Hope for Landsbanki depositors
Saturday 11th April 2009, 2:59PM BST.
A CALL has been made for the States to act to help Islanders financially suffering in the wake of the collapse of an Icelandic-owned Guernsey bank.
Eleanor Monaghan, who is leading the fight on behalf of 125 Jersey residents who deposited money in Landsbanki, said that it was now six months since they had had access to their cash and that some were suffering hardship.
The Jersey depositors, who are still owed £3.4 million, have had 30 per cent of their deposits returned.
Liquidators Ernst & Young have indicated to Mrs Monaghan that considerably more may be handed back, but this could take some time. She is now hoping that the States will act to help out Jersey residents in need.
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Unbelievable! These people invested (gambled) and lost and now they expect the tax payer to bail them out!!! Ok…if that’s the case, next time I lose fifty quid on the odds on favourite at Redcar shall I also go cap in hand to the taxpayer!!!
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Completely rediculous! John (1) has said it right. It was their choice to place their money with Landsbanki. Greedily going for the best rates they could regardless of any risk was plainly foolish in the first place. I remember the full page advert in the JEP for Landsbanki (Guernsey) offering 7% and thinking quite a few idiots would go for that. My own thoughts were I wouldn’t touch them with a barge pole!
Why should my tax money now go to bail them out? Especially when the money wasn’t even in Jersey helping the Jersey Economy!
Of course they’ll ask for a bail out, they’re panicking now. However, the States must not back down.
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I can understand Fred and John’s reaction here but would suggest they investigate the facts a little more deeply. Landsbanki Guernsey (LBG) was a solvent company but had upstreamed Channel Island deposits to Heritable Bank (in the Uk) and Landsbanki Hf (in Iceland). The money placed in those two jurisdictions has been used to compensate depositors in those jurisdictions following the collapse of the Icelandic banking system. I can’t help feeling that this is not far removed from theft. I believe the States should compensate savers until such time as the funds are returned to where they lawfully belong. I also don’t consider that placing money in a bank is gambling. The only retail depositors to lose money from a banking collapse are those who deposited funds with LBG – Icelandic, UK, IOM and all European depositors have been fully compensated. Are all those jurisdications wrong to compensate their depositors? Perhaps Fred and John should also consider moving their funds out of their Jersey banks. If any of those should go into adminstration (regardless of where the parent entity is) they will be in the same boat as the LBG depositors because all Jersey banks are Jersey registered companies and there is no depositors protection scheme in place in Jersey. I should hate for them to be in the same boat as the LBG depositors…although obviously I would have scant compassion for them in that event.
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I am 66 years old and have worked all my life (49 years). My wife and I have little or no pension as I elected to be dependent on no one. Our savings are all we had and we tried to get the best return on them. LG looked a good place to deposit my savings and I researched them well before investing with them. Our future looks very depressing now that the Guernsey states seem reluctant to help. Surely Jersey States could show Guernsey that generosity is not lacking here by making a token advance to small depositors like me who are finding life difficult while we wait for the return of our savings.
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Thank you, Nick, for re-stating the facts about the great injustice that LG savers continue to suffer. If John and Fred will please read the original article again you will see that it was a guarantee for a loan that was suggested, nothing there about using taxpayers’ money. If you gentlemen find yourselves in difficulties at any future time you will no doubt hope to be treated with a little more compassion than you offer or recommend.
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The fact of the matter is that the money was DEPOSITED in this bank in good faith. Guernsey rather shot the stable door after the horse had bolted and introduced a non retrospective DPS, and also there has been virtually no support from the Guernsey Government.
All depositors (and NOT investors) are asking for is help by way of a small advance, obviously repayable, until such times as a final payout is made. This situation has left a lot of people in dire straits, people who by virtue of the fact that they have saved money are now being punished. These are not the type of people who ‘live off the States’.
It is interesting to note that when this situation first arose last year, at the first depositors action group meeting Philip Ozouf assured that there would be a DPS in place in Jersey before the end of last year. Interesting to note that it has still not been actioned.
Perhaps John and Fred would feel a little differently if they were in a similar situation in Jersey.
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The States of Guernsey should have loaned the administrators the funds in the first place to compensate all depositors with a view to recovering their monies once the banks assets are realised.
I would just like to point out to John and Fred that people who have savings accounts with LG are depositors and not investors. The public are unfortunately ill-educated when it comes to knowing which jurisdiction allows certain companies to operate. For example I believe that LG were refused to commence operations in Jersey but were allowed in to Guernsey as they accept the top 500 institutions. Who could possibly have predicted this?? The thing that concerns me is that advertisements for Guernsey deposit/call accounts are still rife throughout the JEP and again the public are not aware that many of these institutions are not allowed to operate in Jersey – this position should be rectified immediately. Having said that SofG do guarantee £50k whereas SofJ are yet to approve such a scheme.
