GUERNSEY ministers have rejected various loan proposals that would have given many Landsbanki depositors some of their money back.
And it looks less likely than ever that savers in the Icelandic-owned Guernsey bank that collapsed last year will get all their money returned when the affairs of the bank are finalised.
The ministers’ decision spells further frustration for Jersey residents who deposited cash in the failed bank. Landsbanki Guernsey is in administration and the joint administrators last week asked Guernsey’s Treasury to put up some of the money owed to depositors as a loan to be guaranteed against bank assets that have yet to be realised.
But the proposal was knocked back by senior politicians. Meanwhile, a spokesman for Jersey depositors in the failed bank said that she left a meeting with Guernsey chief minister Lyndon Trott last week feeling ‘really deflated’. Eleanor Balston said that a report by an independent UK group had apparently identified no failures in Guernsey’s regulatory regime.
• Picture: The Icelandic-owned Guernsey bank collapsed last year
Article posted on 13th January, 2009 - 2.54pm
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I recall the Treasury Minister, Charles Parkinson, stating that if the administration of the Bank had not been completed by the time deposit protection had been introduced in Guernsey, depositors in the Bank would be technically entitled to repayment of £50,000 under the new scheme. He went on to say that he was sure the administration would have been completed long before then. Was he wrong on both accounts?
Elizabeth Gauvain
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The so-called “report by an independent UK group” was a self-commissioned review by the GFSC! Regardless of the review commission’s credentials, would you expect them to bite the hand that fed them? A truly independent inquiry is needed.
Even so, the commission’s report highlights some serious deficiencies:
- There was a serious breakdown of communication between the GFSC and the FSA, for which, in absence of contrary evidence, the GFSC should at the very least be held partly responsible.
This caused a third of depositors’ money being trapped with the UK bank Heritable.
- They let LG advertise that there was a parental guarantee while it was a mere letter of comfort.
In addition, the government of Guernsey also bears a significant responsibility for this debacle:
- It must be one of the few places where there was no compensation scheme in place. Such a scheme was rushed through following the LG scandal but they lacked fair play in failing to apply it retroactively.
- I understand that the idea of a compensation scheme was discussed over the last decade but due to dithering, no action was ever taken until it was too late.
- Guernsey is, to my knowledge, the only State on the planet which did not deem necessary to come to the rescue of its local depositors.
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