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Call to ‘nationalize’ KSF IOM
However, given that the IOM Bank is now nearly three quarters owned by the UK Government, perhaps it is not such a totally ‘off-the-wall’ idea; and it could at least ensure there is one bank left in the IOM if Michael Foot, Alistair Darling et al deliver, to ‘off-shore banking’, the ‘coup-de-grace’ anticipated by some observers.
The Manx Herald has received copies of many emails, sent to the Isle of Man authorities and politicians, in which desperate sounding ‘depositors’ of, the virtually collapsed, Kaupthing Singer & Friedlander (IOM) bank implore them to see that their money is returned.
Some of the emails are more emotive than others, and some make all kinds of allegations about the regulators, the UK & IOM governments and sundry other parties - some of which are probably quite valid.
While most explain how the situation has affected them, and why they think they should have all their money returned - which is understandable - not all of them suggest how they think this could be achieved.
A few suggest that the IOM Government should borrow money from the UK Government to help raise the money to repay depositors. This is perhaps not such a bizarre idea, given that it is not far removed from the Chief Minister, Tony Brown’s own initial thoughts - but now apparently a taboo subject - that if Kaupthing Hf/Icelandic authorities wouldn’t honour the parental ‘guarantee’ he would be looking to the UK to cough up.
However, one suggestion fast coming up on the rails is nationalization of KSF (IOM).
As it happens, the Manx Herald - noting this option didn’t appear to have been considered, or at least openly - ‘ran it past’ the Government’s own PR ‘spin doctor’, at the last KSF (IOM) court hearing, to see what, if any, reaction it produced. It produced none.
Given controversial comments elsewhere - about whether banks should be allowed to fail - and the Treasury’s apparent support for an orderly winding down; then the chances of nationalization are perhaps as likely as finding an Englishman who has beaten a Norwegian in a race to the South Pole.
However, given that the IOM Bank is now nearly three quarters owned by the UK Government, perhaps it is not such a totally ‘off-the-wall’ idea; and it could at least ensure there is one bank left in the IOM if Michael Foot, Alistair Darling et al deliver, to ‘off-shore banking’, the ‘coup-de-grace’ anticipated by some observers.
Meanwhile, the Treasury has been hastily preparing their affidavit evidence in support of the proposed ‘scheme of arrangement’ (SOA); although not hastily enough to meet yesterday’s (Thursday 12th Feb) deadline set by Deputy Deemster Corlett. The Manx Herald was assured this morning, by Gough & Co, they would be filed and served before the end of the day; but we are sure this ‘failure’, to meet the deadline, will create a bit of a stir on the 19th February, the date of the next hearing.
Whether the contents of this affidavit will be sufficient to persuade the court to allow more time for a SOA to work remains to be seen; but one thing is for sure, the longer it takes to sort this affair out the more time there is for the reputation of the Island to suffer damage (in some eyes).
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It is doubtful whether the Government would have the resources to undertake public ownership of the Bank, but in any event it has nailed its colours to the mast of a Scheme of Arrangement.
It is doubtful the proposed SoA will be accepted by the Court on 19 February. However, if it is adopted by the Court it will have to be voted upon by creditors. It is unlikely that a majority of members of the Depositors' Action Group will vote in support as it comes nowhere near to their rightful demand to have 100% of their deposits restored to them.
Jim
I am convinced there is something being hidden too. Some of the Board members of Kaupthing are also Committee members of the FSC. The only reason why the FSC want a special scheme of arrangement (SOA) is so that the directors of the bank and FSC committee members are not held legally responsible.
The Isle of Man government must be held responsible for this mess. It has already caused untold hardship and distress for depositors with life savings. Some people have committed suicide over this affair. It has unimaginable consequences and yet those who have caused the problem are not doing anything to help. When Tony Brown met with Treasury Select members in London last week, he did nothing to try to rescue depositors' funds held in London. He let all depositors down very badly indeed. He is a disgrace.
