the GSFC. No wonder Mr Trott will not allow a truly independent enquiry. We do not particularly wish to ‘personalise’ the issue but it seems that your chief minister’s presidential style of government and alledged lack of spine in all but a few of your deputies rather invited a pointed finger.
What on earth is the State’s continued lack of action doing for your island’s reputation ?
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If that parental guarantee was never signed and known to the GFSC, why did they still allow LG to advertise with this lie? It also means that the political counsel knew of the wrong information and did nothing to correct this. Meaning Trott and co said nothing, did nothing but picked up their paycheck and enjoyed the additional income for the country from the tax side. What is/was the purpose of having a GFSC if they do nothing to correct false information for depositors? Their prime task should be the protection of depositors and not to assist to rip them off. This debacel will surely show the future for the
” Guernsey once a time a save haven ” would be state.
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The sinking of Landsbanki Guernsey have put myself and my whole family in a very precarious situation which is outrageous in 2010, or even ….2008 for that matter!!! We are still waiting for our rightful savings to be returned to us so that we can get on with our lives, – if at all we can after what has happened to our savings. Some of the depositors are no longer even here. Just why is it that Guernsey has to keep finding different excuses not to pay back their depositors? Try to have a backbone and show some courage. My message to Mr. Trott, is ‘do as you like to be done by’
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Of course it is Deloittes job (as the Administrators), to explore every avenue in recovering maximum funds, but one cannot expect them to also exercise POLITICAL muscle. That surely is the job of POLITICIANS!. It therefor would be a comfort to see evidence of a more vocal, pro-activie and robust support coming from that source.
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The end of government help? The winding up board has been given many copies of documents that do give a guarantee, how can the Guernsey government stand by and and let them mis-lead and decieve customers of a bank under their jurisdiction?
Minister Trott – stand up and be counted, pursue Iceland to recover the money that was on DEPOSIT in your jurisdiction.
You have a moral obligation to do so – it is doing the right thing for those in need.
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Well yet again I have failed to realise how stupid I am, I am so grateful for Deputy Trott for helping me understand how daft I am. Of course I should have never accepted what I thought was a written guarantee from Landsbanki hf that I thought had also been accepted by the GFSC.
I am once again indebted to Deputy Trott or is it the other way round!
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If just one States of Guernsey member had money deposited here it would be a very different story. Landsbanki were allowed into the Island of Guernsey so why didn’t the Financial Services Commission conduct its due diligence procedures prior to its business entrance to a satisfactory level. Just days before I deposited money with Landsbanki I asked them for a letter of comfort which they provided – obviously not worth the paper it was written on.
Disgusting if I had stolen this amount of money I would be in jail by way why not them even there staff are claiming for bonuses. Give me back my hard earned savings.
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It is not suprising that when this story first broke either Lyndon Trott or Charles Parkinson stated on TV that they did not expect any depositors to loose any money.
Within days they then stated that the States of Guernsey would not utilise any taxpayers money to advance to savers to provide cash-flow or liquidity, with the Guernsey Government standing in the shoes of individual savers as the UK compensation scheme works.
The GFSC appointed by the States of Guernsey to regulate the industry appears to have stood idly by whilst Landsbanki Guernsey utilised the “Parental undertaking” as security in their marketing literature.
It appears the GFSC want this saga to run on like that experienced by the Equitable Life pensioners, so that when ultimately found deficient by an independant inquiry any compensation will be limited to depositors that are not deceased!
The Administrators now say that depositors are likely to receive at least 80p in the pound back. So the States, having already had their 20p in income tax on earned income before depositors had 80p to deposit, are happy to sit on their tax take to fund a deficient regulatory system, rather than act pro-actively and use those funds where they can do most good to the Island economy, finance and banking industry.
It’s also noteable that neither the States nor the GFSC appear to have frozen any other local asets of Landsbanki Islands hf, such as those reported by the Press in an alleged fraud case, to ensure that the parent bank stands by its undertaking to support the local bank and ensure that additional assets are made available to the local Administrator to distribute to depositors.
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Right well hooray, the Chief Minister has finally made it clear that neither he, his deputies nor the GFSC has really absolutely no authority to control what goes on in the international banking systems who have local bases in Guernsey
Political support, well what does that mean : vote for ME and we’ll do a deal ? Hmmmm
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I am resident in North London and I am currently visiting the Channel Isles for the second time in my life. I reckon it may be the last time after what I have been reading. I am not affected personally by this disaster but have read up a lot of what has been written. It is appalling that people who put their savings in a Guernsey Bank – those who live in the Channel Isles in particular – should be having this battle to get justice from the people to whom they pay their income tax. It seems that the local governments have no interest in whether or not their financial services association staff have been doing their job properly as long as they get the money into the Guernsey banks. Our government has bailed out banks that have got into trouble in Britain and we have collectively funded it to help often very hard up people who trusted their savings. I don’t understand why the goverment in the Channel Isles isn’t getting their population as a whole to make it up to the people who have saved. Surely that is fair. For historical reasons when I lived abroad I still have a small amount of savings still in a bank in the CI. I now realise it is not safe and shall take it out and advise my friends and family not to take that sort of risk with their savings either. I always thought the Channel Isles were rich. If they are not, I cannot see why not, unless it is mis-management.
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ANYONE who lives offshore should seriously NOT consider ever depositing any money in any of the banks on Guernsey. The compensation scheme is absolutely worthless and useless. Just like all those that run Guernsey. To tell a bank we need a letter of comfort and then say, but we know it to be worthless. That’s not worth the paper upon which is has been written, is actually telling each and every bank, open a branch here as we don’t care if you rip your depositors off as we have no intention of ever helping anyone BUT OURSELVES. Guernsey, someday, you will live to regret your non action and your inability to support those that have given your little islands life blood for so many years. You do need a public open enquiry into all of this.
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Why bother insisting on a letter of comfort if it carries no value? Depositors have been left abandoned & destitute by a regulatory commission who do not conform to the best practice benchmark & a governing body who are invertebrate, toothless, ineffectual & disingenuous. The should all frog-marched to the gallows
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‘our parent Landsbanki Islands hf has given an undertaking to discharge those liabilities of Landsbanki Guernsey Limited which Landsbanki Guernsey Limited is unable to discharge from its own assets, whilst it remains a Landsbanki subsidiary.’ Oh yes?
“We write this because the GFSC reuire us to do so. However please ignore the above statement in the event that Landsbanki Guernsey is unable to discharge from its own assets, because the GFSC tell us there is no requirement to honour the undertaking, and we can deliberately mislead the depositors to gain business and retain existing customers.”
GFSC shame on you!
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In his efforts to defend himself at all costs, Chief Minister Trott has well and truly let the cat out the bag with regards to the conduct of the GFSC. He has pointed to a document that that states;
“GFSC had advised the Policy Council it had never required a parental guarantee. The GFSC does require subsidiary banks to have letters of comfort in place but it has always recognised that these are not legally binding and made that a point plainly in the same consultation paper (of Aug 2008).”
And goes on to say;
“The Commission will require that banks should be transparent about the level of
support provided by its parent. Depositors should know at the outset whether or
not this is in the form of a letter of support which the local bank can draw on in
the event of a problem at local level.”
How can the GFSC claim to have been doing it’s job properly when it allowed Landsbanki Guernsey to market itselves as covered by a parental guarantee when all along it was worthless? This revelation is also yet more proof of the woeful inadequacy of the Foot report.
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Did anybody read the article in the weekend Press 10 days ago which absolutely slated Chancellor Darling for the manner in which he dealt with the Icelandic government regarding their obligations to depositors with the Icelandic banks with UK subsidiaries ? It was highly damning of Darling’s behaviour and highlighted precisely who is to blame for the Landsbanki position. It wasn’t the States or Guernsey or the GFSC !
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David, I think you’ll find your words above are unlikely to be read in a reasoned manner by the majority of the posters above.
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David, we are not saying that there wasn,t blame with the UK Government, because there obviously was.But thats a further story where the GFSC took the FSA at face value without carrying out their own full due diligence. The thread above is dealing with the recent excuse the GFSC gave regarding the undertaking that Landsbanki Guernsey produced on all their literature from 2006, that depositors would be covered by Landsbanki Islands hf in Iceland. They themselves are saying that the undertaking isn’t worth the paper its written on, but it took them until their 2008 consultation document to say it. That’s neglect and bad faith.
At least the Isle of Man is now having a full Select Committee inquiry into Kaupthing Singer & Friedlander, a parallel situation in many respects and some interesting facts are coming out of that inquiry.
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Can anybody tell me what positive effects the Chief Minister has had on the Guernsey lifestyle?
I understand his famous 0/10 tax plan was binned; he cannot seem to control the firemen and spends more time wriggling round issues which he as chief minister should be acting upon that he reminds me of one of those slinkies i had as a kid – remember a big coild of whire which when placed on the stairs and pushed performed endless flipflops!
As for blaming the UK let’s make this clear – the UK action in bringing down the Icelandic financial institutions was reprehensible however as the Chief Minister points out Landsbanki Guernsey was regulated by the GFSC – surely it is therefore the GFSC who should have made sure that the bank was on a firm footing and that funds were ringfenced to protect its savers?
this whole disaster did not spring up overnight; however the GFSC chose to ignore the warning signs which were there in April and to orely on third party assurances rather than complete their own due diligence. If the GFSC were not doing their job what were we paying them to do? Now that was a waste of the taxpayers money Mr Trott!
as for the administrator recovering the savers deposits this is true – however the administrators have approached the States with ideas of no cost recovery mechanisms but these have been rejected out of hand. Why? probably because they may place additional restraint or financial burden on the remaining banks who have a considerable financial leverage when deciding the fate of Guernsey.
