Not our problem, UK Treasury tells Landsbanki group
Friday 30th January 2009, 2:29PM GMT.
REPRESENTATIVES of Landsbanki Guernsey depositors who met key HM Treasury officials yesterday were told that responsibility for their plight lay with Guernsey’s States.
Depositors had hoped the UK Government would intervene to apply diplomatic pressure on Guernsey to ensure all savings were returned.
But the Treasury firmly placed responsibility back in the court of the States of Guernsey, underlining that as the regulatory authority it was its responsibility to support depositors.
‘Having had high hopes for the meeting with the Treasury, we have once again been left without answers and assurances,’ said Landsbanki Guernsey Depositors’ Action Group spokesman Matthew Dorman (pictured).
‘We are feeling increasingly frustrated. Clearly, no one will take responsibility or support us to ensure the swift return of funds to depositors.
- To read Guernsey Press stories in full click here for subscription details. Individual editions are now available online.
Island Life
All about Guernsey
Ambassador of the Year 2011
History & Heritage
Visitor Information
Guernsey's government
Campaigns
Voice For Victims
Voice for Victims is a campaign aimed at promoting the rights of those affected by child sexual abuse.
This is Guernsey
Guernsey Press
Useful Links
I’ve said it before, and will say it again, tact and diplomacy are not going to achieve anything. If HM Treasury say it is Guernsey’s responsibility then all pressure, embarrasment and protests must be made to the Chief Minister and given full local and national media coverage. Softly, softly is not going to work.
Report abuse
When Barings went belly up in 1995 it was clear then that depositors with the Guernsey subsidiary were not covered by any compensation scheme.The States did nothing then to introduce a similar scheme to the UK,so I fail to see how Landsbanki customers or for that matter customers of other financial institutions on the island were not aware of the risk to their money.
Report abuse
Perhaps it is time to publicly state the obvious, that Guernsey is not a safe place to deposit money. A campaign along those lines may get the crabs scurrying.
Report abuse
I agree J G this has got to be the way forward; otherwise we may as well all call it a day and let the Administrators get on with salvaging what they can. There are so many people working very hard in the LGDAG that any alternative suggestions should be given full support. However this a call the Committee need to make and I am sure they are only weeks away from calling for some kind of Savers Gathering (not demonstration).
Report abuse
The investors themselves were responsible enough to choose with whom to deposit their savings. All investments carry risk. The higher the return the greater the risk. The Landsbanki investors were betting on the highest interest rate at the time. They have paid the price and have only themselves to blame.
Report abuse
Of course HM Treasury will say what they did, very conveniently forgetting their own role in the whole debacle. The independent enquiry has already cleared the Guernsey regulator of any blame. Maybe there simply is no “blame”, and that its merely just an extremely unfortunate consequence of people losing money due to a commercial investment going bad. It happens.
What recourse do shareholders in RBS have for the decimation of their shareholder values ? They and depositors would have lost everything if RBS hadn’t been bailed out by the UK government. Sadly, Iceland could not bail out its banks but every depositor in Landsbanki knew that it was an Icelandic bank when they placed funds with it. That certainly wasn’t a secret. The sole difference between Landsbanki and RBS is that the UK government had the resources (just) to bail out RBS.
Report abuse
To AC, When are the likes of you going to learn that we are not investors in the ahreholding of a bank we are depositors, please when time allows look up the difference.
Many of us some of whom are overseas did not choose Landsbanki, they chose us with the blessing of the Guernsey Financial Services Commission.
Many of us had accounts with the Cheshire Guernsey Bank for a good number of years, we did not go to them for whatever was their interest rate and if in due course Landsbanki had (slightly) better interest rates, what were we supposed to do.
We have been sold down the river by your Chief Minister and his associate Parkinson, but I am sure that retribution is coming soon.
This old ‘chesnut’ of no taxpayers money will be used will disproved as none is needed.
It looks the Isle of Man is stepping up to the plate in defence of it’s KSFIOM depositors and hopefully Guernsey will soon see the errors of it’s ways and do likewise.
See the script of the above press report and you will see the HMG’s Government lays the blame fairly and squarely upon your administration.
