Isle of Man Compensation / Offshore

occamsrazor

Hi,

About the Isle of Man and their compensation scheme.... there's a few things I don't understand...

http://www.fsc.gov.im/investor/dep_comp.xml

So if an Isle of Man bank goes bust then (in theory) up to £20,000 of your assets are covered at a rate of 75%, leaving a maximum due to you of £15,000 pounds, which could take a along time to arrive. OK, I get that.

But many of the banks there such as Kaupthing, Anglo-Irish, etc are also "fully guaranteed" by the parent company. So, your main worry is not that the local operation would go bust (because it would be bailed out by the parent) but the worry is that the parent would go bust. Yes?

And if the parent company goes bust, does that automatically mean that the IOM local operation is bust?

Now, if the parent did go bust, would you also not be eligible for compensation under the parent company's home country compensation scheme - e.g. Iceland for Kaupthing?

Or, if the parent company was bailed out by the parent-home-country government or other banks, would you be part of that, or not?

For example, from what I know, Northern Rock Offshore was part of the UK Govt's bailout of Northern Rock UK and IOM customers didn't lose money... right?

Basically I've a fairly sizeable (more than £35k) amount of US Dollars I want to be both safe and earn relatively decent interest on, and not have to convert for other currencies yet because it seems (I hope!) the dollar may get stronger over the next year.

As a non-UK resident it's pretty much impossible for me to open new UK dollar accounts and all of my money is currently in a Citibank UK $ savings account getting only 2%, albeit gross. And for offshore accounts all the BIG players (HSBC, LloydsTSB, etc) pay miserable rates (around 1 or 2%). Whereas offshore branches of Kaupthing offer an excellent 4.65%, Anglo-Irish 3.5%, etc.

I'm seriously looking at putting it 50:50 between Kaupthing and Anglo-Irish IOM accounts, but that would put me well over the £15,000, in addition to doubts over the timescale of compensation payback. Would I be stupid to do this? Or am I panicking too much?

How the hell does one stay safe and earn decent interest these days? It's scary....

Thanks in advance....