Savers in Guernsey should vote with their bank accounts – move to a legislation which is safe and well regulated the arrogant stance of the GFSC and the Chief Minister shows that no lessons have been learned and future failures will be met in the same fashon as Landsbanki – the Depositors Compensation Scheme is flawed and insufficient to protect savers completely.
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Gary
It seems that even the UK’s FSA were in the dark as Darling chose not to share his Icelandic information with them either.
The real blame for all of this lies with the UK Treasury taking unilateral action to freeze the Heritable deposits under the anti-terrorism laws (total abuse of those laws), and not sharing the crucial info that they received about Iceland’s finances from their government with their own FSA. How on earth would our GFSC get access to that same information ?
All the blame here is being misdirected. Guernsey, its politicians and its regulators have done nothing wrong and cannot be liable.
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It is nothing short of a disgrace. Mr Trott and co should be doing the walk of shame. His adminstration and GFSC were reckless in allowing Landsbanki Guernsey to trade along with other banks on the Island knowing full well that it did not have a guarantee in place. This would have given Cheshire depositors like myself the opportunity to bank elsewhere had we known the risk Landsbanki carried. I would like to remind all those who have contributed to this scandal that our human right to enjoy our property has been breached – cash in the bank being my property – and I would like to be able to enjoy it now.
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Gary, in addition to your answer to David’s point, could you answer why you feel the comfort letter from the Icelandic Landsbanki is so important? I was under the impression that the whole bank went under, so you wouldn’t have received any cash from them anyway?
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Lyndon Trott statement in March 2009 in regard to the ‘tax haven status’.
‘There is an obvious need for clear identification of those who fail to comply with global rules. As a low-tax jurisdiction, with a corporate tax regime that meets the EU Code of Conduct on Business Taxation and an increasing number of Tax Information Exchange Agreements, Guernsey is at the vanguard of cooperative and transparent financial centres.’
If Guernsey is at the vanguard of cooperative and transparent financial centres then the Guernsey Government or the GFSC should have no problem explaining to the Landsbanki Guernsey depositors,the Guernsey bank depositors and the rest of the world why they allowed a bank to advertise a worthless parental guarantee particularly as the GFSC are now saying they were never required to have one in the first place.
You will never have a better opportunity to explain your 100% commitment to transparency than in this scenario, the whole future of retail banking in Guernsey could well hinge on the outcome of this ‘worthless guarantee’.
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Deputy Trott is missing the point. The honour and reputation of Guernsey is at stake, as THEFT of our savings took place there. Investors all over the world are watching closely. They will be dissuaded from using Guernsey as a financial centre in the future, if its former reputation of unimpeachable probity is tarnished through the short-sighted wrigglings and squirmings of Deputy Trott and his crew. While he cannot be held responsible for the financial collapse of the bank, obviously, he is in the end responsible for permitting it to trade under questionable conditions, i.e. meaningless “comfort” rather than binding guarantee – also, if the job of the GFSC was just to “advise” the Policy Council, in this case that parental guarantees were not necessary, it is still the fault of the Policy Council for accepting such daft advice…….
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David
You are correct in assigning blame to the UK Government and FSA for the Icelandic banking debacle.
However, it is reasonable of anyone to ask about the function of the GFSC. After all they employ so many people. Is it wrong to ask why this body and its then DG failed to be aware of what was going on. Just read the transcript of the then DG of GFSC to the select committee and the part that says we relied on the FSA.
This pathetic excuse despite the evidence that an informed regulator should have had.
In January 2008, Moody’s, the credit-rating agency, described Iceland’s banks as “fragile”. A study by Morgan Stanley concluded that Iceland’s banks were 7.5 times more likely to default than their European counterparts.
In February 2008, Moody’s Investors Service cut its ratings on all the major Icelandic banks. Landsbanki’s long-term rating was downgraded “in light of the weaker credit environment”.
In May, Fitch, another agency, cut the ratings of Glitnir Bank and Kaupthing Bank.
Standard & Poor’s said it had only rated one Icelandic bank, Glitnir, and had cut its rating from A- to BBB+ in April.
Martin Winn, a spokesman for the agency, said: “We have been highlighting a growing risk about the Icelandic banking system since February 2007. The rating BBB+ is very high risk for a Western European bank.”
Independent of 1 November 2008 stated “Gordon Brown was alerted to Iceland’s growing financial crisis nearly six months before the island’s banks collapsed jeopardising the savings of British investors, it was reported last night”.
The same article states that Mervyn King of the Bank of England was also aware of the Icelandic problems.
Whilst brown and King did not feel the need to share these concerns with the GFSC should the GFSC have been aware of most, if not all the concerns. After all, most of these concerns were already in the public domain.
It would be fair for depositors in Landsbanki Guernsey to have asked the GFSC if it had asked of itself a number of questions, such as :
1 GFSC is believed to have asked LG to ensure more assets were transferred to LG.
Why was this necessary?
Were sufficient additional assets transferred to Guernsey?
How did GFSC ensure that ongoing day to day assets of LG were sufficient?
2 GFSC were aware by August 2008 of the dangers of upstreaming. What did the GFSC do to ensure that the levels of upstreaming at LG did not endanger LG as an ongoing business?
3 Did GFSC have LG on a special watch as a bank which was regarded as risky?
If not, why not?
4 If GFSC did have LG on a special watch how did the bank manage to find itself needing to rush into administration?
5 Did the GFSC tell the Chief Minister of Guernsey at lunch time on the day LG sought administration, that the bank was in difficulties?
6 Did the GFSC receive any advice from the law officers to the effect that it could disclose this information to the Chief Minister.
7 Who else did the GFSC share this information with prior to the application of LG to seek administration?
8 Was the GFSC aware of the Policy Council assurances of the Friday prior to the collapse of LG that Guernsey banks were sound?
This suggests that the GFSC were blissfully unaware of the realities at Landsbanki Guernsey.
9 Was the GFSC aware of the fact that the statement by LG on its web site in October 2008 that it was “…rated by two international credit rating agencies, Moody´s and Fitch”. Was this a misrepresentation in contract law?
10 If the GFSC was aware of the existence of the statement “. It is rated by two international credit rating agencies, Moody´s and Fitch”.why didn’t it ensure that the downgrading by credit rating agencies were not entered on the LG web site?
11 Was GFSC aware that Credit insurance for debts at Iceland’s biggest bank, Landsbanki, was priced at 610 points while that for Kaupthing is priced at a hair-raising 856. Given that these two have taken billions in UK retail deposits, it may be a sobering thought for savers to consider where they are putting their cash. 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 March 2008, 12:36pm http://www.thisismoney.co.uk/investing-and…amp;expand=true
Comparable figures for UK banks were
HBOS was 235
Alliance and Leicester was 342
Barclays was 170
HSBC was 145
12 Was GFSC aware that early this year commentators were warning that “Credit spreads are implying there’s a chance of default over the next five years. Not a probability, but a real possibility.” Source Matthew Hegarty, a credit analyst at Barclays Capital in London interviewed by Bloomberg.
13 Was GFSC aware that the central bank of Iceland took steps to boost bank industry solvency as a global credit crunch makes access to funding difficult.
14 Was GFSC aware that Icelandic banks were no longer required to include obligations at foreign branches when setting reserve levels.
15 Was GFSC aware that 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
True, the prime baddies were the UK government and FSA, but the evidence suggests that the comment ““A lack of sufficient supervisory engagement with the firm……a lack of adequate oversight and review…inadequate specific resource……a lack of intensity by the FSA” can be applied to the GFSC in October 2008.
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Greg (and David)
“Hasn’t the parent company gone bust too? So does it really matter about any guarantee’s?”
The parent company is in Administration and LG depositors should, under the advertised supposed guarantee, be creditors of the parent company and get a pro rata slice of the remaining assets. That slice would have covered ~83% of the end shortfall from the LG Administration, so, yes, it does matter, quite significantly actually.
“Even the UK government isn’t being paid back!”
No, that’s not fully correct. There are two separate matters here.
All the fuss you’ve been reading about in the media is about the terms of the repayment of the loan from the UK to the Icelandic *government* for Iceland to fulfil its EEA DCS obligations, of 20K Euros per Icesave depositors. That’s nothing to do with parent, it’s solely an inter-governmental matter.
For the amounts above the EEA DCS limit the UK govt, standing in the Icesave depositors shoes, has also become a creditor of the parent, just as the LG depositors should be. That claim by the UK has been accepted by the parent and will be honoured (at a rate of ~83%) when the parent is finally wound up and its assets distributed.
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I wrote to all our elected deputies shortly after this sad affair started….I have written again since. I warned of the adverse publicity, and the damage it would cause to our island. To all the recipients of my correspondence….HANG YOUR HEADS IN SHAME
Will the people of Guernsey ever forgive you when they realise the true disaster this really is for the island? Will our children ever forgive our generation for the demise of our finance sector due to the ineptness and lack of action by our government?
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David,
If you read the 17 page report by Matthew Dorman on the amount of information that was out there, some 6months prior to Landsbanki going into administration, then the GFSC, being a professional body, should have read that as part of their own due diligence and acted on it as regards upstreaming to Heritable (£37m). Instead they relied , it would appear, totally on the FSA and this shows clearly if you read the “Confidential Letters “ that passed between the GFSC, Peter Neville & the FSA in January 2009 and which were subsequently demanded by The UK Treasury Select Committee as evidence. The Guarantee (undertaking) has nothing to do with the UK, it is a GFSC responsibility to ensure that Landsbanki Islands hf when purchasing the Cheshire had all the right paper work in place and that it was enforceable, not a hollow worthless document , which they are now admitting, that conned depositors into keeping their investments with Landsbanki Guernsey.
Greg
There are three things here, A letter of Comfort, A guarantee, and the undertaking that was on all the correspondence. After the Winding Up Board decision, all these Items appear valueless, but it would appear that the GFSC knew that already, even when the undertaking appeared on all Landsbanki Guernsey literature to depositors.