This is not an exaggeration. The collapse of Northern Rock on the mainland took six days - from perfectly viable bank to complete failure.Thre domino effect would take all 31 banks on the island.
The FSC, setup by and accountable to the IoM Government, is a sick organisation.
The UK recognised that its FSA had failed, this coupled with the dramatic effect a failed bank would have, led the UK to "guarantee" its banks to 100%.
The UK dithered with Northern Rock and nearly losdt the lot.
The IoM continues to dither whilst attempting to blame others.
It won't wash, the IoM is a failure.
The internet age is here and the message about the IoM's failure will echo round the world for many many years.
It seems the IoM is doomed, doomed by its dithering and lack of responsibility.
Grow up IoM and face your responsibilities square on.
What indeed did happen to the "...idea of a loan..." that you state was "Tony Brown’s own initial thoughts - but now apparently a taboo subject.."?
I believe that in an interview in January Mr Lovett of Alix partners, after summarising the SoA route chosen by the treasury, said that his personal choice would be such a loan.
Why was it rejected? We don't know. Costing and the figures behind all the schemes seem vague. I think a little more transparency might produce a better result for the government which frankly appearing to be cynical, disorganised and weak. This is a public issue and the public, and the depositors, and possibly even the Tynwald, deserve more openness.
Secondly timeliness is important. It is believed by some that the David Lovett's affidavit was delivered on time to the Treasury, and the delay was the Treasury's responsibility. The delay, given the short time before the hearing before the court, was more than annoying because the documents could not be read and interpreted by the legal teams before the w/e. Is the treasury really playing such cheap games?
But more of timeliness. If the situation is to be improved, and I don't believe pride should stand in the way of a reversion to a previous better idea for a solution than the SoA, then the government is going to have to get it's skates on.
It is incredulous that the regulators of the FSC were also board members of the banks they were regulating. I have no doubts that there is culpability on the part of these public servants, and probably even liability. All the facts, and the lack thereof because of sealed papers and secrecy, point to a concerted effort to cover up the true story. If this is not resolved in such a manner that is agreeable to the depositors , legal action will drag on for years, be costly to the IOM citizens, and continue to adversely effect the IOM finance industry, which in turn will effect the economy of the entire Island.
Nationalization could be the answer. It would reconstitute the bank, make the depositors money available to them, allow the IOMG to continue to persue claims against Iceland, Kaupthing hf, the FSA, and HMG if it has the guts to do so.
The depositors get the money which is rightfully their's returned.
The IOM preserves a banking industry.
The UK government has a face saving way out of the frozen assets debacle.
Here is an excerpt from an E Mail I sent to all members of the Tynwald last weekend.
"In order for this to be achieved I feel that the best solution would be for some form of nationalization of KSF IOM. I believe this can be achieved with political will from yourselves, the UK government and depositors.
A potential solution would be as follows:
The IOM government or another financial institution takes control of KSF IOM accepting the loan book at full value.
The UK government releases the funds (~£500m) held in KSF UK, or offers the IOM government a loan for an equivalent amount.
Depositors offer to keep a significant proportion of their investment in the bank for 2 years."
So far Peter Viggers has "noted" my E Mail and Geoff Corkish and Bishop Sodor have replied sympathetically, hoping a solution can be found.
I notice that all official E Mails from the IOM have the tag line "Giving you freedom to flourish". This will only happen for all of us only when a satisfactory outcome to the KSFIOM situation is found.
it in the long term will serve every bodies best interest , the loan book is healthy and low risk , get back the 550 million from the uk + what the PL has already in the pot ,
If the IOM was to put this to the majority of the depositors I think this would be they preffered option . A good propotion of the depositors would leave there money there if the bank was Goverment owned and savings were Gaurenteed and the Rate of interest was realistic .
Where else are they to put their money assume they ever get it back .
It also gives the IOM a Bank of there OWN
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