‘Never say never’ on States help for Landsbanki savers
Tuesday 25th November 2008, 1:00PM GMT.
At Frossard House yesterday are, from the left, Jersey Landsbanki depositors’ representative Eleanor Monaghan, Gary Blanchford, Eric Graham and Landsbanki Guernsey Depositors’ Action Group chairman Neil Dickens. (Picture by Tom Tardif, 0676144)
TAXPAYERS’ money might be used to help out-of-pocket Landsbanki investors after all, it was claimed yesterday.
Landsbanki Guernsey Depositors’ Action Group chairman Neil Dickens said Chief Minister Lyndon Trott had suggested the States might help to make up any shortfall if the Icelandic government did not deliver.
‘I asked him whether the States would perhaps help make up the difference if the Icelanders do not come through on their parental guarantee and he responded, “never say never”,’ said Mr Dickens.
He said the group was encouraged to know, at last, that something had been going on behind the scenes, although members would have been a lot better off had they known sooner.
At a long-awaited meeting at Frossard House, Landsbanki depositors met Deputy Trott, Treasury and Resources minister Charles Parkinson and States chief executive Mike Brown.
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So what can taxpayers expect in return Mr Trott?
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Why should we as tax payers bail out a private bank, and pay it’s debts ?.
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The outcome of this meeting yesterday was welcomed by us Landsbanki depositors as a step forward. My wife and I hope that the Deputies will continue to fight our corner. Were the states of Guernsey to help financially that of course would be a great help for us all.
A word of advice to your contributor MELEC (25th)
Firstly, the financial industry is of great importance to your island, what else do you have apart from tourism ? Your wealth depends on your reputation as a financial centre, not at its’ best right now. You could do worse than to encourage your government to help us.
The Landsbanki Guernsey victims number over two thousand. What message do you think they are spreading right now ? It will snowball
as we get more and more publicity.
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I’m getting a little bit miffed with the inferred threats by Landsbanki customers about how the good name of Guernsey won’t survive unless all of it’s decent hard working tax paying citizens step up and re-fill their pockets following THEIR decision to bank off shore with a foreign bank. I’m also a little peeved at the spineless mutterings of our politicians about maybe helping out with tax payers money, they should stand firm, be unpopular but true.
Tax isn’t a gift from the people to the government, it is our investment in our social infrastructure, it isn’t the governments money to give away to private investors, it is ours to be invested on all our behalf’s.
Tax take isn’t a limitless safety net for those that make their own decisions, their own choices and, regrettably, their own mistakes…otherwise we wouldn’t have a free market economy.
It is dreadful what has happened to many people following the economic downturn and I sincerely hope they do get recompense, but is it right to expect those that are already feeling the pinch should divert their tax contribution to line the pockets of others? Guernsey has enough charity cases of it’s own looming such as a sewage treatment facility, waste to energy plant, schools, etc and they are far more deserving of the tax payers contributions.
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I am with carts here, i realise nothing has been said by wannabe overlord trott to guarantee our tax money to landsbanki savers, but by saying ‘never say never, he is either considering it or just too spine less to tell them the truth. I am simpathetic to their loss and would expect the states to do everything it can to help them negotiate their money back, from the bank that has messed it all up not from the states of guernsey. you decide to place your money where you place it, it is your responsibility, your problem if it asll goes wrong. tax money is to be spent on the island not bailing anyone out who lost out on poor investments. times are hard right now, if your investments had made a pile of interest and you had done very well out of it you would n’t give an extra gift of thanks to the states pot to say thanks for being a tax haven would you? and like carts says, stick your veiled threats about guernsey’s reputation, it’s dull.
sympathy for your cause is running out the more threats you dole out.
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I echo Joe Baggot’s thoughts above.
You Guernsey folk are happy to spend your tax money funding Trott country hopping around the orient with his gravy train buddies? But you don’t want to see the reputation of your Island salvaged?