Basically Landsbanki Hf in Iceland was split into two by the Icelandic Government into New Landsbanki and Old Landsbanki so we are attempting to claim under their guarantee as priority creditors. A position the UK Government already enjoy. That is what has just been turned down by the Icelandic Winding Up Board. That is a very simplistic explanation in answer you question and a rather complicated problem.
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Thank you Stephen,
You have said it all most eloquently.
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I have been reading these and all the past posts on the Landsbanki issue,
and still cant understand why many of the investors here chased the higher rates of interest rather than play safe with their funds.
The writing was on the wall for sometime and should have been heeded.
Well done Deputy Trott, stick to your guns, I dont want my taxes used to bail out the investors, who made the wrong decision.
Especially those who live abroad and use our island just to avoid paying tax on their investments..
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To John T. I was wondering just when you would come crawling out of the wood work to snipe at all the depositors who (depositors) not investors entrusted their hard work for savings in a dodgy jurisdiction as it has turned out to be.
As for we (interest hunters) it might be news to you that even rating agencies such as Standard & Poors plus many other banks including HSBC and almost all of the County Council in the U.K. where caught up in this disgraceful episode.
We were not (interest hunters) and a great many of us were originally Cheshire Guernsey customers to whom we assumed that we were given the rate for the job., many of us being resident overseas thinking that Guernsey was a safe jurisdiction for our savings.
So please take a “reality Check” instead of “trotting” out the same old turnip (pun intended)wake up and smell the coffee.
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Gary/Stephen
We will have to agree to disagree on this. Sorry but I don’t blame anybody other than Darling for what happened and its not for the Guernsey taxpayer to pay up for Darling’s actions.
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As Springbok says “even rating agencies such as Standard & Poors plus many other banks including HSBC and almost all of the County Council in the U.K. where caught up in this disgraceful episode.” So why would Landsbanki depositors expect the GFSC to be better than all of these, plus the FSA and the UK government?
It seems to me that most of the posters on this thread expected the GFSC to be some sort of super-human body, able to look into the future much better than anyone else.
Thanks for the explanations re the letter of comfort. 2 quick questions:- 1. Aren’t Guernsey depositors expecting more than 83% of their money back? 2. Has anyone actually been paid by the winding up of the parent company?
Stephen John: Small point here, but BBB+ is a pretty strong rating and nowhere near default. (It’s still considered investment grade and not high yield).
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David get your head out of the sand. Guernsey isn’t even part of the UK so what Mr Darling does or does not do is nothing to do with the Island. Greta Emmerson [Feb 22] hit the nail exactly on the head in her assessment of the problem so read what she writes and accept it. The States are always insistent about how independent they are so stop looking for whipping boys in the UK and look to your own. If Guernsey were a true democracy it would be easier for there to be States Government accountability to the people of the Island.
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To Greg
You are thinking about buying a washing machine with a guarantee, but Which magazine, doing their job, tells you that guarantee is worthless because Laundrette hf haven’t signed it. Would you still buy the item? No. If the GFSC had told us in 2007 that this great bank, that was taking over Cheshire will not sign that guarantee, we would have withdrawn our funds there and then. Our town ‘Wells Fargo’ outfit perpetuated the guarantee myth and continued to sleep right up to October 2008 when the proverbial hit the fan. Being duplicite in a fraudulent guarantee shows bad faith. So to those of you who think you should not be bailing out the saver. You will not: you will be bailing out an outfit that was not fit for purpose and woefully inadequate. The GFSC should be rebranded but my suggestion for the initials gets moderated out. :-)
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john t
Not everybody ( if anybody ) was in Landsbanki chasing high rates ( or indeed even by choice in some cases )
Springbok
I would point out to all Landsbanki depositors that they DID choose to invest in a bank not covered by a depositor protection scheme. If you “thought” otherwise that is your fault, not the Guernsey taxpayers’ …
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Imagine if the FSA had allowed foreign banks to buy UK based banks without a legally enforcable guarantee.
Imagine what depositors who lost their hard earned savings would be demanding of Gordon Brown and Alistair Darling had this occurred.
Imagine depositing your money in a true democracy that has transparency about its financial affairs that is part of the EU, EEA and the UK.
Imagine if the Guernsey Government had the moral courage as well as the finances to assist depositors who lost their money due to the GFSC.
Imagine…
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Dear John T, Just to repeat what has been said over and over and over again : I could’ve received a higher rate of interest with Lloyds TSB at the time my late husband and I put our savings into a Brit.based building society namely Cheshire Guernsey. BUT UK Government would not allow Brits who had moved abroad to have deposit/savings accounts in UK incase we were Terrorists and Money Launderers.
Catch 22 situation ?
Of course Chancellor Darling should shoulder a lot of the blame, but sadly the Guernsey authorities didn’t do much to counter what could have been avoided.
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When I deposited money in Landsbanki I was not chasing high interest rates, in fact the rates offered were very similar to what other deposit takers were offering atv the time.
What I thought I was doing was depositing money in a bank that was operated in a well regulated financial center, not a banana republic.
I thought that the guarantee from its parent, which was approved by the GFSC, might actually be worth more than the paper it was written on.
I also foolishly thought that Guernsey was well regulated and well governed.
I now know that the the guarantee that was approved by the GFSC was no better than a verbal ‘guarantee’ that you might get from someone selling something that fell off the back of a lorry down the pub and that the financial industry and government in Guernsey is just based on self interest and croneyism.
Not much dfferent from that banana republic I was trying to avoid in the first place!
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To Jansen Bewey:- With regards to your washing machine example, I wouldn’t buy a washing machine made in Angola, even if it was 50% cheaper than a Zanussi and came with a lifetime guarantee. Just like I settled for Yorkshire Building Society paying 5% per annum when I had the choice of Landsbanki paying 7% per annum.
To Judith: Why not just use a bank in the country you moved to?
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To Greg,
It should not matter whether the washing machine you buy was made in Angola or not, if the local supplier gives you a guarantee when you purchase it, which has also been authorised by a government agency you would expect it to be worth something!
Obviously not in the case of Guernsey. It only confirms my earlier comments that both Guernsey and Angola should be grouped together as far as corporate governance and open government are concerned.
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Glyn, I guess that is where we differ.
Even if John Lewis were selling the Angolan washing machine I wouldn’t be tempted! I wouldn’t fancy all the hassle of getting technicians out to fix it, and then the hassle of persuing John Lewis for a refund when it inevitably broke.
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Janson Bewey said ” Being duplicite in a fraudulent guarantee shows bad faith”.
My own view based on the facts is that the GFSC thought they had a guarantee until sometime before August 2008 when they suddenly realised the guarantee and or letter of comfort did not conform to the wording required in contract law to make a comfort letter legally binding.
The facts speak for themselves that the GFSC were negligent. The comment of Neville to the select committee, that we relied on the FSA, would be an admission of neglect and admission of ignorance of, or ignoring, of the many warnings already in the public domain. The GFSC owed a duty of care to depositors.
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Greg
In this world of corporate globalism you do not know where a product or part of it is made. It could be in a sweatshop in a 3rd world country. The products in your house will have been sourced and produced from all over the world. So you probably do own something from Angola. But I like the analogy of comparing a Guernsey registered bank to Angola, although that is unfair to Angola as none of their banks have failed. The Guernsey bank failed because the ‘Well’s Fargo’ regulator allowed funds to be upstreamed to a parent and sister company as the disaster unfolded, knowing there was no guarantee or depositor protection scheme in place. They did not tell us the guarantee had not been signed, whilst still insisting Guernsey was well regulated. I have never heard better from an East End Barrow Boy. The rest is history. Your money in Yorkshire was only safe because the UK government prevented all the major banks around it imploding. If RBS et al had gone to the wall Yorkshire wouldn’t be here now, nor would your savings. As an aside, watch out for the predicted hyper-inflation about to hit the UK. Watch your saving become worthless before your eyes; then tell me how you feel!
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Judith B That’s a strange thing you’ve said. We do live abroad [hence time difference in answering these threads] but we have two accounts with Lloyds TSB and we have had no problems. We also have an account with
NatWest. No problems there either.
When will you Guerns learn to accept your own responsibility for matters on the Island and stop blaming the UK, the rest of the word, Uncle Tom Cobley and all.
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Janson, the issue is you knew your bank was Icelandic, a country where things were starting to look a tad unstable (hence the 7% rates being offered).
Guernsey is very well regulated (some would say perhaps too well regulated). The Landsbanki episode (as documented elsewhere) happened outside of any Guernsey influence. Why would you epxect the GFSC to be any better than the FSA, Standard and Poors etc?
You are correct regarding the UK government and it’s actions. If RBS et al had gone to the wall, I doubt we’d be even having this exchange.
As for hyper-inflation in the UK, linkers will give you me a nice hedge.
It would still be nice if someone could answer my previous question as to why all of a sudden depositors want this letter of comfort option, when it apparently is only paying 83%?
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Greg
Correction – Guernsey registered limited company with an Icelandic parent. I was never getting 7% and I was with Cheshire.I stayed after the change over as I was assured by the GFSC, and subsequently never informed of the failure of promises, by the GFSC that Landsbanki Guernsey Ltd was safe. Landsbanki Germany never folded. Guernsey only folded because our money was upstreamed to an iffy parent. Something we had no control over but the GFSC was supposed to.
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Greg. RBS DID go the wall! The UK Government bailed it out with billions in loans.
Anyway maybe you won’t be having too many financial problems for too much longer since President Obama has said that everyone should pay fair taxes and that ALL tax havens should be abolished. I suppose that will all be the fault of the UK too!
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Greg asks “Why would you epxect (sic) the GFSC to be any better than the FSA”
It should not have been hard to be better than one of the most ineffective regulators in recent years.
Thing is that the GFSC was, like the FSA, fast asleep, or incapable of any meaningful action.
