Councils have threatened to legally challenge a decision not to make local authorities priority creditors on the recovery of investments in a failed Icelandic bank.
The Winding Up Board of Glitnir Bank, in which local authorities have deposits of £217m, has opted to specify the claims as ‘general unsecured’ rather than ‘priority’ under the Icelandic Bankruptcy Act.
Without priority status, authorities would be likely to get in the region of 25-30% of their deposits back rather than 100%. . . .
Glitnir’s decision is at odds with that of Landsbanki, where council deposits of £414m were last month recognised as priority claims. Local Government Chronicle website - 15-Dec-09.
The Serious Fraud Office is poised to announce an investigation into collapsed Icelandic banks that operated in the UK. A probe, which will examine Kaupthing, Glitnir and Landsbanki, could be announced within days. Sources at the SFO said investigators were particularly interested in loans made to a number of "high-profile individuals".
Allegations of fraud, embezzlement and market manipulation have been under investigation in Iceland since February. But the SFO has separately been gathering intelligence on the Icelandic banking sector and its UK operations. 13-Dec-09.
Intelligence finds and plight of UK savers prompt prosecutor to investigate possible criminal activity in failure of Kaupthing.
The Serious Fraud Office is preparing to launch a formal investigation into Kaupthing, the failed Icelandic bank, amid suspicions that it may have been involved in criminal activity.
According to sources, the SFO is expected to announce this week that following four months of intelligence gathering it is to launch an official inquiry. The prosecutor is expected to appoint one of its most experienced investigators to take charge. 12-Dec-09.
The European Union, in order to save itself from the faults of its own legislation, has decided that Iceland and the Icelandic people are expendable. Realising its own failures the EU has decided, through the British and Dutch governments, that the Icelandic authorities have to shoulder the responsibility which is rightfully the EU regulators’. This is what the so-called Icesave dispute is mainly about. . .
The EU legislation in question is Directive 94/19/EC on deposit guarantee schemes which was implemented into Icelandic laws in 1999 according to the EEA Agreement between the EU and EFTA which Iceland is a member of. . .
However, the directive does not anticipate a systemic crisis as undoubtedly occurred in Iceland in October 2008 but only a failure of a single bank. In other words there is simply no legislation in force which covers the situation that emerged in Iceland last autumn. Moreover, it should be kept in mind that the Icelandic financial sector is more or less regulated by the EU through the previously mentioned EEA Agreement. . .
There is as a result no mention of a state guarantees in Directive 94/19/EC (Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994 on deposit-guarantee schemes) for the obligations of the Guarantee Funds should they under any circumstances fail to fullfill them towards depositors. On the contrary the directive clearly states that the deposit guarantee scheme „must not consist of a guarantee granted to a credit institution by a Member State itself or by any of its local or regional authorities“. The Brussels Journal - 05-Dec-09.
Reports have confirmed that the Icelandic parliament voted in favour of repaying the UK and Dutch governments more than £3billion. . .
Around 400,000 people lost money from savings accounts due to the collapse of Icesave’s parent company Landsbanki last year.
The agreement was initially made in June, but was only passed after an amendment was added setting various limits to the payments. The total amount that will be paid back by the country has been limited based on the level of its gross domestic product (GDP).
Iceland will have to pay up to 4% of its GDP every year to the UK and a further 2% to the Netherlands. Loans, Mortgage and Personal Finance Guide - 04-Dec-09.
Hearings into the October 2008 collapse of the Isle of Man branch of Iceland’s Kaupthing Singer & Friedlander have captured the attention of IoM residents and KS&F(IoM) depositors, many of whom feel the full story has yet to be told. . .
Thus it was on 8 October, he [Donald Gelling] went on, “without warning or having given notice of their intentions to the FSC or, I must say, KS&F(IoM)” the UK Treasury and the FSA "combined to order the transfer of the majority of KS&F(UK)’s retail deposits" -- including those belonging to KS&F(IoM) -- to ING Direct, and placed the UK arm of Kaupthing into administration. . .
As recently as last month the Landsbanki Guernsey Depositors Action Group, which represents depositors in the failed Guernsey institution, sent a petition to all States of Guernsey deputies calling on them to demand “a full public inquiry” into Landsbanki Guernsey’s collapse.
Mark Ashbey, a member of the LGDAG, said the Isle of Man deserved credit for its "willingness to allow a Tynwald Select Committee to publicly examine the causes behind Kaupthing’s failure” and whether possible shortcomings on the part of the island’s regulator contributed to it. International Adviser website - 18-Nov-09.
Iceland's foreign minister is confident parliament will approve by next week an amended bill to repay billions of dollars to Britain and the Netherlands, boosting the country's chances of joining the European Union.
"I am pretty confident that it will go through. Narrowly, but it will go through by next week," Ossur Skarphedinsson told Reuters in an interview on a visit to Brussels. . .
Bickering over the Icesave issue has held up the release of IMF funds, which are dependent on the island successfully negotiating a review by the Washington-based global lender.
The dispute has also clouded Iceland's bid to join the EU — launched earlier this year — souring public opinion in the north Atlantic country towards the 27-nation bloc. Reuters Report on News Centre, MoneyControl website - 18-Nov-09.
At the request of Iceland’s authorities, the Board also extended the SBA by six months to May 31, 2011 to compensate for delays in program implementation and review, and approved the rephasing of the undisbursed amount over the remainder of the arrangement. The completion of the first review enables the immediate disbursement of SDR 105 million (about US$167.5 million), bringing total disbursements under the program to SDR 665 million (about US$1,061.1 million). The Financial Global News Channel, US, website - 29-Oct-09.
Mr Foot, the former managing director of the FSA, published his independent review of British offshore financial centres, which looked at the future sustainability of these jurisdictions and sets out a series of standards to which they must adhere
Although he did not spell out the kind of sanctions that might be enacted, Mr Foot said the process should be similar to the gradual pressure exerted by the G20 on tax havens. . .
The 93-page report states that British offshore financial centres must ensure they meet international standards on tax information exchange, financial regulation, anti-money laundering and financing of terrorism.
Most controversially tax havens must also ensure they put public finances on a firmer footing by diversifying their tax bases, making them less vulnerable to events like the current financial crisis.
The report also said the UK government should discuss with these offshore centres what its relationship and responsibilities will be to them in the future, including what financial assistance it will provide in times of crisis, and how their risks exposures will be managed. 29-Oct-09.
A Treasury commissioned report has called for UK offshore financial centres to raise supervision standards and cut back on the protection offered to foreign savers.
Michael Foot, author of Final report of the independent review of British offshore financial centres, said the Isle of Man should consider closing its depositors’ compensation scheme to foreign savers following the collapse of Kaupthing Singer & Friedlander IoM. . .
‘Reduction or elimination of these [foreign savers] might allow jurisdiction to provide protection to local residents without the need for a liability cap. This is something that they have the freedom to think about.’ . .
The collapse of Icelandic banks Kaupthing and Landsbanki in October 2008 caused problems for savers who deposited money in its subsidiaries based in the IoM and Guernsey.
The IoM government has paid out £85 million so far to savers who deposited cash with Kaupthing Singer & Friedlander IoM through its compensation scheme while consumers who saved with Landsbanki Guernsey have received no support from the Channel Island Crown Dependency. 29-Oct-09.