SPRINGBOK
Report abuse
AC -Yet again someone is under the misapprehension that these savers were investors. They were not, they deposited their hard earned savings in a bank, in an Island which prided (lol)iteself on being a credible offshore finance centre. Surely the first thing such a claim should have to cover itself is a depositors protection scheme – please note the word ‘depositor’. Methinks you are being a bit heartless, and wonder if the same would apply if the boot were on your foot! I think not!
Report abuse
Springbok and JG
Sorry – you were investors. You just didn’t realise it because you didn’t bother to take proper advice to understand why the rates on offer were so much higher than with banks who weren’t so desperate for your cash. Risk equals reward doesn’t it ? Higher reward equals higher risk.
Yes – you placed your funds with Cheshire Building Society. You presumably did your due diligence when it was acquired by Landsbanki before deciding to keep it there ?
Report abuse
Actually David it was not me who deposited funds in Landsbanki, it was my young daughter whose dream had been to buy a house of her own, and lost all the money she had worked hard for since a teenager that was to be her deposit. There are a lot of other ordinary folk out there who were saving for some of the basics in life, and looking for a higher rate of interest is not always greed, but human nature, and ‘ordinary’ folk and pensioners are not always as aware of the pitfalls and ‘due diligence’ you mention. However this bank was allowed to trade under the approval of the GFSC and I understand it would not have been allowed into Jersey.Perhaps the ‘due diligence’ should have been applied by the GFSC. I for one will continue to fight and fight for this to be resolved. People are encouraged to save and not live on credit, therefore this is NOT what they expect when they do just that.
Report abuse
JG
Focuss your attention on the GFSC and its behaviour between March and October 2008. This will be a better investment of your time than discussing depositing and investing.
The whitewash review of the regulator, by its own appointed and paid reviewer, actually helps you, rather than hinder.
Report abuse
JG
It is nonsense to say that Landsbanki would not have been accepted into Jersey. It met their “top 500 world bank” test. One of their Senators mischieviously pretended otherwise to try to score some brownie points but that rather backfired.
Report abuse
I echo David’s response. Couldn’t have said it better.
It is all about Risk vs Reward and the Landsbanki investors / depositors, whatever they call themselves, have been caught with their pants down.
Report abuse
Can you tell me AC or what ever you you want to call yourself. Was this Pensioner caught with her trousers down. This lady had her money in Cheshire Guernsey before LG took it over. I am not going to say what I really want to say, but mate grow up and show some respect if not to me, but to the many Guernsey elderly folk who are at their wits end. Please see below and tell me what you think.
True Story
All of my life savings were in the Bank
I am a 97 year-old depositor and I live alone in my own home, where I have lived for 53 years. I couldn’t believe what was happening when I read in the Guernsey Press that my bank, Landsbanki, had gone into administration, as I had always thought that Guernsey was a safe place to put your money. All of my life savings were in the Bank.
I am fortunate in that I am able to live independently, with a Zimmer frame to help me get around my home and a stair lift to get me upstairs. Additionally I am indebted to my neighbours and my friends, who provide me with superb support in a variety of ways.
I had saved carefully over the last 26 years to ensure I was financially secure and independent in the later years of my life. I opened my account with the Cheshire Building Society, which then became Landsbanki Bank.
Having followed all of the publicity about Landsbanki since the closure I now have a better understanding of what happens to our money, and I had no idea that banks borrowed from one another like they do and moved money away from Guernsey in such huge sums.
I’m pleased that Guernsey has brought in this scheme to protect depositors, but it’s like shutting the stable door after the horse has bolted: it’s no good for me as it is too late for Landsbanki depositors. Although I have faith in people that my money will be returned I worry greatly that it will not be returned in my lifetime. Some of my money was inherited from friends, and I would hate to think I had let them down in the way I invested their money, as they would surely have wanted me to benefit financially and also to have enjoyed the proceeds of their investment in me.
I know that a lot of work is being done by members of the Action Group on behalf of all of the Landsbanki depositors and I am grateful to them for their help in recovering all of this money, which I do believe will happen eventually.
The world has got to learn from all of this financial mess, we need to get back to people borrowing money that they can realistically pay back; far too many people have debt they have no hope of ever paying back.