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Greg,
No, those explanations were about the (supposedly legally binding) guarantee that was advertised to depositors (and potential depositors, even on the application forms) and that LIHF, the parent, is now saying doesn’t exist. The (non legally binding) letter of comfort from LIHF to the GFSC is (yet) another matter.
“1. Aren’t Guernsey depositors expecting more than 83% of their money back?”
The last estimate from the LG administrators is for an (eventual) 85-91% return but, as it said in the previous explanation, the supposed guarantee would have resulted in ~83% of the end *shortfall* from the LG Administration being covered.
In other words, without guarantee: ~85-91%, with guarantee: ~97.5-98.5%
(Incidentally,the 83% number is not a feature of the guarantee, just the last estimate of the assets of LIHF.)
“2. Has anyone actually been paid by the winding up of the parent company?”
That’s a laugh! No, the LIHF Winding Up Board (their name for Administrators) have yet to go through all of the claims against the parent. So far they’ve only made decisions on 2,500 of the 12,000 claims. They can’t pay out anything at all until all 12,000 are processed, and then not until all the legal objections to their decisions (of which there are already many lined up) are resolved.
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Greg
It would make us preferential creditors like everyone else and not ordinary interbank creditors. That way we get a %age of what was upstreamed to Iceland to bail out their depositors who lost nothing. This would help to reduce the shortfall and Guernsey’s shame.
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I see the oft repeated “LG was offering 7% when everywhere else was offering 5%, so you should have known better” fallacy has popped up again, despite having been refuted many times before. So, let’s put that one to rest once and for all.
Yes, LG was offering 7% on 1, 2, and 3 year bonds during 2008, its best rate.
So, let’s take a look in the internet archive and see what we can find…
4-Aug-2008, Nationwide: e-Bond – 1 and 2 year Fixed Rate e-Bonds 6.80% gross p.a./AER
http://web.archive.org/web/20080804024927/www.nationwide.co.uk/default.htm
6.8% from Nationwide for comparable periods. NATIONWIDE, the largest and, arguably, most conservative and boring of building societies, just a gnat’s whisker less than LG.
NATIONWIDE, 6.8%.
I’d search further (as good chance some of the less huge societies would have been offering yet a little more) but trawling the internet archive is a real pain in the proverbial, and NATIONWIDE offering 6.8% more than adequately proves the point.
A few notes for those who’ve never used the internet archive before. It’s neither exhaustive nor comprehensive, and it doesn’t do continuous snapshots, about one every six months in fact. It frequently doesn’t capture images, and often not the style and formatting information either, so archived pages can often look odd, even though all their content is there.
The trickiest bit is that clicking on a link within an archived page may take you to a page captured at another time. You need to keep an eye on the date-time in the address (e.g. …/20080804024927/…) to make sure, or at least know, if you’ve leapt to a different time.
For anyone that wants to dig themselves, start at http://www.archive.org
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Oh, I said I wasn’t going to dig further, but here’s just one more:
http://web.archive.org/web/20080620090557/www.ygl.gg/interest/2yr_fixed_bond.html
16-Jun-08, Yorkshire Building Society Guernsey, 2 Year Fixed Rate Bond, 7.00% gross/AER.
Obviously a very risky building society, with such ridiculously high rates, right? Anyone who deposited in the Yorkshire probably also buys washing machines made in Angola…
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Greg
from your last paragraph:
It would still be nice if someone could answer my previous question as to why all of a sudden depositors want this letter of comfort option, when it apparently is only paying 83%?
You obviously are stirring it without really knowing what you are chatting about. Go away and read up on it and then come back and ask a question that makes sense and we will quite happily answer it.
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Frustrated Voter, thanks for clarifying the situation. It’s nice that someone took the time.
Gary, perhaps you could follow Frustrated’s example? Maybe the Action Group should be looking for someone with a bit more nous to lead them?
Susan, thanks for the info. I was actually comparing short notice accounts, not bonds, so perhaps an unfair comparison on my behalf.
Stephen John, you’ve obviously never had dealings with the GFSC if you think they are going to be better than the FSA!
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How can there be any debate on this topic. A bank issues a letter guaranteeing to stand by one of its branches. Later the guarantee is altered to become a joke but this is not told to the depositors. The “responsible” authority conspires with this act.
If they need to be told that they are wrong, why are they still in office?
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Interesting reading all these comments.
I had money in Cheshire. I did not like the sound of Icelandic banks supported by a population of only 300,000 so did my own due diligence and , based on what I found, withdrew my money immediately.
I did the same when Scarborough took over Portman. Scarborough claimed to be a top twenty bank but were in fact twentieth by a long way and had few branches outside Yorkshire whereas Portman were spread acroos the UK and considerably bigger with a more substantial base. I did not like what I found and withdrew my savings and advised my friends to do the same. probably Scarborough are well managed but I didnt want my money in such as small organisation.
I can only suggest doing your own due diligence and asking why a bank is paying more interest than others. It is usually due to the higher risk they are taking. Why was Northern Rock growing so quickly and offering silly mortgages to people who could not possibly afford to repay them? because the bank was taking higher risks than others.
Whenever I am investing my hard earned money I always remember BCCI and the higher rates they tempted people with.( remember how the states Electricity invested in BCCI just to get an extra 0.5%!!!! ) Now they were crooks but the principle remains the same. If the interest is out of line with the rest of the Market then something is probably wrong. Madoff was the same. How can anyone guarantee high returns for so long ? they are either incompetent or crooks.
Do you own due diligence and dont try to balme others. The GFSC relied upon the FSA. Numerous countries do the same all the time. In addition a parental guarantee is worthless if the Parent goes bust. Why should any Government bail out people who have lost savings. Guernsey was quite clear in stating that there is no depositors compensation scheme.
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Susan
Are you sure that you are comparing like with like ?
1. What were the credit risk ratings of Nationwide and Yorkshire compared to that of Landsbanki on the same day as those rates ? The credit rating reflects the riskiness of the bank concerned. The lower the credit rating, the higher the interest rate should be.
2. Have you properly taken account of the effect of the bank quoting an AER ? The AER is affected by the frequency of when interest is actually paid, becauses it takes account of the compounding effect of earning interest on interest. So, a 6% interest rate paid monthly for a year results in a considerably higher AER than a 6% inteterest rate every 6 months.
3. Have you taken account of the differential between say 1 year bond rates and 2 year bond rates ? If the longer dated money market rates are higher or lower than the shorter term money market rates then the “cost of money” to the banks changes as well.
To get a true comparative of the merits of any range of quoted interest rates you need to compare credit ratings, deposit periods and frequency of interest payments on the same day.
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John
The GFSC are paid to do their own due diligence; they failed. The GFSC are paid not to mislead us that we had a guarantee; they failed. Desperate to keep a bank in Guernsey when no one else wanted to take over Cheshire they crossed their fingers and hoped; they failed. You do not tell us which bank your due diligence led you to save in. You would have been very lucky and not wise to have chosen a bank that ‘failed’ but still exists only by being taken over or bailed out by the taxpayer. Failure is blameworthy; justice is our human right. Remember we are calling for an open, independent enquiry. Why are the detractors so afraid of one. Do your research and due diligence on our case then premiss your argument on those facts, not subjective, shoot from the hip, C.M. style diatribe.
Greg
Gary has the knowledge and the capacity to fully argue our position. What he and other defrauded savers are tired of is, no matter how many times the case has been stated since this debacle began, we continually get people commenting negatively without any clue as to the underlying issues. They listen to the political propaganda and when it suits them go along with it. The same people will disregard the political propaganda when it suits them. No smoking in public places, the incinerator, fill in Belle Greve Bay. If you accept the C.M.’s political speak on one occasion with little research you must be very happy with the way the Island is run. Guernsey government and its deputies have been given 0/10. Its handling of the failure of a Guernsey Ltd bank rates it minus 10/10 on the world stage. Still I thank all the detractors, even coyote who hides behind a pseudonym and no real knowlwedge of the situation for contributing and keeping this topic at the top of the forum to the extent that google alert has picked it up and sent it world wide. Thank you for helping to advertise the disasterous PR job the Policy Council has made of this mess.
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Whilst Gary may have the knowledge and ability, he doesn’t help you gain any sympathy from local people, and neither do the stupid comments. What does help your cause is reasoned and intelligent discussion, such as shown by Susan and Frustrated Voter.
It seems pretty obvious that the GFSC and States are not particularly fighting your corner, so your best course of action is to win the sympathy of local people. Rightly or wrongly, it seem to me the majority of local people think that most Landsbanki savers were tax avoiding non-locals who were just chasing high rates.
In previous “discussions” on this topic it has become apparent that many depositors were actually “trapped” in Landsbanki because they were unable to break previous bonds taken out with Cheshire. So sympathy for your plight is increased.
Susan then points out that other banks were offering similar rates to Landsbanki, negating the view that you were all chasing the highest rate. Again, sympathy is increased.
By having reasoned debate, and answering relevant questions, your position improves with the public.
But Guernsey people are not going to take kindly to idiotic comments along the lines of ruining our reputation, bringing the island’s finance industry to its knees etc. These comments just promote ill feeling, and reduce sympathy.
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@ Janson Bewey
I don’t know who you are but it would appear you may be a Landsbanki depositor.
I have every sympathy but I do not believe that you can solely blame the GFSC , States of Guernsey or FSA for this. I note you place no blame on the Icelandic Government.
I do not intend to undertake research on your case that is for you to do for yourself.
I merely feel that placing your money with any institution has its risks especially when you are fully aware that the jurisdiction you are depositing money in has no compensation scheme. In addition a guarantee is only as good as the guarantor and placing all your money with a country with a population of 300,000 which relies on fishing and has a fledgling financial services sector always seemed like financial suicide to me. I did my research a long time ago so dont lecture me on doing further now.
