LANDSBANKI Guernsey depositors are the worst-affected by the Icelandic financial crash, and Iceland may now never re-compensate the UK, it has been claimed.
Hundreds of thousands of Iceland residents have joined an insurrection proposing that the UK and Netherlands, which lent the country the money to bail out foreign savers when Landsbanki collapsed in October 2008, should not be recompensed.
Over the past year they have become increasingly unhappy about bearing this cost saying it will make their already huge debt impossible.
An article in the Sunday Telegraph business section yesterday said that of all those affected, one group of Channel Islanders was hit hardest.
‘But the worst affected people – even more so than Icelandic and British taxpayers – are the 800 savers in Landsbanki Guernsey who lost access to their entire life savings,’ said business journalist Rowena Mason.
‘They were not covered by the UK Government’s bail-out,’ she added.
‘Last month, they heard that they are not ranked as priority creditors, so they will never be fully compensated.’
Landsbanki Guernsey Depositors Action Group member Neil Dickens said it was up to deputies to help them.
‘It would take just one twentieth of Guernsey’s rainy day fund to make depositors whole and redeem Guernsey’s banking image on the international stage,’ he said.
‘The fund is there to salvage vital business to Guernsey – no surprise that recently retail deposits have plummeted by 25%.
‘The documentary series mentioned in the Telegraph article which discredits Guernsey is gaining international momentum.
‘Moreover, the closing comment talks about the absence of the police in all of this.’
‘At the end of the day Landsbanki Guernsey savers have had to dip into their own pockets to go through the courts and this may end up including the local regulator: the Guernsey Financial Services Commission.’
‘In the meantime, the LGDAG hopes the States comes to its senses’.
Iceland rejects deal Page 18
Article posted on 8th March, 2010 - 2.29pm
70 Article Comments
Doesn’t the GP check any facts before publishing?
The Icelanders have NOT said the UK & Dutch govts “should not be recompensed”.
The referendum was about the TERMS of repayment, primarily the interest rates, not about if the loans (which were unilaterally imposed by the UK & Dutch) should be repaid at all.
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Just confirms the failures of the Guernsey and UK Governments to act responsibly and work out a deal that treats all savers equally. It is not yet too late to repair the damage.
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How much longer are the Guernsey Government, the GFSC and the retail banks going to continue to absorb the world wide adverse publicity that the Island is regularly attracting through the collapse of Landsbanki Guernsey?
We are now into the eighteenth month of this fiasco and the only positive comment we here is “let the Administrators do their job”
I have no doubt that the Administrators are doing a fine job and that they will continue to do everything possible for the depositors.
Retail banking in Guernsey has got to be on a firm footing in order to renew the confidence of both non local and local depositors, otherwise the funds will continue to flow out of this Island.
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Surely the investors knew the potential risks there were in investing in a high interest account such as Landsbanki, if it were that easy to make money with no risk, would we not all invest in high interest banks and leave the normal banks alone
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MBR
There must be at least three or four previous forums that show quite clearly that Landsbanki Guernsey’s interest rates at the time matched up to the average. People have gone to the trouble of laying them out for all to read.
So the National papers are now saying what we have been saying all along, the Landsbanki Guernsey Depositors are the worst treated depositors by their own Government anywhere. What an indictment for Guernsey’s Government to live down and as Eric says, a 25% drop in retail deposits over the last year and the message is starting to move around the world.
Guernsey’s Government is far too busy at the moment making another monumentally bad decision over the waste strategy,by trying to change the decision yet again, so we can only expect things to get worse, far worse.
The GFSC apart from their first letter they sent to Iceland back in October 2008 have done absolutely nothing to assist depositors get their money back. Guernsey’s Government and the GFSC have been a disgrace over this whole debacle and the only answer is an in-depth select Committee type inquiry, similar to that being carried out by the Isle of Man, to establish the true facts. We are not afraid of the results, Guernsey’s Government and the GFSC obviously are.
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I see the common misconception has started again.
MBR we were savers not investors and the interest rates being offered were no higher (and infact lower) than those being offered by other mainstream high street banks at the time. Investors are where money is at risk and can increase or decrease. A saving account in a bank is not an investment but a saving!!
If you decided to put your money in a low interest bank then that is your choice, but personally I shopped around for a decent rate at the time I had money to put into a bank.
If I had constantly moved it around to obtain the highest rate I would not have been with landsbanki but elsewhere.
Paul
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We had our life savings (not investment) in what we thought was a well regulated Guernsey branch of this Icelandic bank. We were assured several times that a parental guarantee was in place, and told not to worry.
It turned out that the ‘guarantee’ wasn’t worth the paper it was printed on, even though the GFSC allowed it to be printed on all the marketing literature! Shame on you, Guernsey Financial Services!!
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When will the Guernsey Government realise it is not good press for the Island’s financial system to constantly be reported in this way? As the amount of money owed to the savers (not investors) gradually falls due to the work of the adminstrator’s in realising assets, surely it is soon approaching the time when the Guernsey government could loan the rest to those who have lost money, then seek to regain the remainder from Iceland…
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Here we go again, a lot of miss information to try and justify depositing with Landsbanki.
