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Savings in Kaupthing Bank in Iceland Account
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OliverDog_2
Posts: 15 Forumite
I have all my savings in the above bank in a high interest Money Market account in Iceland. This is all the money I have and do not know anything about finance at all. I put the money in this bank when my ex husband worked over in Iceland some time ago.
I have 8975786 ISK in the savings account, which was £70,000 but now seems to be worth £57,000? I have been told by the bank that £35,000 is safe and to move my money now would be silly as I would loose a lot due to the low exchange rate of the ISK? (I dont understand this really either).
Could you give me some advice I can understand about what to do with my money as if I loose it all I will have nothing to retire with as this is my pension? I need someone to help me and I have no-one to ask? I have two current accounts I could move some of this money into (one is in Euros and one is in GBP). Would it be best to move it now, even though its worth less? If so do I put it into Euros or GBP
Please somebody help me I wish I had just put it in the Building Society in the UK!!
Desperate Lady nearing retirement - Any advice would be very welcome x
I have 8975786 ISK in the savings account, which was £70,000 but now seems to be worth £57,000? I have been told by the bank that £35,000 is safe and to move my money now would be silly as I would loose a lot due to the low exchange rate of the ISK? (I dont understand this really either).
Could you give me some advice I can understand about what to do with my money as if I loose it all I will have nothing to retire with as this is my pension? I need someone to help me and I have no-one to ask? I have two current accounts I could move some of this money into (one is in Euros and one is in GBP). Would it be best to move it now, even though its worth less? If so do I put it into Euros or GBP
Please somebody help me I wish I had just put it in the Building Society in the UK!!
Desperate Lady nearing retirement - Any advice would be very welcome x
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Comments
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Well, I don't think these Icelandic banks are going to go bust.
The Northern Rock fiasco happened because their business model relied upon them using money borrowed from the commercial money markets and, because of the subprime mortgage market problems, these sources dried up.
Word then got out that 'Northern Rock couldn't get money' and this then translated into a fear in ordinary peoples' minds that they might not even be able to pay out withdrawals if their customers wanted to withdraw ordinary savings. The queues just lengthened, the fears didn't die away, and we saw these fears, which were originally just silly and irrational fears, amplify and cause a run on the bank. Then the British goverment stepped in and stopped it by guaranteeing NR customers' savings up to the sum of £100,000.
I'm fairly sure you originally got a great rate of interest with your Icelandic account. However, of late the Icelandic Krona has suffered a massive devaluation when compared to the British pound.
If you were to close your Icelandic account now, I think you would most probably be 'getting out at the bottom'.
I think this 'fear situation' with Icelandic banks is currently at just about its maximum. Their are a lot of MSE users, including me with savings in Icesave, which is an account with the the Icelandic Landsbanki bank. All told, Icesave have about £5 billion of our money.
Fortunately for us, but not for you, our money is still in £GBP and has not been converted into Icelandic Krona. We aren't suffering currency devaluation problems like you. But we are getting a good rate of interest. I for one am keeping my money with Icesave. I think the anti-Icelandic bank hype is very overdone.
Good advice looking back would have been to keep an eye on the exchange rate and cop out if it devalued by any more than, say 5%. But you didn't do this and within about a month it's devalued by much, much more than this.
That was then. This is now. What do you do NOW is the problem.
My best advice is to sit tight. I don't think it would be a good thing to convert your Icelandic Krona back into £GBP at this present time. I would very definitely sit tight. It might even become a bit more painful for you but I would still hold tight for the present. Things should get better and when the negative hype dies down the Krona will strengthen. When it does I would re-evaluate the situation.
In other words, I think if you close the Icelandic account now, and convert your savings back into £GBP at this present time, then I think you will be maximising your losses.
I would advise you to wait a while and I feel confident that better times for you than those at present are not too far distant.
As to whether you will get back the exact exchange relationship parity that was present between the Icelandic Krona and the £GBP when you originally opened the account, I'm not sure. But I am sure now is the worst possible time to close the account and transfer Icelandic Krona back into £GBPs.
I hope that helps. I'm sure you must be extremely stressed by this situation but hang tight for the moment. I'm sure things will get better.
I'd also like to see some opinions on this from others.0 -
You can see a chart of the Icelandic Krona graphed against the British Pound on lots of Internet sites.
Key words on Google would be - 'chart Icelandic Krona British pound'
Here's one such chart, where you will see what's happened and why it surely can't get much worse than it is at the moment:
http://fx.sauder.ubc.ca/cgi/fxplot?b=ISK&c=GBP&rd=365&fd=1&fm=1&fy=2007&ld=31&lm=12&ly=2008&y=daily&q=volume&f=png&a=lin&m=0&x=0 -
Many thanks for your help, it has helped to allievate my fears a little.0
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Here's another chart. If you click on 'data' then you can actually see the figures instead of a graph:
http://www.x-rates.com/d/ISK/GBP/graph120.html
As you can see, The Icelandic Krona has just collapsed. Hopefully, it should soon recover quite a lot.
It is an extremely volatile currency. At some time in the future, when things are a lot better, then I would advise you to get back into your home currency.
Really, an adventurous currency speculator would now be BUYING Icelandic Krona.
He would then wait for them to actually strengthen (ie. be worth more in £GBP) and then cash them back into £GBP when it has happened at alevel when he is happy with his profit.0 -
The Krona has been utterly trashed. That's why Iceland has put its rates up to 15%.0
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I would def sit tight for a little while. I think there is a 'bear trap' in the offing.
It is likely that certain investors have been betting on the collapse of the krona, and the default spreads of the icelandic banks.
If this article is anything to go by there is a solution that the icelanders have open to them.
That is for the icelandic goverment (and possibly other nordic goverments) to plough a hugh chunk of cash into bank stocks, and the krona.
This, if they do it, will cause everything to to turn on it's head
http://www.ft.com/cms/s/0/50309f86-fd32-11dc-961e-000077b07658.html?nclick_check=1
The krona rate will rise, and the credit spreads will fall. And all the investors betting on the falls (bears) will be badly burnt.
Bearing in mind the icelanders agressive attitude to business, it wouldn't surprise me if this is what they are planning to do.0 -
I would def sit tight. I think there is a 'bear trap' in the offing.
It is likely that certain investors have been betting on the collapse of the krona, and the default spreads of the icelandic banks.
If this article is anything to go by there is a solution that the icelanders have open to them.
That is for the icelandic goverment (and possibly other nordic goverments) to plough a hugh chunk of cash into bank stocks, and the krona.
This, if they do it, will cause everything to to turn on it's head
http://www.ft.com/cms/s/0/50309f86-fd32-11dc-961e-000077b07658.html?nclick_check=1
The krona rate will rise, and the credit spreads will fall. And all the investors betting on the falls (bears) will be badly burnt.
Bearing in mind the icelanders agressive attitude to business, it wouldn't surprise me if this is what they are planning to do.
AFAIK, Iceland doesn't have the reserves to defend itself.0 -
Hi Meester
Can you explain to me in simple terms who AFAIK are and what this will mean to me if I leave my money in Kaupthing in Iceland? Thanks0 -
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AFAIK, Iceland doesn't have the reserves to defend itself.
We're talking 15% of the issued share capital, of what are very depressed stocks, and a krona that's very low in value, as i've previously posted the Bank of Iceland has an agreement with the other nordic central banks, that they will support it, if called on.
The ratings agencys have stress tested the icelandic economy and think it is more than capable of supporting it's banks, and nationalising if necessary.
On what basis do you think that the iceland does not have the reserves then?0
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