You ask where I deposited my money. I spread it around but focussed mainly on high street names who were paying less interest but had stronger capital bases. The ones i chose did not end up being supported by the UK public but that was by chance.
Everyone suffered during the financial crisis and , if you are a Landsbanki depositor, you were unlucky but I avoided any Icelandic bank due to the poor capital base, poor economy of the country, small population and inexperienced and unsofisticated population. They are fishermen who tried to make a fast buck and are now suffering. Why were they buying stores like Karen Millen? All the warning signs were there.
I also sold my house before the crash and have been renting until recently.
Basically man is greedy and I was lucky enough to get nervous about house prices and high interest rates at small banks. I am still very nervous and believe that we are about to enter the second part of a double dip recession.
I also believe that further banking crashes are imminent in some offshore locations especially as the majority of bankers do not understand the products they are selling and only look at the bottom line to work out how enormous their bonus will be.
There are some banks not driven by greed and that take a very long term view such as Rothschilds globally. I have spoken to their staff in the past who moaned that their bank was boring, did not sell risky products and did not pay huge bonusses. Now they are happy to be working in a well managed bank that has based its business on solid banking principles as it has done since before Napoleonic times. ( No I am not a banker )
It annoys me that people are willing to invest their money in investments or banks that pay above the norm returns but not willing to face the consequences when it crashes around them. there was no compensation scheme and this is emphasised on all literature.
Most banks would stand by their subsidiaries and most Governments would stand behind a major bank if it collapsed. Neither Guernsey or the GFSC were responsible for the collapse of Lansdbanki that was ther esponsibility of greedy bankers and the cowardly Icelandic Government who refused to stand behind the bank.
I undersatnd that Deloitte have recovered most of the Landsbanki depositors funds now so and promise more in the future so I really do not know what your problem is.
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Greg
It is not idiotic comments but fact. None of us local savers want to see the island’s reputation trashed or the finance industry forced out but that is what the lack of action by the Policy Council is causing. Remember there are 1200 non local savers who were forced to save offshore once they moved outside of the UK, most paying withholding taxes to Guernsey. Do you think they give a dam about trashing Guernsey’s reputation when Guernsey people do not give a dam about them? This story will just run and run until justice is seen to be done!
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I take it that you used HSBC and or Barclays. Both avoided problems by the skin of their teeth. Thank shareholder rights issues contributions for that. Had HSBC failed I cannot see China bailing out its capitalist bank. Further LBG was a Guernsey Ltd company. Rules are in place about how funds are upstreamed and they were supposed to be overseen by the GFSC. Iceland has a lot to answer for but so does the American banking system that started the mess. But we are taking issue with a Guernsey limited company and the ‘naughty schoolboy’ approach – not my fault Mr! Like you say you have not done your research but still submit you cannot see what our problem is. That neatly sums up what our problem is.
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Greg,
Had you taken the time to carefully read Frustrated’s original explanation, which clearly says “83% of the end shortfall”, he (she?) wouldn’t have had to take the time to spell it out to you.
So, you were comparing short notice accounts? Well, would you like to tell us which short notice accounts at LG were offering 7%? It’d be news to the LG depositors, all of whom must have overlooked those. Maybe you’d like to follow Susan’s example (great resource!) and post some actual evidence?
Are you sure you weren’t comparing 5% on, say, £1, in a short term account with 7% on £10K in an LG 1-3 year account? Or maybe with some rumoured LG 7% short term account that never actually existed?
David,
What Susan has comprehensively done is prove that the much repeated falsehood in these columns, that LG was offering rates much higher than other banks (and so LG depositors should have, just from the interest rate alone, smelled a rat and known better) is complete rubbish, and that other banks were, indeed, offering comparable rates for comparable terms and amounts.
LG were offering 7% gross/AER on 1, 2 and 3 year bonds, £10k minimum.
Yorkshire was offering 7% gross/AER on 2 year bonds, £10k minimum, and Nationwide was offering 6.8% gross/AER on 1 & 2 year bonds, £1 minimum (less money, less interest, right?).
So, the implication of your very own statement that “The lower the credit rating, the higher the interest rate should be” is that LG had an equal credit rating to Yorkshire, both of which were slightly lower than Nationwide’s. Or maybe things aren’t quite as simple and obvious as your statement implies.
As for AER, in all the rates shown, gross = AER, which tells you that interest was paid once yearly, so they are directly comparable.
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@John,
You state:-
‘placing all your money with a country with a population of 300,000 which relies on fishing and has a fledgling financial services sector always seemed like financial suicide to me.’
If that’s the case then placing your money with a country with a population of 65,000 which relies on growing tomatos, has an unregulated financial services sector and is run by individuals that put personal self interest first sounds like financial suicide to me!
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Janson Bewey
Why were they forced to save offshore ? What was wrong with them banking in their new country of residence if they were no longer able to bank in the UK ? Saying that they were “forced” to bank offshore is nonsense. And why did they opt to suffer withholding tax in Guernsey instead of receiving the interest gross and accepting the exchange of information with their country of residence ? Something doesn’t add up.
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Janson Bewey
You are very naive to think that the 1200 non local savers are all paying local tax.
I have seen messages from savers living in Gibraltar, Spain etc. Now can you explain why they dont invest in the country where they are resident, thereby contributing to the infrastructure of that country by contributing to their tax system.
Simples really.
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John
I have just read your comment above and can say that to mind it is the best comment so far I have seen on the Lansbanki issue,
I had a choice last year to invest some cash and did my homework, and although the rates at Landsbanki were attractive, I spoke to my bank manager who advised that the rates were high as they were desperate for cash flow.
I am a novice on this matter but I used my gut feeling, went for lower interest and invested wisely.
I preferred safety to greed.
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The Chief Minister says that his role is to give political support, well, so far he has not met with much success. If he had met as promised with the action group, instead of continuing to avoid them, and if there had been a sense of genuine desire to help instead of defensiveness, maybe the feelings of those of us who have lost our funds would be less raw. In answer to John and others, I’m glad you were able to do your own due diligence and avoided our situation. Unfortunately I don’t have your sophistication. I tried my best, but I did not know where to check, also my money, inherited from my Guernsey family, was with Cheshire. It would never have entered my head to put money in an Icelandic bank. I trusted the advertised guarantee (now proved worthless) and the advertising which the GFSC allowed to be printed. My suggestion going forward is that there be some kind of disclaimer, similar to the disclaimer about the (then) lack of a depositors compensation scheme. Something along the lines of the GFSC does not recognize guarantees or “Letters of Comfort”. If I had seen such a warning I definately would have done everything I possibly could to extricate my money. I was misled by my perception, which I now believe to be wrong, that Guernsey was safely regulated. I understand that banks can fail, and I knew that there was no depositors compensation scheme, so, in that respect, I agree I should be expected to stop whining. However, I loved the Island, and I believed at the time that my money was safe there.
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@ GLYN
There is a huge difference!!!! these were icelandic banks supposedly supported by their Icelandic parents, by the Icelandic Govermnet and ultimately by the Icelandic population.
None of the Banks in Guernsey are Guernsey banks. they are all subsidiaries or branches of banks parented in other Jurisdictions – prediminantly the UK.
therefore the Guernsey population are not responsible for the actions of those banks.
the reason I pulled all my money from Landsbanki was that it had a frail economy.
If there was a ” Guernsey ” bank I would not consider depositing as, again, the economy would not sustain it.
We only use banks that choose to establish subs or branches here.
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@ John T
I wish more people would think before going for the highest rates.
As I said previously I always think back to the BCCI debacle. If someone in offering rates higher than the market norm then there must be a risk involved. Couple that with a bank that is poorly capitalised and has the bacling ( or lack of ) of a very small population you have to think why am I risking my money with them.
Iceland was living well beyond its means. If a friend of mine was buying expensive houses, flash cars and taking expensive holidays well beyond his means I would not lend him money no matter what interest rate he offered.
I have every sympathy for the Landsbanki depositors but i undersatnd that they have got 83% of their deposits back already and Ric Garrard of Deloitte has said more should be coming.
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@ JANSON BEWEY
As I have previously said I have every sympathy with Landsbanki depositors but you only needed to do your own research to realise that something had to give eventually.
I was lucky that I did not lose money when I transferred into better run high street branches. I could have gone for RBS but was concerned about their balance sheet too. I did lose a fortune on equities but that is a riskier proposition and I was willing to take that risk.
When Scarborough took over Portman and Landsbanki took over Cheshire I wrote to both banks and also to the GFSC questioning the changes and explaining my concern as to the deterioration in the standard of the banks that my money was now deposited with. I got the standard parental guarantee response. I got a very long response and phone call from a Director at Scarborough which did nothing to calm my fears.I was not happy with this and told my children, my parents and some friends to move their savings immediately. some did and some didnt.
I wanted to be invested in much stronger, better capitalised and better supported banks.
You seem to want to blame everyone but yourself. I agree that the regulator could have given more scrutiny but they were also relying on the Parental Guarantee and on information given by the FSA. They were not to know that the sub-prime debacle would have such a devastating impact globally.
It always amazes me that when these things happen we always look to someone else to blame. Even Madoff investors were looking to balme someone else. Itwas a Ponzi scheme giving ridiculous returns and dealing with over £50 billion of peoples money. How could those returns be so consistent.
It is like the great salad oil scandal of the early 1900’s. A company was performing really well based on incredible stocks of salad oil. It was only when someone stood back and said ” Just a minute their stock is equal to more than a whole years usage of salad oil by the whole world” that people realisedit was just one huge fraud.
I go by my gut feeling and everything screamed at me that Landsbanki was too high a risk. I didnt know it would go bust but I did realise that I didnt want to risk my money with them.
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John
Again, excellent comments.
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john T,
Yet still repeating the same old inane comment, eh? Not even updating it for the passage of time!
