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Banking: Iceland

Volume 717: debated on Monday 8 February 2010

Question

Asked by

To ask Her Majesty's Government how much money was lost by retail investors when Landsbanki Guernsey failed; how much remains unreturned to such investors by Kaupthing Singer and Friedlander (Isle of Man); how much was transferred by Kaupthing Singer and Friedlander (Isle of Man) to Kaupthing UK in the period shortly before it was put into administration; and whether they will take steps to have that amount returned if it was improperly transferred. [HL1763]

Oversight of Landsbanki Guernsey and Kaupthing, Singer and Friedlander Isle of Man (KSF IoM) is the responsibility of the Guernsey Financial Supervision Commission and the Isle of Man's Financial Supervision Commission, respectively. Accordingly, arrangements for depositors in banks in the Isle of Man and Guernsey are a matter for the Governments of the Isle of Man and Guernsey.

Landsbanki Guernsey

On 26 November 2008 the States of Guernsey approved the immediate creation of a depositor compensation scheme for Guernsey.

However, this scheme does not have retrospective effect and therefore does not apply to the depositors of Landsbanki Guernsey. Instead, as that institution has been placed in administration, the depositors are creditors and will be treated in accordance with normal administration procedures. It appears that the administrator has already made a part payment to the depositors. Any further payments are a matter for Landsbanki Guernsey's administrators.

KSF IoM

As KSF IoM participated in the Isle of Man's depositors compensation scheme (DCS) and has been placed into liquidation, depositors with KSF IoM may be eligible for payouts from the DCS.

KSF IoM had deposits with its sister company KSF UK at the time of KSF UK entering into administration. Under UK insolvency law, KSF IoM ranks like any other creditor in the administration of KSF UK. As part of the administration process, as is usual, a moratorium is in place on the enforcement by creditors of claims against KSF UK. Creditors of KSF UK will be treated in accordance with the administration procedures and may receive a payment from the administrator in the normal way.