Last I was offered 5 % by a Hight St bank whereas Landsbanki were offering rates over 7 %.
From my observations the signs werent looking good for Landsbanki so I played safe.
You invest your money and takes your chance.
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Landsbanki Guernsey depositors have got back 83% of their cash so far. How does this compare with the Isle of Man situation? I’m aware that the IOM Government has promised full repayment for Kaupthing depositors, but have they actually received any cash?
Eric; I think now that we are 18mths into the fiasco, and Guernsey is clearly still standing as an international financial centre, that the States and GFSC aren’t going to do anything. A 25% fall in retail deposits is not a problem, and perhaps even welcomed by many areas of local finance. Retail deposits are not exactly huge revenue generators!
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in reply to MBR many of us actually deposited our money with Cheshire Guernsey which was then taken over by Landisbanki Guernsey, and we had the misfortune to believe the advertising of a parental guarantee and a misplaced confidence in the GFSC. I don’t understand how some people in this Island, which I have always loved, can be so uncaring of retired people who have lost their savings. The lack of political support for our situation has been very disheartening. Islanders should be demanding an independent inquiry into the failure of Landisbanki Guernsey, next time it might by your money, and there are apparently questions about the adequacy of the depositors protection scheme.
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LANDSBANKI Guernsey: Wake up Guernsey, wake up GFSC, wake up Mr Trott and your supporters you are finished as a banking centre. You think times are hard now for the Island, wait for all the money to leave the funds registered in Guernsey and see more jobs go and the legal firms that cream off the top lose their income too. Landsbanki Guernsey was the start of your troubles by not supporting the savers who thought that Guernsey was a well regulated financial offshore centre. Clearly it was never regulated, well only by a bunch of scoundrels.I am pleased that the money is leaving by the boatload soon just maybe you won’t have a bank left to bank in. As clearly the real wealth does not bank and did not bank in Guernsey and were smart enough not to bank with Landsbanki Guernsey in the first place. Wake up Guernsey.
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I echo what others have said with regard to the comments made by MBR. People who put their money into Landsbanki or indeed left their money in the Cheshire Building Society when it was taken over by LB believed they had their money in a properly regulated BANK – not an investment in shares which does carry risk -but a BANK – let’s just spell that again in case the message hasn’t got through B A N K……BANK. Correct me if I’m wrong but a bank is generally a place you DEPOSIT money in the reasonable expectation you might be able to withdraw that money on demand (or after notice). And yes I did spread my money – some went into the Scarborough Building Society – which was paying HIGHER interest. Funny I didn’t hear anyone saying that they were dodgy at the time or am I missing something here….?
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The Icelandic people don’t want to repay those who financed their standard of living (well not on the commercial terms available); the Guernsey Government also will not stand up to be counted when savers have been failed by its regulator and governance; both are small island states; both are dependent on the financial sector for a large part of their income is there a trend evolving?
At least the Icelanders have allowed forensic accountants to pore over the books of Landsbanki Islands and criminal charges are expected – why doesn’t the Guernsey government allow a full public enquiry into what’s happened with Landsbanki Guernsey and similar forensic evaluation take place – what exactly are they trying to hide?
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Like Pontius Pilate, the then governor of Judea, who dismissed his interest in Jesus by washing his hands in a symbolic gesture, so too has the Guernsey Government done the same with its own local depositors in Landsbanki Guernsey – the bank that sank! In doing so, 800 or so local people have had their SAVINGS (not investments)
disappear from under their feet, leaving a great many destitute.
Bearing in mind that many of these depositors were initially saving their money with Guernsey Cheshire, who were they to dispute that Landsbanki Guernsey (authorised by the GFSC and the Guernsey government to conduct business on the island) was anything but a bone fide banking institution?
Compound that with the fact that the Tax Department of Guernsey has creamed off many thousands of Pounds through tax receipts from local depositors, the situation becomes despicable, and illustrates the greed of the Guernsey government. There is an old well-worn saying………what goes around, comes around!
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MBR
If the regulators had done their job, then the risk element, of simply putting your money in a Guernsey regulated bank savings account would not be an issue. The bumph we received about Landsbanki being around for 150 years and having billlions in capital was a smokescreen for something more sinister. Were pensioners suppososed to dismiss all this bumph and do their own in depth investigations?
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The Guernsey government shares much of the blame for the losses suffered by Landsbanki depositors in Guernsey. In 2006 a ´comfort letter´sent to all depositors when LG took over Cheshihre Building Society, assured us that Landsbanki would stand behind LG. then, in 2008 just before the crash, this was legislated out of force without informing us. Would anyone put money into Guernsey now? Show me someone who does and I will show you a fool.
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Was wondering how soon before our old friend and arch LG-saver basher Greg jumped in and, sure enough, here he is – and wrong as usual. He said:
“Landsbanki Guernsey depositors have got back 83% of their cash so far.”
