Only one answer on bank plan
Friday 24th October 2008, 2:29PM BST.
OVER the last few days, Opinion has looked at some of the downsides of Guernsey introducing a protection scheme for depositors, certainly as far as savers are concerned, and questioned the benefits of a limited package at a time when others are offering a ’100% money back’ guarantee.
And the prospect of the island being seen to trail the other offshore Crown Dependencies when it comes to customer care appeared to increase yesterday with the Isle of Man preparing to spend £150m. of its own money to help those caught up in the Icelandic bank crisis.
Yet there is also a strong argument against having any depositor compensation scheme at all because of the nature of the banking sector here, which is in three basic parts.
The first comprises the subsidiaries of major national banks, which are now likely to receive central bank support in the event of difficulties and the customers of which therefore do not need any further protection.
The second is the international banks attracting substantial deposits from corporate and other high-end customers for whom the proposed £50,000 compensation cap is so low as to be irrelevant.
The third tier consists of the Landsbanki-type operations, which gather lower-end deposits and upstream most of that money to parent banks and are thus exposed to whatever happens to the parent. While customers of such operations definitely want a DCS, the banks themselves provide limited benefits to the Guernsey economy and employ very few people, probably no more than 100 or so, but pose the greatest risk of default and reputational damage to the island.
Quietly remove such operations and the need for a protection scheme goes away or, if current events mean a DCS is an essential item in the PR toolbox, then the remaining banks would be far more relaxed about supporting such a system.
And whether Guernsey should follow the Isle of Man thinking on helping savers ultimately boils down to this: Should depositors chasing higher returns from a little-known bank be compensated by taxpayers at the expense of, say, starting to rebuild Les Beaucamps School?
There really is only one answer, no matter how much sympathy islanders have for the Landsbanki savers.
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Guernsey Press
The way our authorities are dealing with our own financial crisis is despairing.
Every time we fudge and delay we achieve nothing except more detrimental publicity internationally.
In fact our PR is a complete walking disaster.
Has any other jurisdiction used as an excuse for inaction, the fact that they need to spend their money on schools.etc ? No, because there is a much wider picture. In Guernsey, do we want the picture of us to be viewed as staunch defenders of those who trust us with their investments, or do we want to be viewed as turning the other way and not being bothered about confidence in us.
Guernsey does need schools and many other facilities, and like the UK government and other jurisdictions, we will have to find a way of paying for them.
This is not an .. either or .. situation.
It is one where political leadership of the highest stature is required.
The Landsbanki situation required decisive action to protect the reputation of Guernsey as a well managed financial centre. We did not get it.
Many of us have been calling for an independent enquiry , not one directed by the GFSC, and it is time the Policy Council made an announcement in this respect. The Landsbanki situation is not straightforward to resolve but Guernsey’s reputation is. None of us surely want this downhill spiral which those in authority seem to taking us to.
The depositers’ protection scheme is an example of where we have too little, too late. There is no excuse because those who gave submissions back in August had the answers then and certainly the Guernsey Press is aware of those submissions which had realism and foresight. Other jurisdictions have made it clear that they will not allow depositers to be let down. Why don’t we want to give investors confidence in us ? Have some of politicians and those in authority some form of death wish for us ?
The statement by our Chief Minister has to be compared with previous comments by him, which have been contradictory, misleading, and certainly not designed to inspire confidence.
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The author of this article needs to consider the damage to Guernsey’s reputation if it becomes known as a place depositors lose cash.
Nobody will care too much exactly whgich depositors and when, just the fact that anyone has lost a penny (if they do) will ruin the reputation of Guernsey.
Observe the “Gravestone of Guernsey” picture on this page: http://landsbankiguernseysavers.co.uk/BanksInGuernsey.html
Do you imagine that reputation will fade away if Landsbanki depositors do not get their cash back?
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There’s nowt so strange as folk.
We are seeing some Landsbanki depositors trashing Guernsey by every means at their disposal, and trying to do as much damage to the people of Guernmsey as possible.
Presumably these people who are doing their best to damage the Guernssy population are at the same time seeking their help, either by pressure on deputies, or by making up their financial loses.
Funny old world.
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Stephen
A very valid point of view. Trashing Guernsey and its politicians and regulators, who do a man (and woman) will have sympathy I am sure for all Landsbanki depositors, is hardly going to work in their favour although their ire and frustration are fully understandable in the circumstances.
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Stephen John
The authorities have made it clear that they have better and more important things to spend their money on. Haven’t we all. I would rather like a new range rover. Are the people that rely on me to pay my bills going to swallow the fact that my desire for a new 4×4 is more impoprtant than paing what I owe them. Simple answer NO WAY. You appear surprised the investors are trashing the reputation of he island. Would you expect anything different. Maybe they sould be making recomendations to their worst enemies to make deposits in the hope that there will be a turnaround.
I say good on those that are doing what is needed to get back what should not even be need to be debated.