I fully support SofJ giving assistance to those that need it while we wait for funds to be recovered, unfortunately, I agree that it is not wholly upto the SofJ to compensate depositors.
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Nick – I have been well aware for many years that there is no bank deposit protection in Jersey. So why on earth would I expect money lost in LBG to be protected with our own tax when that bank was actually not included in the Worlds top 500 banks given entry to Jersey! At the very least, I would expect a Jersey depositors protection scheme to be put in operation in Jersey before any money held outside the Island now lost is compensated for albeit as an advance. What happens if the money never does get returned to “where it lawfully belongs”? Do we claim the compensation back again?? Obviously the fight with LBG will need to go on as they cannot be allowed to use deposit funds from one area to compensate others elsewhere. That is indisputable.
Of course banking isn’t gambling, but it isn’t totally risk free either as people have been led to believe.
LG Depositor says he researched LBG well. Clearly not well enough I’m afraid.
Found this (with the click of a mouse) written 2nd April 2006 by David McWilliams, popular Irish Author and business columnist:
“This week, Iceland is in crisis. It is on the brink of a currency collapse, money is flowing out, its banks are finding it difficult to keep credit lines open, and an Asian-style crisis appears imminent”.
Edward Hugh, Emerginvest analyst May 2007:
“From 2006 onwards, the Icelandic economy faced problems of growing inflation and current account deficits. Iceland’s growth rate has suddenly ground to a near-halt, with growth this year being forecast to be a mere 0.9%, but with a current account-deficit at year’s end 2006 running at 26% of GDP, and with a currency slide last year of some 30%, and with central bank interest rates currently running at 14.25% some sort of slow-down would seem to have been inevitable.”
Look what happened afterwards!
LG Depositor – I can’t understand that you have little or no pension as you “elected to be dependent on no one.” That really doesn’t make any sense. Surely you will now have a joint States of Jersey Old Age Pension since you’re over 65, or at worst a combination UK/Jersey OAP; if you don’t have a work pension then you could have started your own private one since 1987 or earlier. How is having your own pension income being dependant on others? Quite the contrary, as you are unfortunately more dependant in your current position.
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I have brought all my family with me when I started work for the states of jersey. my two grandsons were born in jersey, love their friends/school but were forced to leave the islands when lbg took our money as we could not afford to live here, so John, you laugh at us for being stupid but please think of those little boys who lost their country of birth because we were robbed. money deposit is not a gamble but placed in a place of safety. watch yours in jersey as there is no protection.
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John and Fred, whilst I understand your strong knee-jerk reactions, you are both showing the lack of understanding with your comments that I had come to expect more from Guernsey politicians than our own islanders.
Depositors with LG were exactly that, depositors, not investors or gamblers. This was a top -500 listed company, which was trusted enough to be invested in by many UK councils. Their interest rates were good, but by no means the highest on offer at the time, and were backed by a written assurance from the parent company in Iceland as to the state of their financial affairs. Many people with bonds in other companies had their bonds transferred to LG, and so were not able to remove their money prior to the collapse without losing their interest. Without the actions of the Uk treasury using anti-terror legislation to seize Icelandic assets, the company may not have suffered the same catastrophic collapse. Both Jersey and Guernsey were very quick to advertise, and are still doing so, yet feel no obligation to warn of risks. Indeed, Landsbanki is still being advertised at Heathrow. This is a new company which has just rebuilt itself on the same shaky foundations, having dumped its previous responsibilities with no regard.
The lack of both the States of Jersey and Guernsey to put in place depositor protection schemes, despite being advised to about a decade ago, has greatly exacerbated the current problem. Whilst
it is up to the administrators to continue to see what assets can be obtained from the company itself, Guernsey having taken taxes from those involved, has a moral if not legal responsibility to help those who have invested with it. Also, it has been argued on many occasions that the States of Guernsey should have loaned the administrators the funds to compensate all depositors with a view to recovering their funds after the bank’s assets had been realised. This, and similar schemes proposed by the administrators, have been blocked by the Guernsey government.
In the mean time, Jersey has been left with the responsibility to help those who through no fault of their own are suffering financial hardship. This is not saying that Jersey should provide full compensation. However, all societies have the duty to protect those suffering immediate financial hardship. Also, pressure from our own politicians to those on Guernsey to be more proactive in trying to sort their mess would be greatly appreciated.