No, Greg, don’t know where you got “83%” from. You are so wrong.
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MRB,I deposited my money with LBG not invested it!
JohnT We can all be selective when quoting rates of interest!Please show us the LBG DEPOSITORS a document that said LBG rates were the higest on offer at that time because all I ever saw was they were mid to higher rates on offer!Will you and your fellow clan please give mr brown and darling some of your wisdom and get the uk out of its current state!!!!!
VBR
Ian
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Good to see the LGAG has roused all the troops to make their one off posts on a topic. Shame they all seem to disappear once awkward questions get asked!
To Calpespain. Your attitude is going to find you lots and lots of sympathy with Guernsey residents……….
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Here we go again, john T repeating his same old stuck-record false misinformation despite the proof that LG’s rates were comparable to other banks (except john T’s it seems) having been stuck in front of his nose.
“From my observations the signs werent looking good for Landsbanki so I played safe.”
So, you agree that the GFSC allowed an “unsafe” bank to operate in Guernsey then. Good. Glad you’re onside.
“Landsbanki Guernsey depositors have got back 83% of their cash so far.”
Cumon Greg, you asked how much so far just a couple of weeks ago and were told: 67.5%. If you’re going to join in these debates please do try and have at least the basic facts to hand.
“I’m aware that the IOM Government has promised full repayment for Kaupthing depositors, but have they actually received any cash?”
No, the IoM didn’t promise that. They put up £179m to *retrospectively* implement a £50k DCS for the Kaupthing depositors, and all those with up to £50k (£100k joint) – the most of them – got fully repaid last year.
Doing the same for LG would cost less than £5m (yes, just five), and would also sort out the most of the LG depositors.
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Here we go again!!
83% has already been recovered with the promise of more to come.
I have every sympathy with those who have lost money but the current attitude of the Icelandic population only confirms the reasons why i removed my money when Cheshire was taken over by Landsbanki. I did my research and didn’t like what I saw.
Cheshire’s parent was UK regulated. Landsbanki’s parent was regulated in Iceland a relatively unsophisticated jurisdiction in financial services terms with a population of only 300,000.
Why risk your money with them? because they paid a little more interest.
Yes the GFSC relied upon the parental guarantee but so did everyone else in other jurisdictions on other Icelandic banks. It is the icelandic population and governemnt who have failed to stand behind their banks.
Maybe the GFSC should have been more aware of the fragility of the parental loan but ALL who deposited their money knew there was no Depositors Compensation Scheme. It was spelt out on the bank’s literature and on the GFSC website.
Also nobody foresore the financial crisis coming and , unfortuantely, Iceland was way over stretched.
If you want to have a go at somebody because of your misfortune then please confront the Guernsey Government but at thesametime confront the Government and population of Iceland who , by voting this week, have made their position perfectly clear.
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Greg
Retail depositors are indeed not exactly a moneyspinner, but given the funding conditions in the wholesale markets are currently very much in demand by banks with high wholesale funding ratios. This is evidenced by the extremely high savings rates on offer relative to quoted money market rates. For instance the 1 year LIBOR is arounfd 1.3% but most savers could get 2.5 to 3% from a fairly reputable bank. (if there is such a thing). As far as Guernsey is concerned although many banks have different income streams there are still a number of banks who rely on upstreaming funds to their parents as their reason for being. ( See all recent press blrb on Clydesdale) Therefore a drop of 25% of retail deposits is bad news for a number of Banks on the Island.
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Greg – where did you get the figure 83% returned – I wish! The only reason I got 6.5% – the same as HBOS was offering – was by tying my money up for 3 years thus freeing myself of having to think about the grubby matter of how I was going to manage in my twilight years – no greed involved – and, I assumed, no risk for how could anyone possibly imagine that an honourable and respected state like Guernsey would allow a BANK to operate in its jurisdiction without ensuring that DEPOSITORS not investors were safe.
If I wanted to make a fast buck I could have gone into the stock market but after working for 45 years I just wanted safety. The irony was my money was in Northern Rock and I moved it to Landsbanki as I did not trust the British government’s strategy!! Well you live and learn.
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Really BORED & fed up of hearing people bleating on about this issue….
YOU chose the bank to put your savings in
YOU chose a higher interest then a high street bank
YOU were not happy with the low risk high street bank
YOU gambled & YOU lost…
Stop blaming the States of Guernsey & the GFSC – they didnt make the choices – YOU DID
Bored, fed up – get over it & carry on living your life…
Take one look at people in Haiti, Madeira, Chile & Turkey at the moment – & then if you still think you are hard done by & the world owes you something – then you carry on bleating…
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Sorry Mark/Frustrated, got my figures mixed up!
Frustrated: Thanks for the IOM figures. However, the IOM had a DCS in place prior to the credit crisis, but it was well known within the finance industry that the scheme was a “joke” (probably like the current Guernsey scheme!). What happens to anyone in the IOM who had more than £50K? Is it possible that the Guernsey sitation is actually better for someone who had say £100K deposited? Or are administrators in the IOM topping up the amounts received under their DCS?
