Island survives hard questions from MPs
Wednesday 4th February 2009, 11:30AM GMT.
CHIEF Minister Lyndon Trott survived a grilling over the banking crisis from members of the Treasury Committee.
Compared with representatives from the Isle of Man and British financial advisors, who were also questioned by members of the House of Commons Select Committee and who did not fare so well when aggressive questions were flung their way, Deputy Trott was calm throughout and offered firm answers.
One such question was why Guernsey did not have a compensation scheme in place before the Landsbanki collapse.
‘There is no international regulatory requirement for a depositor compensation scheme,’ said Deputy Trott yesterday.
‘However, the States of Guernsey did approve one in November, similar to that in the Isle of Man.’
But what about those people who had invested before the collapse and lost out? asked one of the committee members.
‘Landsbanki Guernsey depositors have already received 30% of their money back, which in some cases is far in excess of the £50,000,’ replied Deputy Trott.
The £50,000 he referred to was the figure depositors in the Isle of Man were promised by their version of a compensation scheme.
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I’m not so sure he did come out smelling of roses.
30 pence in the pound is not much, and nothing to sing about. Peoples lives are ruined, hundreds of people have lost their life savings, and he is smuggly saying they have 30 pence in the pound back!
These people are not investors, they are savers, saving in regulated banks.
Well, I am sure the drain of money out of these Islands is well and truly turning into a torrent.
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Ian,
I am sure most of us aware that the PR machinery is at work again and that everything was not a rosey as inidicated.
As a former States Member and as a former Member of our Income Tax Authority I was embarressed for our Baliiwick for our Chief Minister to have to put a defence up for matters which should never have happened.
Those in authority responsible for the Landsbanki crisis and the damage it has done to our financial reputation have a lot to answer for.
Tony Webber
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LT held his own.
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The Times today focused on the role played by the FSA which doesn’t look at all clever. The Isle of Man regulator allowed Kaupthing Isle of Man to transfer £550m to its UK parent after consulting with the FSA who promptly froze the money and that the collapse of Kaupthing Iceland and the rest of the Icelandic banking system including Landsbanki. I only caught the very end of a news item today which seemed to confirm previous allegations that Alastair Darling and the FSA knew how bad Iceland’s finances were but chose not to share that vital information with the regulators in Guernsey or the Isle of Man.
The article also in the Times also reports the warning of the firmer CEO of Singer and Friedlander that the directors of Kauthing were not “fit and proper” to run the bank after it was acquired by Kaupyhing but the FSA ignored his warning. Looks like it was the unsurprising collapse of Kaupthing which caused the knock-on collapse of Landsbanki rather than any specific error in relation to Landsbanki.
That puts rather a different complexion on whose was actually responsible and seems to fully vindicate the decision by Guernsey not to pay the cost of the UK’s actions. This is going to run and run.
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Shame he couldn’t accept that we are a tax haven. The bluster plays well with the businessmen back home, but falls on incredulous ears in the real world.
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Damage to our reputation? Utter rubbish
It may have done us some limited damage in the retail investor community but that is a tiny fraction of the massive business we have here in Guernsey
The level of deposits post Landsbanki have continued to increase and other business flows apart from Funds are very healthy indeed. Our long term investors rather than retail rate chasers understand us and are supporting us fully
So much for damage to our financial reputation!
It is really only those that want to do us down that harp on about this non issue in the hope that the more they say it the more people will believe it and its about time that Tony Webber in particular dismantled the blocks of stone off each of his shoulders and asked those that are still involved in the industry what the facts really are
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Mr Trott wants to have his cake and eat it. In times of plenty, he quietly accumulates the money, but in times of famine, he is nowhere to be seen. He claims he does not want to use taxpayers’ money, forgetting that Guernsey quietly profited from LG depositors’ money for years, through withholding tax payments by local and EU residents, corporate taxes by LG, income taxes by its employees.
Guernsey, “the well regulated financial centre” (confirmed by a convenient self-commissionned review) is the only place on earth where retail depositors were let down. Let the world notice!
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Mark,
whilst I generally with everything you have pointed out, be careful with regard saying that deposits have increased.
The value of deposits quoted in GBP have had a massive boost because sterling is now so weak.
Whilst it is possible that the figures quoted are corrected for foreign exchange movements, this has never been quoted so I suspect that they haven’t.
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Readers will be able to judge for themselves how the questions went when the Treasury Committee transcript of the evidence, comes on line in a few days.
The States of Guernsey written submission is already on line, as is the LG action group submission.
Interesting to compare both submissions.
David
A fascinating point is that Lord Turner the new supremo at FSA was critical of the standard of regulation, whilst friend M Foot felt that there was nothing wrong with the FSA regulation.
I take your point about the comments of the former CEO of Singer. Good as they are, I would venture there was enough information available to the GFSC for them to have been more protective of depositor funds.
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Stephen
The point I am making, one which the Mail on Sunday reported in November and which I previously reported on this blog, was that Alastair Darling was tipped off about the extent of Iceland’s financial problems 6 months earlier by their then Finance Minister and failed to pass on that information either to the FSA or to the GFSC, who would normally rely on such intelligence to be disclosed to them. I have no doubt that the GFSC would have acted very differently if that absolutely crucial information had not been withheld by Alastair Darling, who then compounded the problem by freezing the Isle of Man and Guernsey banks’ assets under the anti-terrorism legislation.
This is fundamental to the analysis of what happened and why it happened, not to mention who is to blame for the consequences. Its not Guernsey !
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Mark said that it was utter rubbish that there was damage to Guernsey’s financial reputation.
He seems to think this damage is just with a small segment of the financial market and that effectively business is booming.
Mark said I should talk to people in the industry, which in fact I have done. I accept that there are different opinions, but I am sure that we all agree that we want a viable future for our financial sector.
I doubt if Mark would disagree that we could have dealt with the Landsbanki debacle a lot better.
I,quite frankly am not alone in being embarressed that our Chief Minister has to defend our Island before the UK Treasury Select Committee, and I don’t think they are fooled by glib assurances.
I am completely aware that many in our financial sector feel that Guernsey should be presenting its national and international case in a much more sensible and forward thinking way than we have so far. Pretending that everything in our garden is rosey is just not going to wash with those who could cause major problems to our financial sector if they decided to.
Tony Webber
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