A bank is just that. The authorities are making it sound like they are bookies and wash their hands with the whole affair. If this carries on for much longer this island will take a long time to recover. Before long the only deposits being made locally will be into the toilet bowl.
Keep up the good work Landsbnanki Losers because it is the only way that you are going to win at the end of proceedings. I am just surprised the consortium that has been set up has not approached the tabloids to air their grieviances further.
This is a situation that the people in power, or lack of it, has no control over due to the fact that they are arrogant, self fulfilling and greedy. Hopefully we will take stock of who is good for us and who is not. Deputy Trott to go. GFSC to ansewr its failings in a court of law and islanders able to trust once again.
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Paul
You say I appear surprised the investors are trashing the reputation of he island.
Partly correct, but I wondered why thos who trash Guernsye expect a payout from the island.
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Stephen John
Simple answer because it is well regulated and should protect against this kind of occurence. I believe that the consortium should carry on with what they are doing relentlessly and shift things up a few gears. Take the GFSC to court and then they will have their hand forced into coming to a satisfactory conclusion. Surely they have liability insurance to protect them from this kind of scenario? If not why not?
This is a very greedy and secretive island. People on the make will scratch the back of those that are feeding them then as soon as the food stops out comes the daggers. Guernsey has been living well and truly above its means for far too long and now we will need to find our own level. I am excited by this, it wont be all doom and gloom. If it is noted how much money deputy Trott has wasted on overspends this would have gone some way to paying what is duely owed.
This island is disgracing itself more and more. It is anybody’s wonder what the next bomshell will be. This DCS is just PR for the sake of it. I would like to now where the money will come from if things go the same way as they are now. Will it be a case that the GFSC will actually start doing a proper job?
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Right, so they expect a payout from a well regulated island.
Yet, they still trash Guernsey.
Rather a daft strategy when the object should be to win friends,
Funny way of winning friends.
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Stephen John
Win friends? Where did you get this from? These so called friends have made it clear that they have got other priorities to put money into. Where is the friendly nature in that? Depositors have been hung out to dry. The authorities have got a funny way of showing that they are working for the electorate when they turn their backs and concentrate on high net worth individuals that would need to be a bit simple to invest in a place that can’t even look after its own peoples money. What is worse still is the fact that we are the last place to be doing anything positive inorder to wrap this embarassing sham up.
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Whilst I recognise that my fellow tax payers and the Guernsey government may find it unpalatable to support the poor people who have lost their savings in Iceland savings accounts, surely the reputational damage to Guernsey represents a far bigger risk. There has been some press coverage about this issue, but relatively little from the Ministers involved. A capped compensation scheme, maybe at 50K to match the UK scheme, would have less downsides for our government/ banking industry. If if just topped up whatever could be regained from the bank’s own funds, to make up the shortfall, this could represent a fairly small amount of money spent, yet massively increase the reputation of our banking industry.
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I have a better idea – lets all go to Fermain and stick our heads in the sand, it’s free.
Apologies for the flippancy, but how can you expect people who have lost money (and even those who haven’t) to sit there and say ‘yes, place your investments here – it’s a great place’ when the actions of the Guernsey Govt have not assuaged any concerns.
The whole point of freedom of speech is about having a balanced view of how you see things.
I think sometimes it is important for a Governent / Minister / County / City / Bailiwick to get a slating in the paper, whether it be nationally or internationally as if this does not happen, and people are not held either accountable or made to sit up and take notice then things will go on, and on, and on as they have always done.
This is in bad taste, but look at Jersey with the recent horrors of those poor children (and some now traumatised adults). Would it be appropriate to try and cover that up? Of course not. Has Jersey suffered with it’s reputation – darn right. But think about this – if you were one of those people affected would you want it covered up, I expect not.
It’s easy to pontificate and tell people to keep quiet or ‘guernsey’ will suffer – well sorry, but so it bloomin well should. If it fails to manage expectations properly then it should reap what it sews.
If I speed at 50mph in my car along Lancresse I expect to get a ticket / fined whatever from the Police. Would it be fair? That all depends on your point of view – most people would argue about time of day, children etc. However if it was a Policeman doing 50mph there would be UPROAR if he didn’t get prosecuted.
Bias is a strange thing, I suffer from it, as does everyone, but sometimes getting some international negative publicity can be a good thing – some investors may not have ever considered investing here before, but now it’s on the world stage – imagine if Lyndon (I’m off for a Jolly) Trott addressed this epmhatically and used it to Guernsey’s advantage? It would work in out favour. Just requires some lateral tought.
Have a good weekend everyone.
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David
Some very interesting comments!
With regard to the jersey abuse saga do you think that the world would have received the information at such a direct and truthful nature had it not been for Senator Stuart Syvret? We need people like him on this island. Without him I am quite sure that the whole situation would have been swept under the carpet and forgotten about. He Should stand for jerseys CM. He has my utmost respect and I feel that a lot of people in the C.I. and abroad feel the same way. He took on the system and did not bow to any pressure. Respect to the man.
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