Should States have helped savers more?
Monday 12th January 2009, 4:38PM GMT.
UNTIL the release of a report by the Landsbanki administrators, islanders could have been forgiven for believing that the Policy Council was doing everything humanly possible to ease the plight of depositors and to ensure that they received more than the 30p in the pound currently in prospect.
Instead, it now emerges that Guernsey’s politicians have rejected two suggestions from the administrators which would more swiftly have returned cash to the beleaguered savers who are now so terribly out of pocket.
Admittedly, this is a complicated matter, involving multiple governments and one that has shown that cross-border regulation needs to be completely overhauled to prevent one country from disadvantaging depositors in another.
The scale of the task is one reason why it cost in excess of one million pounds last year and is expected to cost a similar amount this year for the administrators to get to the bottom of the matter and realise the assets that will return more of the Landsbanki savers’ money to them.
Nevertheless, the reason Rick Garrard and Lee Manning of Deloitte, the business advisory firm, were appointed to manage the affairs of the collapsed bank was because of their expertise in these matters. They would not have proposed two ‘quick payment’ options without cause.
The first, a phantom compensation scheme, would have been onerous to implement. The second, the States advancing money to savers on the security of existing and provable bank assets, would have been more workable.
As it is, Treasury and Resources rejected it because in its view the cost and complexity would have outweighed the benefits.
It would be interesting to know what the department based that conclusion on. While that might be the view of T&R’s advisers, Landsbanki depositors are likely to have a completely different view and islanders would be fascinated to know what steps T&R took to canvass them.
A ‘responsible’ decision taken in the isolated comfort of Frossard House could be entirely the wrong one for a pensioner relying on the interest from their Landsbanki account to pay the bills and heat the home.
Unless, of course, the States feels no responsibility at all for the stricken depositors.
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Guernsey is only the government in the western world that has refused to help depositors who have lost money in the banking crisis.
We have paid taxes to Guernsey on our deposits.
We kept our money in Guernsey because we were given a written guarantee that our money was safe.
The behaviour of the Guernsey government is appalling and through its own actions has done the most damage possible to itself as a ‘reputable and safe financial centre’.
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Imjust wonder how much the vindictive comments abotu Deputy Trott and to a lesser extent Deputy Parkinson have played in this sorry saga.
Some of the You Shout comments have been questionable but not nearly as bad as some other sites and the Landsbanki activists we site.
If these comments have influenced the decsion then the many ordinary Landsbanki depositors will have suffered.
The comments about Deputy Trott of a few days ago on You Shout are hardly of the sort to win friends and influence the gatekeepers.
No doubt the Landsbanki activists will feel their actions were right. Others will feel a more responsibilty and diplomatic approach, could have led to the acceptance of one of the options sugested by the Adminiatrators
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Daniel
Precisely what taxes have you paid to Guernsey on your deposits ? Unless you are resident here then you wouldn’t have paid any Guernsey taxes at all !
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The PDCS would cost the States next to nothing with regard to risk – at a £50,000 threshold this would involve an initial set up cost of approx £25M – which if borrowed under commercial interest rates would be approx £875,000 p.a. The administrator indicates that he exects the full value of the property portfolio to be realised over time – this is approx £52M so in time the States would receive al ltheir money back. As Deloittes were involved intimately in the DCS approved recently the due diligence necessary for a PDCS has been larely completed and the risks and benefits determined.
The implementation of a PDCS will pay the large majority of small depositors out preferentially to larger depositors agreed but it would do a great deal to repolish Guernsey tarnished reputation in the finance sector. If cash goes elsewhere rather than Guernsey it will affect 60,000 islanders with a reduction in standard of living as the States available budget will be reduced – so it is not only the 700 Guernsey savers who will be affected longer term.
Is a magnanimous gesture on the part of the Chief Minister with no great risk or cost to him or the Guernsey taxpayer not worth it to restore our national reputation?