Report abuse
Hi David, sorry mate I left you out. Here is another one of those moaning Landsbanki Savers or should I say Investors (answers on a post card please) If there is nothing on tele tonight, maybe you could meet up with AC have a pint somewhere and plan your next assault on the elderly.
True Story
Is your money safe? Don’t bank on it!
I am Guernsey, born and bred, and have worked extremely hard to try and live within my means and keep out of debt.
I opened my account with Cheshire Guernsey Limited quite a few years ago. Having had insurance companies which have changed their name several times over the course of their lives, I thought no more about it when I got this letter in 2006 saying that the bank was changing to Landsbanki Guernsey Limited. After all, it was a Guernsey company, run in Guernsey, regulated in Guernsey and paying tax to Guernsey, so no problem…?
I had been doing exactly what the States of Guernsey wanted, namely putting aside money for my old age so that I would not be a burden on any-body. I have gone without big holidays and new cars when so many people around me have had exactly those things. I have declared every penny of interest to the tax office, and because I have never withdrawn anything, may end up paying tax on interest that I will never receive!
When I discovered that the travel company XL had gone into administration and that their bankers were Landsbanki, I felt that it might be prudent to move my hard earned cash elsewhere so I put the notice on the account to close. Unfortunately, Landsbanki Guernsey went into administration half way through the notice period, and despite the fact that the bank knew that I wanted my money back it seems that I am back at the end of the queue.
On going to the first depositors’ meeting I was shocked by how many older Guernsey people were there,so worried as it seemed that the States had all but forgotten them. However by the end, it was obvious that there was a group of articulate, intelligent people who are doing so much on our behalf to try and fight for the return of all our monies, and for that I am truly grateful.
Just to make matters worse, the recent collapse of interest rates has only made matters worse for everyone who relies on their savings to top up their pension, as they are now having to eat into their capital.
It just appears so typical of the States to bring in a depositors’ protection scheme now after it is needed, though I believe one had been talked about years ago.
I am trying to think positively that eventually we will get our money back but at least I have a few more working years in which to put some money away (though it will take many years to make up what I might lose) – there are a lot that do not.
I urge all depositors to join the Action Group as they are working so hard and you will realise that you are not on your own.
Report abuse
An aspect of the Landsbanki Guernsey saga that has had virtually no attention is the responsibility of the GFSC in relation to up streaming of funds.
Before Cheshire BS became LG there would have been upstreaming to the UK parent. That would have raised no probelsm.
Then LG came on the scene. Initially, the Icelandic Bank was seen as fairly safe. I say fairly safe because of the need for a comfort letter. Sadly, the GFSC didn’t seem to appreciate the type of wording in the comfort letter they obtained was one o moral and nor legal standing.
When the reputation of Icelandic banks came into question in or around March 2008 the matter of up streaming became more critical. Not only did the depositor have no protection from Guernsey, they were also left with no protection from Iceland.
Whilst the LG web site made this exposure clear there were aspects that should have caused concern. We l know from the Foot report that the GFSC was concerned about the level of upstreaming and came up, or agreed with, with a formula limiting the amount of up streaming.
I would have expected an independent reviewer to have paid more attention to the exposure of LG depositors in a bank that had become of questionable quality.
Should, could the GFSC have dome more to protect LG funds? They do have a responsibility to depositors. They would no doubt claim that if they had stopped LG from taking further deposits it would have led to a run on the bank.
What we do know is that banks have been stopped from accepting further business and if the GFSC had been more proactive in keeping the money within LG and then commencing a closure of LG, it is likely that much of the £70? odd million that was in the hands of UK Icelandic banks would have been available for distribution to depositors.
The GFSC would say they couldn’t have insisted on monies remaining in Guernsey. That raises the question of whether retail overseas banking is worth the hassle, something David asked some weeks ago.
The events of March to September of 2008 and the GFSC role make me somewhat more sympathetic to LG depositors.than many of the other arguments put forward
Report abuse
A C
I did not “choose” Landsbanki Gue. I worked abroad for many years and tried to live frugally and save – in a building society in the UK, of course.