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Ginja, the drop in retail deposits may have an effect on a few banks who predominantly operate in the retail arena, but it’s not going to have an impact on the Guernsey finance industry as a whole. The big players over here won’t let you through the door if you’ve got less than £250K.
And let’s face it, the damage to Guernsey’s reputation amongst retail depositors has been done. No retrospective action by the GFSC or the States is going to repair that.
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I am not really that up to speed on this debate but surely if the Guernsey Government bailed out the landsbanki depositors then eventually the Guernsey taxpayers would eventually have to pay for the bail out?
If that is the case why should Guernsey tax payers subsidise people who knew they were depositing with a bank with no Depositors Compensation Scheme.
Surelypeople with that sort of money should do their research first. Anybody could see that depositing in an Icelandic bank was a lot riskier than depositing in a UK parented bank.
When did Iceland start a Financial Services industry? How many fishermenn in Iceland turned to banking to make a fast buck?
Guernsey didnt lose you your money Iceland did.
If you want to moan then ask the Icelandic people why they have voted against repaying other jurisdictions
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An apology from Greg! I never thought I’d see the day.
It’s the GFSC that’s shirking awkward questions, Greg, not Cheshire LG savers who you so try to malign.
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Greg,
The IoM had a 90% of £15k DCS in place prior, and raised it to 100% of £50k *after* Kaupthing IoM went under, but stomped up £179m to *retrospectively* apply that to the Kaupthing IoM depositors too. Compare that to the handwashing here and I think we can all see where the “joke” is!
Anyone in Kaupthing with more than £50k (£100k joint) has already received back the first £50/100k from the DCS and is and will be getting further amounts from their Administrators as assets are realised.
Their Admins estimate the final recovery for those “bigger” depositors will be 83-94%, as compared to an estimated 85-91% for all LG depositors, although both will take years.
So, pretty much the same, the difference being that, due to the actions of the IoM govt, the great majority of Kaupthing depositors (three quarters I believe) have already had *all* their savings returned and been able to put the disaster behind them.
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Lyn
You asked: “why should Guernsey tax payers subsidise people who knew they were depositing with a bank with no Depositors Compensation Scheme?”
The GFSC assured everyone that a 100% Parental Guarantee was better than a DCS which only pays up to a certain amount. That is why John Roper resisted the implementation of a DCS for many years, saying Guernsey was too well regulated to need one. Indeed, only says before LG imploded the GFSC was reassuring callers by citing the 100% Parental Guarantee.
“Anybody could see that depositing in an Icelandic bank was a lot riskier than depositing in a UK parented bank.”
Absolutely right. That is why most deposited savings with the Cheshire and not a penny in Landsbanki. When Cheshire was acquired by L many were locked into long-term deposits that couldn’t be withdrawn. Others were naturally concerned but (foolishly, in hindsight) allowed themselves to be reassured to some extent by the 100% Parental Guarantee authorised by the GFSC as well as by the hitherto good reputation of the Guernsey finance centre.
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Mark, I don’t have a problem with local’s who lost their cash, or Cheshire depositors who had no choice but to stay with Landsbanki. I hope that they get their cash back, and as soon as possible.
I do have a problem with the ex-pats who come on here, blaming Guernsey for the collapse of Landsbanki and who go on about how they’ll ruin Guernsey reputation etc….whilst not being able to answer simple questions (as put by David, for example) as to why they were happy to pay punitive taxes to keep their identities secret from the tax man. Let’s face it, we all know the reason why….
Frustrated: Thanks for the explanation. So, at present a £100K (sole) depositor with LG Guernsey is in a better position in terms of cash received back that a IOM depositor, but with those roles expected to reverse. Yet small IOM depositors have obviously been put in a much better position. I guess it must say a lot about the two different jurisdictions.
From your previous comment, are you saying it would cost just £5mio to cover the sub £50K investors?
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Mark, i’d be very interested to see the literature where the GFSC state a DCS was not needed in Guernsey because of a parental guarantee. Please could you post a link to your source?
Also, could you provide the percentage of people who’ve lost cash in LG that were unable to withdraw savings from long-term Cheshire bonds? Since the take-over took place in August 2006, it would appear that the vast majority of Cheshire account holders must have had their deposits in bonds over 2 years in maturity, otherwise their bonds would have matured prior to LG going bust and thus allowing the depositors to move their money elsewhere.
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Unfortunately this sequence of events really does show the limits of prudential regulation in the offshore finance centres. Very limited in what it aims to achieve in reality. I’d be looking for no less than AA+ rating for any offshore finance company I put my funds in. The Guernsey politicians (forget about the GFSC) haven’t acted well but then they don’t want to set any precedents for the future. If you are a private investor steer clear of offshore financial centres as they are not fit for purpose compared to the investor protection you get on shore. That’s just the reality.
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Lyn,
“…then eventually the Guernsey taxpayers would eventually have to pay for the bail out?”
