Treasury loan refusal keeps Landsbanki savers waiting
Saturday 10th January 2009, 9:29AM GMT.
Joint administrators Lee Manning (left) and Rick Garrard.
MINISTERS have rejected a loan deal that would have got Landsbanki depositors their money faster.
Joint administrators Rick Garrard and Lee Manning of Deloitte asked Treasury and Resources to put up some of the money owed to depositors as a loan to be guaranteed against assets held by the bank that have yet to be realised.
But the proposal was declined.
Treasury minister Charles Parkinson said his department had examined the options closely, but decided they would take too much time and money.
‘The administrators say they anticipate making a further distribution in 2009.
‘While we might be able to accelerate the distribution by a few months, the complexity and cost of doing so would not justify the benefit,’ he said.
The loan idea was outlined in the administrators’ interim report and statement of proposals as a preferable alternative to the States offering a phantom depositors’ compensation scheme.
A phantom depositors’ compensation scheme – operating as if the scheme rushed through the States in November had been in place when Landsbanki failed – was also rejected.
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It’s incomprehensible why our Dear Leader and his cohorts aren’t leaping to support these proposals by the administrators, which would make a massive difference to the Guernsey savers who make up the majority of smaller depositors in Landsbanki, and would cost the States and taxpayers ABSOLUTELY NOTHING.
The phantom depositors compensation scheme the administrators (who obviously care a lot more about the people affected than our Dear Leader does) propose would only require the States to underwrite -underwrite, not make- a loan of 15 million for 35000 pounds of cover or 25 million for 50000, and that’s against 100 million of assets from which the administrators have said they expect to get a “substantial” amount, so the chances of the States being called on to make good on it are zilch.
It’s a no brainer. All that’s needed is a signature. No cost, no risk, and would get the majority of local Landsbanki victims, who otherwise have to wait until the end of 2009 -at the earliest- for any more of their money back according to the administrators, off of their backs.
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So Mr Parkinson is quoted as saying:-
‘While we might be able to accelerate the distribution by a few months, the complexity and cost of doing so would not justify the benefit,’
Well that few months that he mentions might have made all the difference to depositors who have lost everything because they put their savings in a Guernsey bank.
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Mr Trott wants to have its cake and eat it. In good times, let the money roll in but in bad times, there is nobody to be found to help out. The Guernsey government stands out as the only one on earth that did not prescribe to the principle of not letting down small depositors.
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This is not the Guernsey taxpayers problem. And I’m not even sure he would have the authority to do this without States approval.
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Sorry, Jackie, but I’m afraid it is the Guernsey taxpayers’ problem because the longer the Guernsey Govt delays in helping stricken LG savers the more of a battering the Guernsey finance centre’s reputation receives.
The erosion of its finance centre will result in decreased revenue for the Guernsey Govt – and higher taxes for Guernsey residents. So they have to act now.
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I endorse the comments made by Glyn published above.
It is all very well for Deputy Parkinson to claim
that helping depositors get their money back sooner is not justified.
He has presumably not lost most of his savings and has a fat salary and expenses on top. He is not a pensioner who relies on his savings nor does it seem he cares about your island’s reputation.
The Treasury could afford to act now and come out of this with some honour and aclaim for a bit of common sense. It is frustrating that
Guernsey would rather stick two fingers up to us when they could do so much, so easily.
The more the word spreads, the more the retail depositors are avoiding the Channel Islands. My wife would not even visit any more!!
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Rejection of an underwritten loan.
Rejection of a Phantom Compensation Scheme.
I hope the good people of Guernsey reject the useless politicians who are running their island at their next election
Messrs Trott and Parkinson are running the show – and it’s third rate at best. They don’t care.
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Unfortunately the islands finance is not suffering from bad publicity.
As previously printed £5billion came into Guernsey in November and I believe another £10billion in December.
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I hope Trott and Parkinson never put their money in a bank regulated by their Financial Services which subsequently goes broke. I don’t feel that I’ve lost money, because I didn’t invest it in Landsbanki, I deposited it there and that’s the difference. Irrespective of what these two lamentable people say, my money has been stolen, along with a lot of other innocent people’s and the Government of Guernsey who benefit by the money pouring into their island, owe a duty to us, if not legally, then certainly morally. There too, if they can get their heads around it, is a difference. You shame yourselves, gentlemen, but mostly you shame Guernsey.
Despondent
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Another comment from Mr Trott, another disappointment. It’s amazing how much more the Isle of Man politicians are able to achieve in the same time. Maybe they actually care about their citizens. Why do Politicians say they are working on our behalf, but when matters are revealed, it turns out they have not been exerting any where near as many pressures as they have claimed, and when they are offered a route to help by the administrator, then reject it. Lack of foresight to put a compensation scheme in place, lack of ability to act when needed during the crisis, and lack of integrity to admit that they have failed those who need their support.
After all the Island has been through, concepts of Community and helping other people should be respected, rather than just letting the unfortunate individual suffer.
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We will just agree to differ Mr Ashby. As for effect on reputation, it has had no impact, deposits rocketed in Q4 2008
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To the people who believe that deposits increased during Q4 2008, don’t be too sure. The total is measured in sterling (which weakened considerably against the dollar and the euro during Q4) and is therefore not necessarily accurate. For instance, if $100bn were held locally at 30 September 2008 and converted at 1.80 that would have equalled £55.55bn. But if $90bn were held at 31 December 2008 and converted at 1.45 then the total would be £62bn. Therefore a reduction in currency deposits can actually be claimed as an increase because of exchange rate movements, something which I certainly wouldn’t put past Trott or Parkinson.
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Jackie
I totally agree with your comments, and for the life of me I just cannot understand why some of the depositors keep on slagging Guernsey and the politicians whom they want to help them.
It has been shown that the island was not at fault, there was no compensation scheme in place which we all knew about so where is the problem.
There are funds available in UK by way of cash and property, so common sense tells me that the depositors are wasting their time and money chasing Guernsey.
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MJ Ashby would be correct if Guernsey had a depositors protection scheme in place and failed to honour its obligations. This is not the case however and it is difficult to elicit much sympathy for his cause when he makes thinly veiled threats and frankly absurd claims about Guernsey’s reputation as a finance centre.
However unfortunate the investors position is I am afraid to say the states is not liable as no protection scheme was in place at this time. Ignorance of this fact is not a defence.
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Private banks are not public liabilities. Although many people choose to ignore the small print when dealing with banks there are never any guarantees that your dosh is safe if they get into difficulty…you have effectively lent it to them hoping that they will use it wisely and deliver you a return. If they do not invest it wisely then they cannot “re-pay” your loan to them.
Whilst I have every sympathy with those that are embroiled in this terrible saga I also don’t think it is helpful assuming that Guernsey tax payers can fund the recovery of private deposits. If the bank’s clients have a case then take it to law, hold someone accountable and recover your loss from the beneficiaries of your investment, not the working population of Guernsey.
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