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This whole sorry saga will surely herald Guernsey’s demise and Mr Trott’s intransigence has done him no favours at all. Landsbanki savers will NOT give up whatever it takes.
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Taxes: 25% of the withholding tax paid by EU residents, at source, are kept by Guernsey. I.e. 5% of interest. Lookup European Savings Directive (EUSD).
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Mac
That’s only if depositors have taken the option under Guernsey’s arrangement re. the EUSD of having tax withheld on their interest. The other option under the EUSD is to receive the interest gross, in which circumstances Guernsey receives no tax from the depositors whatsoever.
I would like to think that the vast majority of Landsbanki depositors residing in the EU are paying taxes in their country of residence on their offshore bank interest, in which case they will be receiving their Guernsey bank interest without any deduction of withholding tax.
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The Landsbanki Guernsey web site clearly set out the options open to depositors concerning payment of taxes.
It does seem to be something depositors were not aware. It does seem to be further evidence of the need for all depositors to be aware of all the facts before depositing monies.
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I am not a financial worker and do not even to pretend to understand the legalities of the processess. I do believe that the decision of the States of Guernsey not to burden the Guernsey taxpayer with ensuring the depositors receive their monies though. The way the money was funnelled from Guernsey to the UK and then Icleland should surely have rung bells with the Guernsey Financial Services. If Iceland have paid their residents then they morally have a duty to pay the Guernsey depositors as that is where the money came from surely? As the saying goes ‘ the law is an ass’ . Of course the winners in any lawsuit will be the lawyers!
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Laying blame everywhere we can – typical Guern attitude!!
Lets face it – if you gamble on a horse at 33-1 & it doesnt come in – do you go to the states & ask for your money back??
What these people did was invest their money in a bank with preferential rates so they would get more money back… this was their choice… Why didnt they put their money into the Post Office or into a British bank like Lloyds or Natwest?? I will tell you why – because they would not have got such a good return thats why….
They chose greed over security – so why should my money be used to bail them out?? It wasnt the States of Guernseys fault that the Icelandic economy went down… It wasnt the States of Guernseys fault these people chose to go in a higher risk account. Its gambling on a much larger scale basically…
The next time I lose on a horse i’m going to write in to the press & ask that the taxpayer pays me back my stake & if they dont i’m going to cry about it at every opportunity to the Press…
How far do you think I would get?????
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I think you will find most investors opened their account with Cheshire Guernsey, and ended up at Landsbanki as the GFSC allowed them to take over the license from Cheshire. It is very diificult to open a bank account at a new bank due to strict kyc guidelines, so most will have left their deposit at Landsbanki to avoid all that is required to open a new account.
I have lost my life savings, an inheritance from my parents. I do not think the States should pay us the money but they could look at the options put forward and not just reject them out of hand.
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W H Bonney.
Aye, you’ve hit the nail square on the head. They either knew the risk and ignored it, or didn’t understand the risk.
Either way – not a problem for taxpayers to pay for.
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Disgraceful comments from W H Bonney!
I agree that tax payers money should not be used, BUT surely the Government should take some resposibility to help the administrators to obtain our money back. Every other jurisdiction has helped, what is so different about ours, yes I am a Guernsey person. I deposited some savings with a BANK as opposed to stocks and shares, and YES it was supposed to have been regulated. I could have got comparably higher rates elsewhere on this ‘well regulated’ island. If the regulators are allowed to choose who they have to investigate their affairs, need I say more!
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W H Bonney
No doubt you have been “sensible” and put your money only into local subsidiaries of British banks like Lloyds or RBS (which owns Natwest), and that’s why you’re so smug.
Well I hope you are expressing your GRATITUDE to the UK TAXPAYER for having bailed YOU out.
Oh yes, some other taxpayers’ money goes into saving our deposits and there’s not a peep, or maybe you’d be happy if the UK had rescued only UK branches and cut our local branches loose to fend for themselves?
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