Not necessarily, first the States would get reimbursed from the further payouts from the Administrators, and then there have already been a number of suggestions made by the depositors group as to how the end shortfall could be covered, from using the funds the States has already committed to the Guernsey DCS to a one-off tax on the investment banks.
Or, indeed, the States could use the windfall they got in the last quarter as a result of “a higher return on investments than expected”. That £6m would more than cover applying the DCS to LG depositors.
http://news.bbc.co.uk/1/hi/world/europe/guernsey/8553675.stm
“Surely people with that sort of money…”
Sorry, but what sort of money? The vast majority of LG depositors aren’t the private-client wealth-management types you know, they’re normal everyday people with some savings.
The Administrators have told us that two thirds of the depositors had £22m between them; that’s an average of £20k each, not exactly a huge amount of savings considering most are in their 50s, 60s and 70s.
Sure, some of the remaining third will have a lot more, but once you strip out the fiduciary deposits, companies, and other institutional deposits there can’t be more than a few “truly wealthy” individual depositors.
(No Greg, don’t ask :-) We don’t have a breakdown of the non-retail depositors, we just know there are some.)
“…ask the Icelandic people why they have voted against repaying other jurisdictions”
But they haven’t. They voted against the *terms* the UK and Dutch were demanding, primarily the interest rate, not against repaying them at all. They accept the obligation to repay, just not the punative terms.
Greg,
Yes, at present that’ll be the case, although it’s swung back and forth since both went under, and might well do so again as the respective Admins make further payouts, until it finally settles as you say. And, as I say, those with £100k or more will be a small minority.
Re the £5m for a £50k (£100k joint) DCS, yes, at most. The Admins proposed a DCS to the States in the early days and calculated and provided costs under a wide range of interim payouts and ultimate recoveries.
For the current situation as is (67.5% payout to date, 85-91% estimated ultimate recovery), the cost comes to between £3m and £5m.
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Trott should get a job with Guernsey Finance. As the saying goes: “Any publicity is good publicity!”
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Lyn, Tom Jones As has been mentioned so many times : the UK Government will not allow a Brit ex-pat to put their money into savings/deposit accounts in the UK. In case of terrorism or money laundering !
My and my late husband’s savings went into the nearest thing (being stupidly naieve and would you believe, patriotic?)a building society with UK parent company. And in the Channel Islands (again how trusting)
It is so easy with hindsight to criticise those who actually accepted the Landsbanki hf parental Guarantee as it had been approved BY THE STATE OF GUERNSEY financial authorities.
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to WH Bonney + Greg
Couldn’t agree more
to all the Landsbanki investors who clog up this forum
You’ve had your say, several times over, you’ve had a substantial chunk of your investment returned, get over it and stop this tiresome bleating
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Frustrated, thanks for your post. I am quite suprised that such a small amount of monetary commitment by the States would placate so many people. However, your figures do seem to be a bit at odds with those of the Action Group.
http://info.landsbankiaction.org.gg/taxonomy/term/10
These figures state that only 39% of their members have £50K or less with the bank.
(Interestingly enough, they also show Mark’s claims about most LG customers being ex-Cheshire customers to be complete rubbish! Still, I guess we wouldn’t expect much more).
Anyway, if it’s such a small amount then I am rather surprised the States aren’t being more helpful. However, nothing should really be surprising with the current States!
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We will stop bleating when we get 100% of our money returned, as would you if you had lost money in RBS, Lloyds or Northern Rock Guernsey, all of which similarly went bust and instead were rescued by the UK government.
You need to stick to the fact that you live in a country that prides and survives itself on a banking industry that doesn’t stick by what it stands for when the you know what, hits the fan!
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NJ
You say that Guernsey “doesn’t stick by what it stands for…”. It didn’t have a depositors’ protection scheme and LG depositors were aware of that. So how exactly is Guernsey not sticking by what it stood for ? What you are advocating is that Guernsey now does something totally different !
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Greg,
The figures on the LGDAG site are only those of the members of the site that have filled in the surveys, around 160 (see figure below each graph), so are only representative of about 10% of the depositors.
(The LGDAG has a lot more members than that, in particular there’s a lot of mostly elderly no-internet depositors on the island.)
The figures I gave are from the Administrators and so are definitive. Here’s the exact numbers FYI: the total number of depositors in LG is 1676, of which 1086 would be fully paid off by a £50k DCS. I.e. 64.8%. At least some of the 1676 are non-retail (number unknown) who wouldn’t/may not qualify for a DCS, so you can take the %age as an “at least”.
The £3-5m cost is also from the Administrators, but as it’s from a table of costs for wide combinations of payouts and ultimate recoveries that takes up almost a full A4 page I hope you’ll forgive me if I don’t type it up and just believe me!
Regarding the number of locked-in ex-Cheshire customers (of which I am one), we don’t have any definitive numbers (i.e. the Admins haven’t given us that info), so I, personally, can only offer the anectodal evidence of saying that of the scores of depositors I’ve met over the past 18 months, which includes many of the elderly no-internet ones, a very good number (probably the majority, although I didn’t keep a tally!) are in the same boat.