Detractors: Please read and learn here: http://landsbankiguernseysavers.co.uk
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There is one deputy who had a substantial amount of money in Landsbanki
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Dear fellow readers,
Let us at least agree, that were it not for the numerous deposits which ex-pat UK citizens such as myself, (and those from other countries) choose / have chosen in the past to deposit their hard earned savings in branches of banks / building societies based in the Channel Islands, (i.e Guernsey) Guernsey itself would infact be little known and certainly far less prosperous a place. Simply put, without offshore deposits and the banks which operate on the island, Guernsey would have no real industry of any value, no significant means by which to generate income and consequently far, far fewer financial reserves and/or resources with which to support the lives of its inhabitants.
Tourism and fishing as industries simply cannot compete.
With the above inmind, I should like to make the following points for your consideration:
Firstly -
A sincere and heartfelt thanks to “The Guernsey Press” for keeping this issue “in the news” and not allowing it to drift away into some dark and possibly difficult to access area of the archives. The articles which it continues to publish relating to this shocking event continues to do much to keep the flame of hope alive for the many people who continue to hope that one day soon their savings shall in some way, by some means be recovered.
Secondly -
The depositors who plaed their savings in Landsbanki Guernsey did so because they trusted that Guernsey was a place where offshore deposits would be safe. They did so in the belief that Guernsey was a place where banks would be properly regulated and their operations supervised.
Guernsey gave Landsbanki permission to operate a branch on Guernsey and in so doing, it appears to me that they also accepted the responsibility to ensure that the operations of the branch of the bank which was located on Guernsey performed in such a way as to avoid the recent failure.
Having failed to ensure that the banks operations on Guernsey were performed in such a manner so as to avoid assets being transferred to other locations where they would be beyond the reach of the local branch should something occur neccesstitating them being utilized by the branch itself, it is
a)all too clear that the State of Guernsey has every reason to simply stand up and do all that is possible to recover those monies which were clearly “guaranteed” by the parent company of Landsbanki Guernsey in the advertisements and promotional information which was constantly available for review before and indeed immediately after the collapse of Landsbanki Guernsey itself.
or
b) that should they be unable to convince the Icelanders to do the right thing, that it then falls upon the state of Guernsey to do the right thing in their place.
That is, use whatever funds are at their disposal to provide appropriate compensation to the customers of Landsbanki Guernsey who have so far received only 30% of the monies which they had invested and then pursue whatever international avenues are available to them to recover the resulting financial loss to Guernsey from Iceland with the assistance of the UK government.
Lets face it. Guernsey did and does still promote itself as a well regulated, safe and secure offshore location to choose when selecting a duristiction within which to deposit funds. As a result, people chose and continue to choose Guernsey as a place to depsoit their savings.
Should the savings of these Landsbanki Guernsey offshore depsoitors not be returned in full soon with the visible assistance and if neccessary financial support of the government of the island, who in their right mind would choose to continue believing that Guernsey is a safe place to deposit funds when other similar duristictions are seeking such funds and are willing to offer better guarantees. Guarantees which have already been lived up to in full, (example Kaupthing Edge IOM).
Guernsey. Stop messing around. Face tup to yoru responsibility and bite the bullet. It will be tough. But the GOOD PRESS from your doing the right thing promptly without any further production of delaying cods wallop wil in itself guarantee further depositis and your survival as a place of good reputation where offshore funds might stil be depsoited safely in the future.
Do the right thing Guernsey! Your future depends on it.
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To those that feel it is not up to the taxpayer to bail out the savers. The simple answer is that whilst it is unfortunate for the taxpayer to shoulder the burden. The reality is it would cost the Island and us taxpayers much more not to.
People are responsible. As usual those that are wish to remain quiet for fear of inflaming the situation further.
Our CM is now happy to contradict himself! We were all lead to believe is was Schools and Health.
Now it seems to be a different story?
Never say never. This should be a question that those who know they hold responsibility should understand. It won’t be much longer before legal proceedings start.
