info.LandsbankiAction.org.gg   30-Mar-2016: Liquidators' Update, see Deloitte site

Let down by the watchdogs

The doorstopping official report into the collapse of Iceland's banking system may not make for entirely comfortable reading for the Governor of the Bank of England, Mervyn King, or the Financial Services Authority.

In the Spring of 2008 the Icelandic central bank - the Sedlabanki - made a request to the Bank of England for a currency swap agreement after Iceland had failed to renew a credit line with the Basle-based Bank for International Settlements (BIS).

Mervyn King sensibly refused - after all, Icelandic bank liabilities were five times the size of the nation's economy - and offered some help in reducing the size of Iceland's banking sector.

What happened next is unclear. But we know that between the spring and autumn of 2008, when the Icelandic banks collapsed like dominos, savers' money continued to pour into Icesave and other Icelandic deposit accounts.

The missing piece in this puzzle is what the Bank of England decided to do with its assessment of the Icelandic banks when it refused help. One trusts it informed the other tripartite members - the Treasury and the FSA - which should have been far stronger in warning depositors of the risk.  12-Apr-10.

http://www.thisismoney.co.uk/news/opinion/article.html?in_article_id=502708&in_page_id=19&in_author_id=1&position=moretopstories