Not scientific or definitive, and must admit to having been a bit surprised myself, initially at least, but that’s the best I can offer on the subject, and as such don’t have any more to say or want to get into a debate about it, it’s just my personal experience, FWIW.
In regards to your last paragraph: indeed, and if you’re surprised you can imagine how the depositors feel and maybe understand why there’s so much upset …
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@ NJ
Firstly Guernsey is not solely dependent upon the banking industry.
Secondly you deposited your money in an Icelandic bank fully aware that in Guernsey there was no Depositors Compansation Scheme.
I had deposits in Cheshire but did not like the risk of an Icelandic bank supported by a population of 300,000.
You should have undertaken your own research.
If you want to blame somebody then go to Iceland and ask the population there why they wont honour the debts of their banks. They have used the money on their lavih life styles and improving their infrastructure.Did you not ask yourself how an Icelandic bank could support the interest being paid on the deposits?
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@ NJ
If we follow your arguement about RBS, LLoyds and NR Guernsey then you definitely should be looking for Iceland to refund your money.
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Is it known for sure:
the UK will not allow any LBG losses as tax deductable for UK tax from the years that the money was “locked” in after the CGL buy out?
Have the action group written to the UK gov stating their tax numbers and asking them to look at all the implications for them?
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ED
Landsbanki G attracted deposits.
Buying shares in a bank is investing and attracts capital gains in the UK. Losses, when shares are sold can be deducted from capital gains.
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Extract of letter posted on Landsbanki depositors site.
“In September 2006 we got a letter saying that Landsbanki had taken over Cheshhire Guernsey and that:
‘For your comfort and security, Landsbanki has given an undertaking to honour all the obligations of Landsbanki Guernsey.’
This reassured us. In March of this year (2008) we read in The Week that Landsbanki was shaky. We arranged accounts to move our money into the HSBC. We went to the Landsbanki office in Hong Kong to arrange the withdrawal of our funds. The staff there reassured us, telling us that Landsbanki had recently been voted Bank of the Year, they told us that the Icelandic government guaranteed our money.”
Well I never. so it was common knowledge that there were troubles with Landsbanki in March 2008, and that staff were confirming that the Icelandic government would guarantee deposits.
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“The Joint Administrators also note that the GFSC do hold a signed Letter of Comfort from LIHF, however as the GFSC have stated this is not and was never intended to be legally binding.”
So if it was only meant to con the unsuspecting public into parting with their deposits, it can only be described as a deliberate act of deceipt.
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Greg
I see there’s no let-up in your crusade to smear Cheshire LG savers as tax dodgers, which is clearly not the case. Come here and see for yourself. I can show you all the tax-paid papers so stop your incessant smearing as it’s in danger of becoming your full-time job.
All
Clearly it was a big mistake to heed UK banks’ request to move savings to Guernsey when no longer UK-addressed but then most didn’t have much choice if they wanted to remain in sterling and be as close to the UK as possible. Jersey didn’t have building societies. Isle of Man was an option which in hindsight would have been much safer in light of the Isle of Man’s honourable action in launching a public inquiry and repaying most savers with public funds.
However, each bank only recommended its own Crown Dependency operation. In my case it was Woolwich in London which moved my account to Guernsey (which I had never considered) when I no longer had a UK address and then I moved it to Cheshire (not a penny directly in Landsbanki) when I visited Guernsey and saw an ad for the Cheshire in the Guernsey Press.
Guernsey’s Chief Minister doesn’t know how to run a finance centre and his regulator, the GFSC, has proved to be more than disingenuous regarding the 100% Parental Guarantee as we all now know. Chief Minister Trott is here in Gibraltar at the moment with an entourage of three others (bigger entourage than he took to Mexico, USA, China etc) desperately trying to find out how Gibraltar’s finance centre is run and hoping to copy its tax system.
I think that instead of globetrotting he should stay in Guernsey and sort out the LG problem for once and for all if he really wants to salvage the reputation of its finance centre.
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So, john T, as it was “common knowledge” you agree then that the GFSC should have required LG to eliminate its exposure to the Landsbanki group, in order to ensure the stability of a bank in its regulatory jursidiction. Good. Glad you’re onside.
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Frustrated VOTER
I am on your side as regards getting your money back, but I just don’t want my taxes used for that purpose, and if it was common knowledge the bank was shaky why did everyone go with Landsbanki.
There was no compensation scheme in place here at the time, so Guernsey owes you nothing.
Just why you don’t chase those responsible in Iceland beats me.
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john T,
I agree, and if you read above (up a few screens, my response to Lyn) you’ll see that there are several ways LG depositors could be helped *without* using our taxes.
And as has been pointed out many, many times, a lot of depositors didn’t go to LG, they were already in it involuntarily and were locked in after the GFSC allowed a bank we’d never heard of to take over the Cheshire.
As for those responsible, Landsbanki Guernsey was a *Guernsey* bank, a stand alone subsidiary, and as such the people responsible for regulating it were the *Guernsey* Financial Services Commission. It wasn’t a “branch” of an Icelandic bank (like, e.g. Icesave in the UK was). Look up the difference between subsidiaries and branches, and the respective emphases on “host” vs “home” regulation.