Yet more big headlines to show the World how incompetent we are at banking and with racism allowed to be aired public to boot.
Day by day this Island is being fed to the dogs. It is happening in public. Now too many people have been impacted. It won’t be just another lift the rug and a quick couple of sweeps and nobody will be any the wiser.
If the depositors do receive a full 100% payback which I am 100% confident they will. We will need to question why a CM would wish to discredit the Island that he claims to control?
Anyway how could happen when he is in control?
Or is it going to be the case that it has been a positive reaction? What with all the free media focus business is booming but we still need further taxes out of you?
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To landsbanki saver…you mention “our tax money”…like we were being mean for asking not to get involved in fixing your problem and, again, another threat about Guernsey’s reputation, although I’m not sure that Bernard Fluke-eh might have already beaten you to ruining our reputation.
As an informed investor, who was bright enough to realise that Landsbanki were paying better interest than every other bank (wonder why?) you surely must have realised that there was no investor protection from the Guernsey government but, fully informed, you made your decision based on your personal interests and needs and, now that it has gone sour (which I sincerely regret) you want someone else to foot the bill…isn’t this a bit like expecting the police to pay for your car when it gets stolen instead of claiming on your insurance?
If there is a legal case to be answered then it should be tested and, if Guernsey PLC is liable then we will obviously abide by that decision..
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carts
Very well said.
I am cheesed off with all the comments by Landsbanki customers and especially those residing outside the island, insisting that Guernsey bail them out.
I chose not to invest with Landsbanki as I did my homework and wanted security rather than high interest rates.
As for those living off the island I wonder how many of you are contributing to our finances from which you are now wanting a bail out.
It has been said so many times before, you chose to deposit where a compensation scheme was not in place, that was your choice.
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Carts
Will you PLEASE stop saying that we invested in Landsbanki. We didn’t.
Most of us deposited our hard-earned savings in the Cheshire Building Society’s Guernsey operation because, no longer having a UK address, we were prevented from saving in the UK.
However, we did all make a very serious error of judgement. We failed to close our accounts the moment we learnt that your regulator had permitted the sale of our savings to a foreign bank that most of us had never even heard of.
Instead of apologising, your regulator, the GFSC, has now commissioned an expensive report to exonerate their massive blunder.
The States should not let the GFSC get away with this.
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Quite right Muzeek, you took the words right out of my mouth.
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Mark
Landisbanki took over the deposits of Cheshire in 2006! Thats two years before this current debacle.
All the depositors according to the GFSC statement were informed that this had happened so why didn’t you move your money then. There were and still are numerous entities with household names operating offshore. So it was your decision to stay with Landisbanki and nobody elses!
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If I had £167,000 to invest ( which I haven’t )and if I had chosen to place that money in Llandsbanki ( which I didn’t )I would now be sure of 30p in the pound and, with a bit of patience, a pretty good chance of more to come later. That’s a return of £50,100 at the very least.
However if I had placed that same £167,000 in a rock solid bank such as HSBC, even though it was offering a much less attractive rate of interest, I would get back a maximum £50,000 under the new Guernsey compensation scheme
Life really is a bitch !
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It is very interesting that numerous contributors to this blog seem to think that Guernsey’s entire finance industry is made up of retail depositors and that the whole finance industry and economy of Guernsey will collapse if retail bank depositors lose confidence in Guernsey. That could not be further than the truth.
Retail depositors contribute only a tiny fraction of Guernsey’s revenues from the finance industry, unlike the Isle of Man where the percentage is considerably higher. That in itself may help to explain why the Isle of Man and Guernsey have taken different stances.
Let’s use some simple figures as examples.