Eventually the Woolwich in London told me that, not having a UK address, I had to move my account to Guernsey, which I had never considered, and they facilitated the move.
When the Woolwich was taken over by Barclays I moved my account to the Cheshire precisely because I had always felt safer with a UK building society than a bank.
Naturally I was alarmed when I was informed that the Cheshire had “sold” my savings to an Icelandic bank that I’d never heard of.
And, no, A C, I do not primarily blame Mr Neville, Mr Trott, Mr Darling, Mr Brown – or even Mr Haarde for the loss of the majority of my savings earned over many years abroad.
I myself assume the biggest share of the blame for allowing myself to be reassured by the parental and other regulatory guarantees.
Report abuse
“The events of March to September of 2008 and the GFSC role make me somewhat more sympathetic to LG depositors.than many of the other arguments put forward”
I tend to agree with Stephen John. On a human level I have sympathy, on regulatory level I maintain that the GFSC were in part derelic. Even I knew trouble was afoot in Iceland in the March period SJ stated. Were there simply ‘go for growth’ politics involved? Another bank in Guernsey being a ‘good news’ story? I suspect that may also have a part to play.
I feel for the Cheshire customers and I feel for those that deposited on what was clearly a high profile marketing campaign within both islands.
However, where we part company is the suggestion that ‘Guernsey’ and by definition the taxpayer is liable – we are not liable.
Report abuse
AC and David
You describe LG depositors as investors because the banks invest the money they deposit? Wrong. Banks invest money that is on deposit yes, but this does not make a depositor an investor as their agreement does not expose them to the potential downside in normal market conditions.
All your talk about the average people who were investors in a building society doing due diligence is just plain callous. Since when have everyday working people been expected to understand derivatives and up-streaming when they put their saving in a bank account? If they were that informed they could INVEST it directly themselves with far higher potential returns but instead they entrust it to the financial institutions in the form of a guaranteed DEPOSIT (and at a rate that doesn’t exactly compensate for 70% downside).
Please try to be a little more humane – real people have had lives changed dramatically. Families are suffering, pensioners are depressed even suicidal and all you do is sneer about their lack of understanding.
You would do well to bear in mind one lesson of the last 12 months is even the men that think they know it all can get it very very terribly wrong………….
Report abuse
What do you expect, Lyndon Trott gives smarmy answers. Well Mr Trott be aware that I for one will pay bloggers internationally to publicise your “don´t care attitude”. This will protect the many offshore clients that Guernsey relies on for its finance industry from having their money stolen in the future.
Report abuse
Jackie
I don’t believe the Guernsey taxpayer shopuld pick up the tabs for the Landsbanki Guernsey failure.
What I do believe is that there is a question of the GFSC being liable, despite what Michael Foot said, or more critically failed to say.
I have also previously stated that some form of ex gratia payment financed by the banks ought to be considered for LG depositors. Similar to a retrospective deposit protection fund but called, for the sake of expediency or face saving ex gratia.
Any ex gratia payment would be made at the end of adminsitration.
Neither of these payment plans would be a charge on the taxpayer, but on the banks.
Report abuse
PD
Like many others you miss the point. Investing (or depositing as you put it) for a 7% interest rate when the major high street banks were offering so much less, had to reflect the risk premium. If it didn’t then why weren’t all banks offering 7% at that time ? How would you react today, with deposit interest rates at 1%, if a bank offered you a 10% rate on your deposit ? Would you not consider that it simply must be carrying a risk premium ? Anything with a risk premium becomes an investment as it reflects the risk of you not getting your capital back.
You also state: “…but instead they entrust it to the financial institutions in the form of a guaranteed DEPOSIT (and at a rate that doesn’t exactly compensate for 70% downside).” Well, The States of Guernsey was not guaranteeing your deposit as there was openly no depositors’ protection scheme existing in Guernsey at the time. You would have been aware of that if you had checked what you were investing in before parting with your cash.
Report abuse
HEADLINE -
Bank fails and niether it nor the duristiction within which it operated and which was responsible for supervising and approving its financial activities fails to recompense depositors
COMMENT -
This happened in the UK? In Guernsey?
Really? Wow! Sounds more like something that one would expect to happen in a Banana Republic.
Report abuse