So, you asked your bank manager why the competition was offering better rates than his bank and he gave you reasons not to go to the competition. Doh! And people say the LG depositors were gullible!
You clearly didn’t do your homework then – or even now, by reading the information on this page – or you’d know that, as Susan has demonstrably proved, other banks, including mega building societies, were also offering comparable rates.
So, maybe your question to your bank manager should have been, how come your bank is offering such crap rates when even boring old building societies (let alone LG) are offering so much better? I wonder what answer he’d have given then, desperate to convince you to keep your money in his bank…
John,
“i undersatnd that they have got 83% of their deposits back already”
Do try actually reading the information already available.
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Frustrated, how much have LG depositors received back so far?
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Greg, 67.5%
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The old adage ‘if something sounds to good to be true, it probably is’ was never truer than in this whole Landsbanki saga. The interest rates offered sound unbelievable. Investors don’t seem to have either thought matters through or asked the right questions.
We were offered ‘excellent investment opportunities with high returns’ through an ex-Barclays bank manager who worked for Henry Woods. When we analysed the information given to us, the Funds being recommended had no foundation in reality. We put questions to which there really was no satisfactory answer. We declined to invest and a year later Henry Woods ‘crashed in flames’. We ultimately received less interest on our cash but because we put prudence before greed we didn’t lose out.
We eventually bought UK Government ‘premium’ [NSI] bonds which usually win 25.00 or 50.00 per month. All this is legally tax free. Much safer option and the returns aren’t bad either.
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Frustrated VOTER
Sorry but you criticise me for seeking advice from my bank manager, who’s advise proved to be correct.
I shall repeat what I have already stated, in that last year for the first time in my life due to an inheritance, I had sufficient funds to be used for investment purposes.
I had no experience of investments but for a while I observed what was going on in the finance world and used this to invest wisely.
I didn’t want the highest return but just wanted security for the future.
Now having read many comments on these forums from investors much more knowledgeable than myself, I have come to the conclusion that many ignored their gut feelings or financial expertise in order to get a high return on their investments.
My investment was really important to me as I am retired, and so I quickly learnt the meaning of ” Due Diligence”.
I can only assume that a lot of people were blind to the signs of trouble which I could see coming.
Finally, I did invest some of my funds locally, with Northern Rock, which was in the same building as Landsbanki.
With the knowledge of the advise given by my bank manager, I didn’t consider Landsbanki and especially as there was no guarantee.
I used Northern Rock which I knew was less income but was 100% covered by HM government.
Everyone is responsible for their own actions and obviously a lot of people failed to do their homework.
You pays your money and you take your chance.
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John
You said: “It annoys me that people are willing to invest their money in investments or banks that pay above the norm returns but not willing to face the consequences when it crashes around them. there was no compensation scheme and this is emphasised on all literature.”
They did not “invest…in banks” they deposited life’s savings in the Cheshire that was paying about the average. There was no DCS but a 100% Parental Guarantee that was marketed in all bank literature and even on the Chamber of Commerce website.
The GFSC was somewhat disingenuous by not requiring banks to inform their customers that the ‘Guarantee’ that everyone thought was legally binding was in actual fact a worthless ‘comfort letter’. The GFSC only revealed this fact when they panicked in August 2008 and issued a Consultation Paper knowing that few would read it (otherwise it would have sparked a bank run).
So the GFSC has to take the brunt of the blame for this fiasco.
Greg
I see you’re still up to your old tricks, wrongly trying to smear tax-paying savers as tax dodgers.
You’d better hurry up if you want to answer this because they take the forum down after a week.
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Greg
67.5% with the possibility of 85 to 91% over the next few years if market conditions are right.
There is so much misinformation going on above from ill informed people who don’t take in what they are told in the first place,replying to any great extent is a waste of time.
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John
Hold on, there.
The products sold in the UK on behalf of these banks were given top rating in all the ‘best buy’ trusted consumer indices. As far as the consumer is concerned they have to believe that the information is based on post-regulatory approval.
The same applies to the Guernsey situation. The GFSC believed, in a best case scenario, that Landsbanki was a well run bank, able to conform to the image that Guernsey’s OFC is ‘well regulated’.
That alone should have given some comfort to those that chose either to deposit, or to transfer through takeover.
Who was auditing this bank?
If you’re so sure that there was imminent collapse, or a lack of sustainability, surely those that are in control of the audit and regulatory and compliance mechanisms should have been aware.
Until the very last day it was advertising for deposits. True and fair?
People, like David, can lambast the actions of others all they like. The fact remains that there is a gaping hole between local ‘good governance’ and local corporate responsibility.
No one who had any power and/or who had any semblance of social responsibilty that understood anything – if you knew, John, why not try and alert others, hmm? – had any idea
of what was going on in their backyard.
That is entirely the fault of those that make the rules, that interpret the guidelines, and those that advertise the low-hanging fruits.
The biggest shame is that the politicians who are elected to represent the voices of those that cannot get heard, rally around the corporatist juggernaut willing to accept that ‘losing a few’ should not jack-knife their blind vision to a dead end.
When will Guernsey accept some responsibility that its legislation for providing the means of obfuscation causes harm to innocent people, whilst not providing anything tangible to the wider world?
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John & and your supporter John T
Not Guernsey Banks! That sums up the extent of your research and knowledge about the subject. Landsbanki Guernsey Ltd was a Guernsey registered and limited company. Had to file accounts under Guernsey companies law and pay Guernsey tax. They were not like ICESAVE in the UK which was an Icelandic internet bank and yet the UK & The Netherlands came to the rescue of domiciled savers. The Guernsey tax authorities were happy to draw in the tax on the interest I had received, from a rate comparable with UK High Street Building Societies but from which we are barred from saving. Lloyds TSB are registered as Lloyds TSB Offshore as are the othe major banks. Having drawn in income from reasonable interest rates into the tax exchequer, the island wants to wash its hands. But just like Pilot, history has judged him with the blood on his hands. What will the IMF make of the sorry state of affairs on the lack of effective regulation by the GFSC that allowed a GUERNSEY Registered Bank to fail.
Anyone else out there that would like to pontificate on the situation armed with no more than the political spin of the Guernsey Government?
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My tip to save taxpayers’ money: dismantle the GFSC which has proven its social uselessness. Those guys are paid high salaries straight from taxpayers’ money (and depositors’ pockets) to protect retail depositors and ended up actively participating in misleading them by letting Landsbanki (and all the other banks) print on their marketing material that a parental guarantee was in place.
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Well, well, who are the greedy ones? The little retail depositors who looked for a competitive interest rate, (retrospectively foolishly) safe in the knowledge that they deposited in a high street regulated bank? Or, rather, the States and their financial arm –the GFSC–, by letting rogue bankers rob in full daylight unsuspecting people off their hard earned money and pensions, in the hope that the gamble (with others’ money) would pay off and that they would end up even fatter?
TIME HAS COME FOR ACCOUNTABILITY!!!
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Janson Bewey
You like many others on this site, ie Gary, Frustrated VOTER etc seem to be very knowledgeable concerning investments etc.
With this in mind it beggars belief that none of you did your homework and were caught out by investing in Landsbanki.
Shame none of you used “Due Diligence”.
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Arnald
My post of 6.02pm on 25th February to Janson Bewey asked some perfectly reasonable albeit awkward questions. I note that there has been no response. I thought that you of all people would have been critical and unsympathetic to anybody who might not have been tax compliant in their country of residency, or do you only take that stance when it suits you ?
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coyote,
“The interest rates offered sound unbelievable.”
Another person who hasn’t the read the information available and is spouting on sheer speculation. Read above and you’ll see major building societies were offering comparable “unbelievable” rates (and they weren’t the only ones). But maybe you consider Nationwide and Yorkshire to be “too good to be true” too.
john T,
“..and especially as there was no guarantee.”
Now you’re just plain making things up. The fact that there was no guarantee – or, more precisely, that the guarantee that was being advertised isn’t enforceable – wasn’t known then.
Gary is right, it’s too tedious to have an informed debate with people who don’t want to inform themselves, or just plain ignore facts in favour of their own preconceptions – or invent their own “facts”.
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@ Janson Bewey
LBG was registered and licensed in Guernsey but it was a subsidiary of an Iceland Bank, relying upon the parental guarantee of an Iceland Bank.
My point was that I was uncomfortable that such a small country had banks in offshore locations offering above the avaerage interest rates.If you would care to read my contribution I also said that if there was a Guernsey bank in simlar circumstances I would not invest in them either.
I do not know why you think you are barred from saving in UK banks such as Lloyds. You are not restriced from doing so and I have several accounts in UK banks thereby spreading the risk rather than putting all my eggs in one basket and numerous people seem to have done.
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@ ARNALD
If you care to read my previous contributions you will see that I wrote to the Directors of Landsbanki and also the GFSC expressing my concerns. When I did not get a satisfactory answer I withdrew my savings.
You ask why I did not alert others? I did alert friends and family and did write one more time to the Directors of Landsbanki and to the GFSC explaining why I had withdrawn my money. I only received a response from the GFSC who said that they noted my concerns but that they had received assurances from the UK lead regulator, FSA, and that there was aparental guarantee in place. Who among any of us, including the GFSC, knew that the lead bank would collapse and that the Icelandic Goverment would wipe their hands of it?
Why should I alert others? How should I alert others? If I had written to the press or stood outside Landsbanki would any of you have listened? You wanted the higher interest rates without thinking about why the bank was paying those rates. No doubt if I had written to the press the bank would have taken action against me for trying to cause a run.
I had a gut feel and I was lucky.
Do not blame other people for acting on their own research.
I do feel tht the GFSC should shoulder some of the blame and I think the pratice of upstreaming loans to parents is dangerous.