You seem to be under the common misconception that LG upstreamed all its funds to Iceland. That’s just not true; less than 10% of LG’s assets were in Iceland, the rest were in the UK. Over 25% were in that really dodgy institution, the Nationwide Building Society, and over 35% were in UK property loans.
LG had assets exceeding liabilities by about twice the less-than-10% that was in Iceland, so could have well survived the Icelandic collapse alone.
In spring 2008 the GFSC did actually wake up and get concerned about Iceland and required LG to diversify away from it (see Foot Report), but it then promptly allowed them to put some 25% of their assets into the Heritable UK – another subsidiary of Landsbanki Iceland! Doh!
It was the placement in Heritable that was the cause of LG going into Administration, not that in Iceland. The Administrators made that clear right from the beginning.
Go to http://info.landsbankiaction.org.gg/node/10 and click on the “statement by the Administrator” and “news release from Deloitte” links to read it from the horse’s mouth.
(The “Liquid Interbank Placements” in the latter were the assets in the Nationwide.)
Every time you say everyone should have known you highlight the regulatory failings of the GFSC (who, as the regulator, should have known best of all), in particular the utter stupidity of being concerned about Landsbanki Iceland yet allowing LG to place funds in another Landsbanki subsdiary, rather than requiring them to eliminate their exposure to the Landsbanki group altogether (or at least take it down to a survivable level).
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If all it takes is Five million to bail out most of us Landsbanki victims then Guernsey should realise this is a small amount to pay to stop those of us, myself included, from spreading the message at every possible opportunity…..
Guernsey is not the safest place to deposit your savings..FACT.
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To Frustrated Voter
An excellent and well reasoned factual argument. If I had any doubt about the justness of your cause, they are now dispelled. Shame on our shambolic Guernsey government and its blotted, incompetent civil service. These facts have stopped me in my tracks. There will still be detractors, but they will be the ones who cannot read the whole case effectively or understand the premises and validity of the argument. The CM included!
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Yes Joe but I’m afraid I’m with John T on this one. I never made/told any of the Cheshire/Landsbanki Guernsey depositors where to invest so why should my taxes be used for a bailout?
Had all of this never happened and in 20 years’ time as a struggling pensioner myself and others asked Landsbanki depositors for financial assistance I’m guessing the answer would end in ‘off’…..
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joe baggot
You obviously don’t get it do you?
Threats (or maybe it could be a hint of blackmail) do not work within this wider scenario
Oh, by the way, given your claim to be French resident, would you care to tell us where you pay your taxes on your interest income? Depending on the answer, perhaps the French Government could bail you out!!
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Landsbanki depositors – It is obvious that the Guernsey government is not going to help you, surely it is time to get over it and move on!
You are lucky you had any money to invest in the first place – most of us don’t!
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I know this is going on and on but throughout all these comments something does puzzle me.
Landsbanki depositors are asking for a bail out from Guernsey and assuring us that by doing this the tax payers will not have to pay a penny, as we will be repaid by the administrators when it come through.
Well if that is the case it must be that the depositors are convinced that they will eventually get the 100 % of their funds returned.
Am I wrong, if so please explain.
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There is little point in arguing with the LGDAG. They are simply playing the game. What else should we expect? We’re never going to hear them say “thank you for explaining what a deposit is – yes you’re right it IS an Investment with associated risks, if only i’d taken more care”; we’re never going to see them with their hands up saying “it’s a fair cop – you were right all along we were rate chasing and got caught with our pants down…” They have set out their stall and they will not climb down.
It’s a bit like arguing with creationists – no-one will successfully convince them that creation is baloney, although i’ll bet deep down that like the Landsbanki lot they know they’re flogging a dead horse but to face that admission is a massive undertaking.
So the LGDAG will continue to argue with some voracity. The more they argue, the more their perceived influence will weaken. Eventually they will disappear which is a shame as I have enjoyed reading their misguided ramblings.
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john T, no, didn’t say that. Please re-read the first two paragraphs of my response to Lyn, the bit which talks about ways the States could cover “the end shortfall” they don’t get back from the Administrators without using any of our taxes.
I.e. they’d get partly repaid from the Admins and the rest from the no-you-and-I’s-taxes ways such as those mentioned.
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Frustrated VOTER your comment.
“Not necessarily, first the States would get reimbursed from the further payouts from the Administrators, and then there have already been a number of suggestions made by the depositors group as to how the end shortfall could be covered, from using the funds the States has already committed to the Guernsey DCS to a one-off tax on the investment banks.”
1, No one knows how much is to come from the Administrators.
2, DCS was not in place to cover Landsbanki.
3, Why should Investment Banks support Landsbanki Depositors ?
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John T
You said: “There was no compensation scheme in place here at the time”. True, but there was a 100% Parental Guarantee in place authorised by the GFSC. That was a policy decision to attract savings to Guernsey in the first place. Can’t you see?