Let’s assume that a Guernsey bank or building society has £200m of deposits, i.e. roughly the size of Landsbanki. Typically, a bank makes crica 0.4% to 0.5% margin (on average) when it upstreams its deposits. That’s £800k to £1m of gross profit. It has staff and other overheads, such as computer systems, but not that many are required due to the simplistic nature and limited range of its services. Let’s assume that it has £400k of expenses. It therefore makes around £400k to £600k of net profit. Guernsey tax on those profits is currently 10%, which is £40k to £60k. The tax earned from its employees might be say another £40k. The economy benefits to the tune of less than £100k per annum from a Landsbanki-type of operation. Assuming that we have a maximum of 8 of them of similar size providing similar products (i.e. simple retail bank deposits and no other fee-earning services), then based on 8 operations holding £2 billion of deposits, Guernsey PLC only makes give or take £1m of revenue. At that level it barely makes the radar screen and the loss of that type of business really would not make a material impact to Guernsey PLC.
However, on the flip side Guernsey has regulatory responsibility and reputational risk exposure for £2 billion of deposits for just £1m of annual tax revenue. That’s not a risk/reward equation which it makes any sense whatsoever for Guernsey to fight to retain, unless I am missing something very obvious indeed.
On that basis we should get rid of all retail deposit-taking business and get rid of the related risks. It just isn’t worth it.
On the other hand we have banks providing sophisticated fund administration, fiduciary services and investment management services who in many, many cases contribute several million pounds of tax revenue each and every year from employing often 200-500 staff each. Those institutions are the ones which are vital to Guernsey’s economy. A typical weekly fall in the world equity markets and its knock-on impact on fund or portfolio valuations and the ad valorum fees attached to those portfolios probably hits Guernsey’s total tax revenues more than the loss of the entire pure retail deposit industry.
I don’t mean in any way to upset the Landsbanki depositors with the above comments but I feel that after reading daily postings from so many of them about how Guernsey’s entire finance industry is at risk if we don’t use taxpayers’s money to bail them out, this information may perhaps help them to understand why the States, rightly or wrongly, have not rushed to do so. It sometimes helps to be able to see the bigger picture.
If anything, Guernsey’s mistake was in accepting pure retail deposit-taking banks in the first place bearing in mind the associated risks. Recent events have of course highlighted this risk/reward equation and my view is that rather than being paranoid about Guernsey risking losing this specific sector of our finance industry, on economic grounds we probably should be escorting it to the door and slamming it firmly shut.
I may well be wrong but would be reasonably confident in saying that this sector’s relative lack of importance to the overall Guernsey finance industry probably contributed very significantly to the inertia in setting up a depositors’ compensation scheme.
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Whilst I’ve got every sympathy for the people who have lost money through the Landsbanki crisis why should we, the taxpayer, be asked to bail out the finance industry yet again?
There is no easy answer to the problem but we are already heavily subsidising finance through the zero ten scheme, all this industry does is take, take, take, surely its time it gave something back?
The Landsbanki customers were lucky to have spare money to invest, with the high cost of living and increased taxation in this island us non-finance workers will never have any savings to bank!!
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Carts, you should check the facts before commenting. Hundreds of the depoitors with Lansbanki Guernsey were local residents who will have paid income tax to the states on those deposits…. Will the states give back that 20%? I think not.
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Of all the comments made by Landsbanki depositors living abroad, no one has explained why they chose to deposit in Guernsey rather than the country of their abode.
I am sure there are financial institutions in those countries who will take deposits otherwise where do the locals put their savings.
Also the tax on those savings would contribute to the welfare of that country and ultimately to your way of life.
Or am I being cynical.
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Dan,
Check my previous posts, I think you might have got the wrong end of the stick…my issue is with those investors/savers that have used threatening and aggresive language in the context of Guernsey having to divert tax contributions to help them….or else!
I don’t care if these are residents or aliens…The people of Guernsey didn’t force them to bank with Landsbanki so why should the people of Guernsey now be so openly bullied into paying for it?
To put it into context…Who is more deserving of our tax take (a) a small minority of Private investors, who may or may not live here or (b) the current and future resident population of Guernsey?
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Try using High Street Banks, they do as much if not more, what do you have to hide?
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Sounds expensive will they help me out if my business fails ?
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