Depositors are seeking a public inquiry
DEPOSITORS in a Guernsey bank that went bust are angry that a guarantee from its Icelandic parent now appears not to be worth the paper it was written on.
Earlier this week the winding up board for Landsbanki’s affairs in Iceland rejected depositors’ claims under the Guernsey bank’s parental guarantee. And the people who banked at Landsbanki Guernsey are now accusing the Guernsey Financial Services Commission of not doing its job properly.
A group representing the Jesey and Guernsey depositors said that the regulator allowed the bank to advertise a parental guarantee to potential customers that has not now been honoured. They also say that recent assurances given by Guernsey Chief Minister Lyndon Trott, that depositors would be treated fairly by the winding up board, were worthless.
The group is calling for an independent public inquiry to investigate what went wrong and to hold people to account.
About 100 Jersey depositors are still owed about £2 million after the bank failed in October 2008. Over a period of time, they have been repaid chunks of their savings and have so far got back about two thirds.
Article posted on 20th February, 2010 - 3.00pm
9 Article Comments
The Guernsey Financial Services Commission would only issue a written statement on this subject and would not respond to questions. In their statement below you will see thay refer to a consultation document from August 2008, two years after Landsbanki Guernsey Bought the Cheshire and Landsbanki’s literature had been advertising that guarantee for the whole of that period. Negligence comes to mind.
” The GFSC has never required parental guarantees and pointed out the limitations of such undertakings in its August 2008 consultation paper entitled, ‘ Consultation on Parental Upstreaming and the Introduction of Depositor Protection and Ombudsman Schemes ‘. You should refer to Paragraph 4.2 on page 16 of that document which is still on the Commission’s website. The GFSC does require subsidiary banks to have letters of comfort in place but it has always recognised that these are not legally binding and made that point plainly in the same consultation paper. “
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Thank you for bringing some of the truth to readers’ attention. Since October 2008 so many of us ordinary O.A.P. depositors have had more stress than we deserve. Maybe people don’t know that I and many others as a retired British citizen living outside the UK, chose to be ‘ex-pat’ not to be a Tax Dodger but just to live within our means in a warmer climate. Also one isn’t allowed to leave money on deposit etc. in the UK once you move abroad even if you’re still paying UK Income Tax !
How gullible my late husband Joe and I were to actually TRUST the Guernsey Finance regulators that the Icelandic LandsbankiIs.hf. guarantee was true. We would’ve got a higher rate of interest with Lloyds TSB if the UK Government permitted, than with CheshireGuernsey. Now of course my Claim to Iceland has been rejected BECAUSE GUERNSEY FINANCIAL AUTHORITIES didn’t do their homework correctly. All that will be said now is ‘Oops silly me I’m so sorry, well as you’re 76 you haven’t long to go … who cares’
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I think the Jersey States should be demanding the Guernsey States set up an independent enquiry into the GFSC fiasco, since a large number of Jersey voters are affected.
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If the GFSC had been doing their job properly then they should have demanded that any Bank making reference to a parental commitment to cover the liabilities of the subsidiary, make clear that such commitment was not legally binding. This complete lack of oversight by the GFSC can only be described as gross negligence. What is the point of having a CGSC which hides important information from consumers in a consultation paper on its website, which it then conveniently trots out when it wants to defend itself.
Moreover Guernsey Chief Minister Trott’s whinge in the Guernsey Press that “LGDAG has sought to personalize the matter”, is laughable. One of the depositors in Landsbanki is 98 years old. Maybe Deputy Trott should start thing of other people for a change.
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Absolutely. Begs the question: why has the States of Jersey not been pressing Guernsey for a public inquiry seeing as so many Jersey senior citizens lost life’s savings?
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Seems eventually the truth will out, I wonder if Trott and Co will be too. They should be ashamed at allowing such a situation to be, and then leaving the savers who trusted this” Well regulated banking industry” to the administrators. Clearly Guernsey as a savings hole for so many around the world will never trust Guernsey ever again nor anyone else who will be able to read about Guernsey’s failures forever and a day on the internet. It takes time for money to be moved and for money held in Guernsey regulated fund to be cashed up, but for sure it is happening as is evident with the latest figures. Guernsey sorry to say but your government really has let you down and soon even more banks will be leaving your island.
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we definately need to force an enquiry. The GFSC and Chief Minister Trotts handling of this affair, and the way they have hidden evidence then been among the only jurisdiction to hang the people they are mean to support out to dry puts direct negative impact onto Jersey financial institutions. Strong action by the Jersey Financial authorities and government against Guernsey would help a lot. This could include pressurising them to loan the money outstanding to those who lost it with Landsbanki (and then get it back from Iceland itself, as has been done by the Uk, Holland etc).
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I refer to Gary Blanchford comment above – the following paragraph of the document referred to is more telling:
‘The Commission will require that banks should be transparent about the level of
support provided by its parent. Depositors should know at the outset whether or
not this is in the form of a letter of support which the local bank can draw on in
the event of a problem at local level.’
Certainly in the case of LG there was never any indication that the undertaking by LIHF was anything except legally binding and the MD of the bank 3 days before its failure told a depositor:
‘our parent Landsbanki Islands hf has
given an undertaking to discharge those liabilities of Landsbanki Guernsey Limited which Landsbanki
Guernsey Limited is unable to discharge from its own assets, whilst it remains a Landsbanki subsidiary.’
So where was the GFSC when this was still going on?
Unfortunately the GFSC will continue to stonewall and the illustrious Chief Minister will continue to quote the discredited Promontory Report as a means of ’squeaky cleanness’ and more LG depositors will pass away whilst politicians and administrators spend more money covering up their ineptitude and actions in bad faith than it would cost to hold a full and transparent Public Inquiry.
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The longer the States of Guernsey and the Guernsey Financial Services Commission resist the call for a public enquiry into the collapse of Landsbanki Guernsey the more likely they will be perceived by the world banking fraternity to be lacking in their own ‘transparency’.
This dispute has gone on for some 17 months now and you only have to look at the GFSC own quarterly figures to realise Guernsey’s banking figures are spiralling downwards.
To reflect all of the responsibility onto the Administrator is just ‘donkey’ mentality, working with, as opposed to against, is surely the only way a satisfactory solution can be found to this on-going saga.
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