Why are you not picketing the auditors of LBG or the Directors of the bank. they surely had the inside track on what was happening? How did the auditors signoff on a set of accounts with significant upstreamed loans?
the Foot report effectively clears the GFSC but does nothing to help thepoor Landsbanki savers.
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David
My comments are on the technicality of regulatory failure. Nothing to do with the personal tax arrangements of a handful of depositors of immaterial consequence when compared to the tax abuse that Guernsey’s OFC promotes in my name.
Try again.
John
I don’t blame you for anything. I just don’t think you should criticise those that have no idea of the lack corporate governance that lies behind these charades of businesses.
I agree entirely with the fact that the audit companies are entirely complicit in all aspects of financial failure. Not only do those companies have no idea what they auditing, they make the rules!
Then they make huge pots of cash in wind ups.
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John
I do not know how you have been able to open a account with a UK High Street branch because as soon as they know I am not resident in the UK they refuse on the ‘know your customer’ rule. True it is their interpretation of the anti-money laundering lesgislation and not government policy, but that is how they apply it. If you could give me contact details of your banks I will willingly open accounts with them as the depositor’s compensation scheme in Guernsey is grossly under funded and woefully inadequate. Should another bank fail, and we know the GFSC will stand by and watch it happen, you will not get as much back as one is led to believe. One of our savers researched how many banks in the the UK would allow someone not resident in UK to open an account. Out of approx. 98 Investec Private Bank in London and a Barclay’s Branch in Kensington were the only ones and I think Barclays have now stopped that. My son used to live in London and came back last year. He had an account with a High Street Building Society that does not operate over here. As soon as he gave them he Guernsey address they made him close his account. So the evidence on your assertion does not back you up. I await the contact details. Thanks.
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Going along the premise of some the proven invalid arguments regarding interest rates; I think we should be calling for Skipton Gsy Ltd to be closed down. After all they are offering ridiculously high interset rates compared to the High Street banks so they are bound to fail on your arguments. And without an effective regulator and an under-funded compensation scheme no one will see the max. £50,000 paid back. SKIPTON close your doors now. Must get my son to withdraw his savings from there before he gets labelled a greedy investor who should know better!
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I blame the Eskimo,Lyndon is doing a grand job thanks for the free lunches
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Arnald
A handful ? Really ? So your view wouldn’t change if you knew that hundreds of depositors in LG were willingly suffering Guernsey withholding tax instead of agreeing to exchange of information with their country of residence ?
You seem to be suffering from very selective memory loss. You have consistently slated any hint of anybody using Guernsey for tax evasion purposes, yet in this case you seem to be saying that if indeed LG depositors were evading their full tax reporting obligations in their country of residence, then its all right !
A quite remarkable inconsistency, don’t you think ?
I think its you who needs to “try again”. You seem to have severely compromised your principles.
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Janson Bewey
Anti-money laundering rules require that a financial institution verifies the usual residential address of its customer. Whether that is in the UK or not should be irrelevant. If they can produce proper and verifiable evidence of their overseas address then there is absolutely no reason for a UK bank to decline that customer’s account. Indeed, to decline is probably illegal if the customer resides anywhere in the European Union.
I’m not saying that UK banks are not declining accounts for non-UK residents, merely that you should be taking this up with the FSA in the UK.
I have opened numerous UK bank accounts in the name of offshore trusts or companies for clients of mine, and have never had a problem. OK -that may well be because my business is a regulated business here in Guernsey, but it really shouldn’t be impossible for non-UK residents to open accounts with UK banks.
But you still haven’t answered my earlier question – why did LG depositors not open accounts with banks in Spain, Portugal, France etc, if they were resident there ? Were they trying to evade their tax reporting obligations in their country of residence by banking in Guernsey instead, so that they could illegally resrict their tax on the interest to the rate of withholding tax suffered in Guernsey at the relevant time (15%) ?
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The GFSC made this statement “The Commission does require subsidiary banks to have letters of comfort in place but it has always recognised that these are not legally binding and made that point plainly in the same consultation paper.” So I take it from that the only value of such letters of comfort is to create a false feeling of security in any investor who believes that the GFSC wouldn’t insist on a bank producing something if it had no real value.
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Mark, care to back up your accusation above with some evidence? Good to see you are still making things up!
However, I do note that from the glut of non-local posters at the start of thread, none have answered David’s questions above. Namely, why pay a punitive tax to keep an account secret from tax authourities? And why not bank in the place you live?
Still, I guess anyone who chose to pay the witholding tax to keep their secrecy will probably be a bit worried now. I presume that the list of non-local people who are part of the LG Action Group (and those who’ve registered with the administrator) will be eagerly inspected by HMRC et al, and cross referenced to ensure that all of those names had declared their LG account.
Frustrated/Gary: Thanks for the percentage info. I sincerely hope the administrators secure the reamining amounts for you ASAP.
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Let me see if I udnerstand correctly:
(1) A bank is allowed to operated under Guernsey government’s jurisdiction,
(2) That bank makes statements whose effect is to lure people into investing their moneys in it,
(3) The bank goes bankrupt,
(4) Guernsey government asolves itself of all responsibility and states it has nothing to do with any it.
Even some Third World banana republic would acknowledge SOME accountability in such a scenario!
From what I understand, once the administrators have done their part of the job, the shortfall between the funds recovered and the total is going to quite small. If the Guernsey government stepped in and made up for that shortfall, it would firstly, do the moral thing by the savers (and do put yourselves in their shoes), and secondly, restore confidence in Guernsey as an offshore detination. I think these two greatly outweigh the cost involved.
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David
I don’t see your point. Why would people folk be openly campaigning for reclamation if those funds were supposed to be off the radar?
What you have done is admitted that Guernsey provides a framework where tax evaders – criminals – can escape notice. Surely that’s what I’ve always said?
My comments have been purely based on the shared lack of information between jurisdictions operating within a global system. Despite the unfortunate shortcomings of all that, I am more disappointed in the lack of political representation for those who have lost out due to the actions of foreign scammers. The outcomes would not change, but do you not think that some supportive rhetoric would not have gone amiss?
It is unfortunate that the chief spokesperson of the Guernsey government is also the chief ‘national’ representative, and cheerleader, for the industry that has failed Guernsey tax payers.
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This is one of the most distasteful, unbelieveable bank scams this century, – especially as the responsables do not have the courage to reimburse the poor Landsbanki depositors. Shame on those who are still living ‘the lie’.
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john T,
“You like many others on this site, ie Gary, Frustrated VOTER etc seem to be very knowledgeable concerning investments etc.
With this in mind it beggars belief that none of you did your homework and were caught out by investing in Landsbanki.”
http://www.thisisguernsey.com/2009/10/20/landsbanki-depositors-want-public-inquiry-into-banks-collapse/#comment-54836
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Arnald
By the looks of it, many LG depositors haven’t properly worked out their tax reporting obligations in their home country. That’s a very dangerous strategy ib this day and age of exchange of information.
What a rather silly comment re. tax evasion. Any bank account, anywhere in the world, can be used for tax evasion if the accountholder is so inclined. Its not illegal to have an offshore account, but its illegal not to declare the interest arising therefrom in the accountholder’s country of residence. That isn’t the bank’s responsibility, regardless of whether the account is in Guernsey, London or New York. But you already know that.
And who is to say that the States of Guernsey won’t step in and cover the final shortfall ? It wouldn’t surprise me, but only once the shortfall has been quantified. There’s a huge difference between recklessly covering 100% and covering 10%, especially when a depositors protection scheme would only have covered part of it anyway, and especially as Guernsey did nothing wrong in the process.
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Do not deposit money in a Guernsey bank, it is not safe! The GFSC has no will to do anything to regulate those that trade under its jurisdiction.
The banks know this, they will take your money and run – with no repercussions.
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Hmmm…. reading some of the above comments really makes one’s blood boil.
The comment from Frustrated Voter in particular, when he suggests that it beggars belief that Landsbanki depositors did not do their homework before investing in Landsbanki.
Does Frustraded Voter not think that the GFSC should have done it’s homework too before allowing an Icelandic bank to purchase a Bank in Guernsey and then allow the Bank to offer depositors a parental guarantee that was never signed and now turns out to be completely and utterly worthless?
Does Frustrated Voter not realise that many depositors invested their money with Cheshire Guernsey on long term deposits and were not allowed to withdraw their funds following the Landsbanki takeover?
Is Frustrated Voter truly happy with the performance of his financial regulator?
Perhaps a few more people should examine the facts before posting ill conceived and poorly researched comments on this site. Frankly, as a Landsbanki depositor, my remaining funds have long since left the Island and I will continue to advise others (along with my current financial adviser) to steer clear of Guernsey until it demonstrates an acceptable level of regulation and accountability.
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Frustrated voter.
Absolutely! That is why we don’t invest with them!! At the moment we wouldn’t invest in ANY bank or building society.
Luke B
Sadly you won’t get accountability until you have democracy and Guernsey has some way to go before that.
Thought for the day: investment of money for high returns is like wanting money for doing nothing and we all know that there is no such thing as a free lunch.
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Now thats a suprise – Trott sitting back and letting someone else do the work- for a monumental mistake that he and his cronies LET HAPPEN due to their not doing the correct checks when Landsbanki took over the Cheshire.Its about time Trott and his so called Financial Services Team stood up and admit their failings and do the right thing in paying back the depositors that lost so much money
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JohnG,
Please read again, the comments you attribute to me were made by john T and were ones I was *responding* to.
coyote,
Ah, I see. It’s not LG you’re going on about but ALL banks and building societies. Must be difficult to live without any bank accounts, the way things are nowadays, but good on you if you’ve managed that.
I see you say you bought Premium bonds. Putting your money into a lottery with a chance of winning £1,000,000, eh? Now that’d be one hell of a free lunch!
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Can anybody who invested before the Landsbanki takeover tell me what ( if any ) guarantees were being offered by Chesire ?