Right up to the LG implosion the GFSC was reassuring concerned savers who telephoned them there was nothing to worry about because of the PG, which was deemed to be superior in coverage to a DCS. Mind you, the GFSC would have been terrified of saying anything else and spark a mad run on the Guernsey bank.
KD
Wouldn’t only be your “taxes”, which make up a minority share of public funds. Also comprised of corporate tax, excise tax, income from Govt-owned properties and other Govt business etc. So don’t worry unduly. It’ll be worth it to salvage the reputation of your finance centre and economy.
I for one would certainly vote to assist “struggling pensioners” if the genuine need arose and the state was unable to assist you. I am sure most LGDAG savers would too.
Kevin
For the umpteenth time: didn’t “invest”. Deposited.
AC
Interesting parallel with creationists. Good one.
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john T,
Sigh. You know one of the things that makes it really difficult to have any sort of informed discussion is when basic simple facts have to be repeated again and again and again.
People say LG was offering much higher rates than any other bank, and that’s been demonstrably proved to be not true, yet people keep on saying it.
People assume most of LG’s money went to Iceland, and that’s been known not to be true since the Administrators made their first press release a year and a half ago, yet people keep on assuming it.
And now you say “No one knows how much is to come from the Administrators” when the ultimate recovery range is listed twice in the comments on this page, was listed in the comments on the last LG article a couple of weeks ago (which you posted in), and was reported by the GP itself when it was announced.
It’s not only you, and it’s not only the things above; the list goes on. I’m not talking about complex points of law or the like, just simple basic facts.
I’m happy to elucidate on (and provide references to) facts that haven’t seen the light of these columns before, but this need to keep on reiterating the most basic of them again and again and again just makes having informed discussions all but impossible, and certainly very tedious.
Now I could give an answer to your points, I certainly have one, but as you haven’t kept even basic facts to hand that tells me that you’re not really interested in having a genuinely informed discussion, just in expressing your opinion on which you’ve already made up your mind.
There’s nothing wrong with that, you’re perfectly entitled to your opinion, as we all are, and I seriously doubt anything I say will change that – and I’m sure you probably feel the same of me.
So, let’s just be honest and say we’re of differing views and leave it at that.
If you want to think of this as a cop-out, so be it, believe what you like. I just don’t seen any point in us wasting each others’ time (let alone on repeatedly reiterating basic facts).
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For how many times will I read these lines
Unbelievable what has occurred
Could this happen anywhere else in the world
Knights in shining armour were promised
Is it possible that Guernsey has some morality
Not likely
Good luck for the future
Returns will be down
Everyone now knows
That Guernsey is not a place for a safe deposit
Absolutely disgraceful
Really should do more
Don’t deposit nor invest
Shame, shame, shame
Good people who worked hard
Understood that their money was safe
Experts assured them so
Rest assured this was not the case
Now or never is the chance to undo the damage
So, please do as all the rest of the world have
Every little bit helps
Yes, every little helps…
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The GFSC is now claiming that retail depositors ought to do their own analysis of banks’ financials to convince themselves that the bank of their choice passes the mustard.
Err… what are the GFSC guys there for at the considerable expense of taxpayers?? This definitely confirms,if needs be, their social uselesness.
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The bad faith of a handful of contributors to such forums, eg MBR and John T, is just astonishing…
It has been documented time and time again in those forums that interest rates offered by Landsbanki Guernsey, although competitive, were not the highest of those offered by some leading offshore and onshore banks. And here we go again… those guys keep referring to the simplistic and fallacious argument that depositors picked an obviously too high rate.
If you want to keep participating to such forums, it would help adopt some intellectual integrity to progress this debate. And if it is above your means, well, abstain from making unconstuctive comments.
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Just why is it that these Landsbanki depositors cannot be reimbursed like all the other depositors who fell foul of other banking incompetances…………? Is it the fault of the Guernsey states who are not admitting their faults, is it Iceland, or Mr. Brown’s government who are again dodging the issues?
Cheshire Guernsey was a UK bank, so why doesn’t the UK hurry up and bail out these pensioners. These guys have NO money to live on!!!!!!! disgusting politics
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Guernsey positions itself as a centre for offshore banking. Banking is based on trust and this therefore means ensuring the security of deposits.
The States “solved” the problem by deciding that retail depositors (including 600 local voters) are small fry and they can therefore wash their hands of Landsbanki depositors. So much for the trust put by those depositors in a “highly regulated centre”.
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Excellent point, P Lucas. Why are taxpayers, and probably the banking industry, paying the GFSC’s clowns for? Their latest stance would be funny if it wasn’t for the 1,700 families whose lives were wrecked eighteen months ago.
Let’s sack them all and use part of the money to refund the Landsbanki depositors. And let’s return the rest of the money to the taxpayers. Those GFSC guys are a waste of space and money. Enough!!! TAXPAYERS WANT VALUE FOR MONEY, IN ABSENCE OF ACCOUNTABILITY AND INTEGRITY.
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Dear Guernsey,
Pay the bill.
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