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Furious LBG Depositor
It has taken me 52 years of hard graft Fred and John to save the money I deposited with Landsbanki; if I had stolen this amount of money from a bank I would be locked up in jail by now – yet this Icelandic Bank was vetted and passed by the Guernsey Financial Services Commission to commence trading within the Channel Islands,then allowed to steal their savings and then just bury their heads in the sand if there had been just one Guernsey States member with funds deposited with Landsbanki it would be a totally different story wouldn’t it.
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This has absolutely nothing whatsoever to do with Jersey so why on earth do these people call for the Jersey taxpayer’s assistance?
Even people who had their entire savings in LBG will have already received 30% back, so they are better off than many people in Jersey who have no savings and mounting debts.
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The rights and wrongs of the Landsbanki matter are extremely complicated. Inevitably people want to find someone to blame, but it seems to me that kicking people who are down is against all the values that most of us believe in. Of the many elderly people who need somehow to supplement their pensions, and have saved to do it, not all are financially sophisticated enough, or even know how to use a computer, to find and read what the pundits said last year. Big UK charities and local councils also missed the warning signs so its hardly fair to blame individuals.
True, Jersey’s government has no responsibility for Landsbanki’s collapse. What has resulted in misery for so many people has complex causes and in varying degrees the blame lies with the Icelandic government which was responsible for how the parent bank operated, the British government and its Financial Services Authority, the Guernsey Financial Services Commission and the directors of the bank in Guernsey. All have played some part in the chain of events that led to LG being placed in administration, a bank that owned more than enough assets to cover its liabilities. A large part of those assets are in the UK, some on deposit with another bank with Icelandic origins which the administrator is trying to untangle and retrieve, and a large amount in property loans. You can imagine how long it may take to realise some, if any of the latter in the present state of the UK property market. And all of this quite outside the knowledge or understanding of people who simply trusted Guernsey as a safe place to put their money in a high street bank and earn some interest.
The reason we know so much about it now is entirely thanks to the untiring efforts of a few determined people who lead the depositors action group. They are using every avenue to bring pressure to bear on the various authorities involved to try to get back money their own money that they have had to manage without for six months. For some people the wait is leading to despair. They need some help now.
Guernsey States has a moral responsibility to help fill the gap until further repayment is possible, but to its shame continues to give the impression that matters must just take their course, no matter what the degree of desperation. And it is this intransigence, this apparent lack of compassion, that has led to great anger and sense of betrayal when every other jurisdiction which has been affected in a similar way has done what it could to assist depositors. I sincerely hope that Ministers in the Jersey States are using their own influence to try to persuade their Guernsey counterparts to change their stance, not least because the damage that this is doing to the reputation of its finance industry can easily rub off on ours.
In the meantime I hope I’m right to be confident that Jersey’s government will respond to the call to consider how they might assist any local people who are in financial difficulties as a result of this situation. I hope they will show we are a humanitarian society.
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I would have thought that there are already measures in place to help people in extreme hardship, eg income support, parish welfare etc?
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If the money is guaranteed to be paid back eventually why don’t these people go to a bank for a loan ?
And as Dave 14 says, Jersey already has a welfare system in place to alleviate extreme hardship.
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Dave and PJG, you should see how smugly self-satisfied you sound. Your remarks about welfare show how incapable you are of understanding self-respecting people, whose savings symbolise their independent spirit. Begging for handouts ? Hardly ! A recognition that those savings are, at this moment, stolen goods are what ‘these people’ as you so dismissively call them, are asking for.
Taxes were paid on these savings, and as tax payers we are asking our governments to recognise the injustice and to find a way of enabling responsible citizens to get on with lives that have been on hold for six months.
Just pray that you never find yourselves in the same situation. Demeaning suggestions from fellow citizens just add insult to injury
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Another LG saver,
The article states ‘A CALL has been made for the States to act to help Islanders financially suffering in the wake of the collapse of an Icelandic-owned Guernsey bank’can you please explain what sort of assistance, financial or otherwise, you feel that Jersey States should give?
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When I deposited my savings with Landsbanki Guernsey, I already had funds with Bradford & Bingley which were receiving 6.5% interest. Therefore it wasn’t greed (as has been suggested by some email contributors) which made me opt for the Landsbanki 7% interest offer, but a case of not wanting ‘all my eggs in one basket’.
I also had reassurance from a friend who had been with Landsbanki since they took over the Cheshire Building Society and I assumed that if the Guernsey states were happy for them to trade in their jurisdiction, then Landsbanki must have been ok.
I am not a big-time investor or a fool. I’m just a person who works hard, pays their taxes and saves for their future, but made a bad choice of bank.
I do not expect the Jersey tax payer to bail me out. However, I hope that the Guernsey states will fight for a resolution, with the Icelandic government, for the earliest return of our money.
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