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John T says “With this in mind it beggars belief that none of you did your homework and were caught out by investing in Landsbanki”
True, but it is surprising that so many castigate the Landsbanki depositors whilst so many look everywhere to enable them to excuse the professional regulator for not being awake too the well publicised concerns.
David says “there is absolutely no reason for a UK bank to decline that customer’s account. Indeed, to decline is probably illegal if the customer resides anywhere in the European Union.”
I assume John T lives in Guernsey, where he insists he has been able to open multiple accounts in the UK. Two points. One he may have opened his accounts before the due diligence laws came in being and two the issue seems about people in Guernsey opening accounts in the UK. Guernsey is outside the UK..
David wondered why so many in places like the Iberian Peninsula open accounts in Guernsey rather than where they live. Perhaps the answer is that they trust (ed) the British bank rather more than local banks.
Kevin Moore. I think you are too hard on the GFSC when you say they misled over the letters of comfort. I would suggest the truth is they had no idea, until shortly before August 2008, how worthless they can be, and the form of wording needed to make letters of comfort legally binding.
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Stephen
No – I was referring to the dozens of non-local contributors to this thread who claim that they had to use a Guernsey bank account after leaving the UK, but who have not explained why they did not open a bank account in their new country of residence. Perhaps wanting to escape paying tax in their new country of residence had something to do with it ? There are many, many good international banks all over the Iberian Pensinsula. Why not use one of them, instead of Cheshire Building Society/Landsbanki ? Hmmm….I wonder.
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One can only hope that the Deputies realize the serious consequences of their failure to ensure proper regulatory supervision of Landsbanki. The money that I had lost was allocated to my long-term medical care. The decision of the Deputies to refuse help should remain on their conscience forever. I shall never forget it either.
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Stephen John
I do live on the island, and when I inherited funds last year, more than I have ever had before, I looked to invest them.
I had no knowledge at to what to do at the time as it was a big learning curve for me, so I sat down each day on my computer and watched how the World markets were performing.
I could see that there were a lot of warning signs and and I really feared that some of the large banks were going bust especially Barclays where my funds were at the time, and this made it more serious as there was no compensation scheme in place locally at the time..
Therefore I transferred funds to Northern Rock, and National Savings and investments, which were 100 % safe.
I had no knowledge of investments before, but just used my gut feelings and a bit of homework.
I wasn’t concerned with high rates, I just wanted security and peace of mind.
Why others didn’t take more care with their savings beats me.
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David:
I chose Guernsey as I was told, when I left for the US that I could not keep money in the UK. Further to, I was informed that I would be subject to capital gains tax if I brought more than $10,000 into the US and for any reason other than to buy property. Oh, and Guernsey is also where my father lives and I was born in London. Good enough argument?
Perhaps if I told you further that it even recommends on the Foreign & Commonwealth Office website, that you deposit your money in the Channel Islands or the IOM, you might soften your stance a little more?
Indeed, if I had deposited with Northern Rock Guernsey, you and I would not even be having this conversation. The only problem was that Northern Rock precluded depositors who resided in the US, from keeping money with them.
Do you get the picture?
Would you pay capital gains tax on your entire net worth while on a foreign work visa? No. Hence the reason why the UK government recommends you deposit it in a safe building society like Cheshire Guernsey, that when it gets taken over by an Icelandic bank comes with guarantees and assurances from the GFSC that it turns out two years later, weren’t worth the paper they were written on.
Let’s get one thing clear, us British expats, otherwise devastated by the collapse of the bank, are sick and tired of some local Guernsey peoples’ petty arguments.
Let’s not forget that local Guernsey people benefited fiscally from depositors with the bank who resided within the EU and under the EU tax directive, prior to Administration. That’s money that’s paid for local schools, roads and indeed the salary of your local elected government.
Clearly Guernsey was prepared to take the money…and run.
Shame on you for defending such a stance and instead making insinuations that again are not worth the paper they are written on.
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N John
Capital gains tax in the US if you took more than US$10,000 in ? Who on earth gave you that advice ? Before attacking me for asking a sensible question, I think you need to check the tax advice that you were given !
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N.John. You should check your figures re the tax take retained by Guernsey under EUTSD. I doubt the amount retained even covers the costs of administering the tax, so it’s laughable to suggests it funds roads and schools!
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I see Cheshire / LG-saver bashers extraordinaire are still going strong – and have now been joined by John T. But you should all think carefully before making such serious allegations about tax dodging. British expats tend to move around different countries as is their right and free will – France, Spain, Malta, Gibraltar, wherever – but always used to keep whatever savings they could gather in the UK as the safest place to do so – until UK banks and building societies obliged them to move them away, that is.
UK banks recommended the Crown Dependencies as the closest and hitherto safest options outside the UK. There is a slight saving in that taxes are deferred – rather than deducted at source on a monthly basis – but they definitely are paid.
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I meant to say “Cheshire LG saver bashers Greg and David”. Sorry I missed out your names, lads.
John (not John T)
You said “none of the banks in Guernsey are Guernsey banks”. Well, that would be the case if Guernsey were in the EU and banks had ‘passported’ in. But Guernsey isn’t in the EU – or EEA – so all banks are locally-incorporated, GFSC-regulated Guernsey banks. No use trying to blame the parent(s). The GFSC is responsible for regulating them and should have conducted its own due diligence rather than rely on third-party information via the FSA.
You did ask the GFSC some very pertinent questions and say that you got “the standard Parental Guarantee response”. Absolutely right: an 100% Parental Guarantee was deemed by the GFSC to be better than a partial DCS, which is why John Roper always said the latter wasn’t needed.
That is why John T is being disingenuous when he says that “there was no guarantee”. The GFSC didn’t own up to this until August 2008 in a little-publicised Consultation Paper of which few were aware until it was too late.
David
UK banks and building societies do now indeed refuse to open individual accounts unless you have a permanent UK address. A survey revealed that only one or two out of approximately 100 surveyed did so. Try and open a UK personal account as an individual residing in Guernsey with, say HSBC, RBS, Northern Rock (UK), Nationwide, Coventry or Chelsea BS etc etc if you are still a Doubting Thomas.
Finally, you said: “Wouldn’t surprise me if Guernsey stepped in and covered the final shortfall instead of recklessly covering 100%”. Well, the Isle of Man spent £200 MILLION repaying KSFIOM savers. Was this reckless?
I think not. CM Tony Brown and Treasury Minister Allen Bell did the right and honourable thing to try and shore up confidence in their finance centre to the extent possible and, further, a large part of the public funds disbursed will be clawed back via the liquidation.
A small price to pay to 1) help savers that trusted in their jurisdiction and 2) help safeguard their finance centre and economy.
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Toby
Yes Cheshire did give a parental guarantee. The same as the one LBG followed up with. The difference was LBG told us we had a parental guarantee – I still have the documentation – but unlike Cheshire, who had signed the documentation held with the GFSC cowboys in town, LB hf never signed it. The cowboys failed to tell us it had never been signed and LBG kept on marketing the parental guarantee right to the end. If the ’sheriff’s office and his deputies had done their overpaid job and told us LB hf would not sign the guarantee we would not be having this dialogue now. That would still have left Cheshire bondholders locked in to LBG as Cheshire refused to let them move the bonds to the UK with the Cheshire parent and LBG wold not let them cash them in early. Many bonds were due to mature a month after the crooks went bust.
You should further remember that the then head of the Guernsey Financially Screws Cheshire savers, kept on banging the drum as to Guernsey not needing a depositor’s compensation scheme because Guernsey is too well regulated. That was a big a as Chamberlain’s peace in our time!
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David
You are priceless!
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To Toby
Having deposited with Cheshire Guernsey for 10 years prior to the takeover, I will check whether they gave a parental guarantee. they certainly gave a glowing report about Landsbanki in their letter to depositors saying only that they were waiting for approval from the Guernsey Regulator which was expected within the next few weeks.
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Janson Bewey
Priceless maybe, but where’s your answer to my repeated question ?
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Cheshire Gsy sold their business to Landsbanki, what did people expect them to say about the new owner?
With regard to the DCS scheme, this g’tees to repay the first “x” thousand of the eligible deposits asap for each depositor, the balance is subject to the liquidation, presumably the DCS scheme would be refunded first?
Would the bulk of the depositors have got more or less if there had been a scheme in place? Probably the smaller depositors would have got more – the first £50k would have covered them and the bigger fish out there rate chasing would have only got their £50k up front.
I thought I read somewhere that the average claim was closer to £200k? In that case the 80p in the pound looks like a winner for the big fish!
Is the 20p in the pound loss tax deductable against interest earnings? How long can you carry it forward? I’m sure the tax office in each and every juridiction would be pleased to discuss the issue.
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Ed
You said: “Is the 20p in the pound loss tax deductable against interest earnings? How long can you carry it forward? I’m sure the tax office in each and every juridiction would be pleased to discuss the issue.”
What are you on about?
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Is the amount of the potential loss on the deposits able to be off set for tax purposes against the earnings in the prior periods?
I quoted 20p as further up the thread it said that 80p out of each 100p deposited was likely to be returned, hence 20p in the pound loss.
what don’t you understand about the question?
Has the depositors action group questioned their local tax authorities on this matter?
The actual loss could therefore be mitigated against tax payable.
UK tax covers capital gain, what about capital loss? I would expect an offset at least.
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Janson Bewey
I take it from your continual lack of response to my twice-repeated question that you aren’t willing to confirm what now appears obvious. Numerous non-local depositors were willingly suffering the Guernsey withholding tax in order to illegally evade paying the full tax due in their country or residence, which of course is a criminal offence if they don’t declare it.
You’ll be telling me next that they weren’t aware of their tax reporting obligations and that its somehow all the GFSC’s fault.
I assume that the Administrators will be submitting (or may have already submitted) Suspicious Transaction Reports with the FRS in respect of those depositors.
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