Kaupthing Edge covered by FSA?

chrissy513

In your details on whether your money is safe, you quote

An important note about Kaupthing. In the FSA listings of passport scheme banks "Kaupthing Bank hf" is included. Don’t confuse this with the fully UK regulated “Kaupthing Singer & Friedlander” registration which is what covers the "Kaupthing Edge" account (part of the Top Savings article) meaning the savings account has the full UK protection.

Interestingly enough, have you seen the following extract in the Terms and Conditions for opening a savings account for Kaupthing Edge?:

3.2 Novation
Kaupthing Singer & Friedlander Limited may, by notice to you, novate the contract between it and you (comprising the Terms and Conditions) to Kaupthing Bank hf. This means that from the date of the notice to you, all of Kaupthing Singer & Friedlander Limited’s rights and obligations to you will be transferred to Kaupthing Bank hf, with whom you will have a contract comprising the Terms and Conditions. From that date, your rights
and obligations under the Terms and Conditions will be with Kaupthing Bank hf. Kaupthing Singer & Friedlander Limited will notify you of that novation through one of the Communication Methods. You consent to that
novation.

Which means that at any time they could convert to Kaupthing Bank hf which is covered by passport scheme and therefore not fully covered up to £35,000, i assume.....

Aegis

It would still be covered up to a full £35k even if it switched to the passport scheme. At that point the FSCS would cover the excess above the passport scheme limits at the time of failure.

oldagetraveller

After being notified of any change it would be then up to the customer whether they accept the change.
Still covered up to £35000 though but would claiming by the passport scheme be worth it compared to the FSCS? Only, in the unlikely event of the necessity for this, would either be tested.
If not put the money elsewhere?

alared

The whole issue with the Icelandic banks seems a bit confusing to say the least.
People say "we`ll be OK with KE if it goes under,as long as we don`t go over £35k"
The FSCS will come galloping to our rescue and cough up our hard earned.

But will they?
Have they ever been tested with having to fork out BILLIONS of pounds.
And even if they did how long would it take?
NR was saved by the BoE (ie: THE TAX PAYER)

Can`t see the taxpayer caring about an Icelandic bank or the Iceland government.

SouthCoast

Guess I will get flamed,. but following the revelation that XL.com was partially financed by the Icelandic Banks, just some thoughts.

Iceland has a population about the size of Brighton & Hove.
I am unclear about its relationship with the EU.
How long have the Icelandic Banks been trading in the International market?
Do the Icelandic Banks have shareholders and who are the directors and what experience do they have of running an International Bank?
Are their shares quoted on any of the worlds leading stock exchanges?
What lending exposure to non domestic business do they have?
Has anybody from the UK actually been in an Icelandic Bank branch and spoken to the employees?

An old adage says:

The higher the return, the greater the risk.

Update:

XL's three main creditors were revealed yesterday as British bank Barclays, owed around £10m, Icelandic bank Straumur, owed £36m, and Icelandic bank Landsbanki, owed £165m. Total debts are estimated to top £350m.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/09/13/cnxl113.xml

alared

An interesting article here about how banks are rated for risk.


Bank CDS (basis points)
Alliance & Leicester - 480
Anglo Irish Bank - 383
Barclays - 134
HBOS - 281
HSBC - 121
ICICI (India)- 358
Kaupthing (Iceland) - 902
Landsbanki (Iceland) - 686
Lloyds TSB - 112
Royal Bank of Scotland - 194
Source: Bloomberg (21/3/2008)

As you can see,KE is a massive 902 compared to Llyods TSB`s 112

http://www.thisismoney.co.uk/saving-and-banking/article.html?in_article_id=433952&in_page_id=7

EalingSaver

alared wrote: »

An interesting article here about how banks are rated for risk.


Bank CDS (basis points)
Alliance & Leicester - 480
Anglo Irish Bank - 383
Barclays - 134
HBOS - 281
HSBC - 121
ICICI (India)- 358
Kaupthing (Iceland) - 902
Landsbanki (Iceland) - 686
Lloyds TSB - 112
Royal Bank of Scotland - 194
Source: Bloomberg (21/3/2008)

As you can see,KE is a massive 902 compared to Llyods TSB`s 112

http://www.thisismoney.co.uk/saving-and-banking/article.html?in_article_id=433952&in_page_id=7

Given this article dates back to March isn't this unfounded scaremongering? At least if you are going to make a point about CDS rates for specific banks shouldn't you use up to date data???? Interesting to note that since the date of this article, A&L has had to run into the arms of Santander, and I vaguely recall HBOS making a £4.5bn rights issue to raise new capital. I don't recall seeing any such thing from Landisbank or KE todate.

BTW, there was an interesting article in the Economist recently - can't remember which issue - which noted that CDS was proving to be a useful indicator but also prone to short term fairly violent flucations, as an example of the latter it specifically mentioned the big CDS rates experienced by Icelandic banks for a period.

Now a more recent artical from Icenews (mid-August) (which tends to bear out the volatility statement referred to above):

http://www.icenews.is/index.php/information/credit-default-swap/

CDS spreads on Icelandic banks improved significantly last week....Kaupthing’s CDS level fell by 350 basis points (bp) last week to 630bp....and the CDS for Landsbanki is now 410bp after having decreased by 240 bp. .....Additionally, positive news came on Thursday that the three major Icelandic banks had comfortably passed the stress test set by the Icelandic Financial Supervisory Authority.

ed123_2

....also the financial results for Landsbanki & Kaupthing Edge for the first half of this year were v good (can't find the link but posted on here-as far as I know, no US sub prime losses) we could trust good old British companies aka Cheshire & Derbyshire building societies which were subject to a forced takeover by Nationwide (following expected large losses-Derbyshire after US sub prime losess). Brad & Bing & A&L, HBOS are also aledgedly on shakey ground.

alared

By Chris Bolwig on Aug 18, 2008 in Finance and Business, Iceland, MBL | comments(0)

CDS spreads on Icelandic banks improved significantly last week, according to research from Nordic bank Glitnir.
Kaupthing’s CDS level fell by 350 basis points (bp) last week to 630bp. The CDS on Glitnir is down by 305bp and is now 680bp and the CDS for Landsbanki is now 410bp after having decreased by 240 bp.
The price of CDSs (credit default swaps) is seen as a sign of a bank’s credibility in global markets. The lower the CDS level the better, as the CDS reflects investors’ faith in financial companies to keep their commitments.
Glitnir Bank has given a number of reasons for the tightening of the spreads, including increased market activity and positive earnings statements from the banks.
Additionally, positive news came on Thursday that the three major Icelandic banks had comfortably passed the stress test set by the Icelandic Financial Supervisory Authority.
Tags: CDS, credit crunch, credit default swap, economy, Glitnir, Icelandic Banks

Yes improved to a still massive 680 bp

jwlwri

Further to the original poster's question, I'd like to ask one of my own on the subject. Although they are currently covered by the FSCS, and the Kaupthing Bank hf which customers can be transferred to has topped up into the UK scheme for the 2008-2009 financial year, this leaves me with some concerns still.


This is a lot of ifs, but:

If they did begin to go under after next financial year, and IF they hadn't topped up into the UK scheme for 2009-2010, and IF they had transferred customers to Kaupthing Bank hf (their terms and conditions state that the customer is effectively transferred from the time that the notice is given - nothing is mentioned about it being a choice), would this not mean that the full £35,000 would not be covered?

Again, I realise this is a huge number of small probabilities, but where savings are concerned it's good to consider the worst case I reckon.

Any info people have on this would be really appreciated

dozey

Can somebody please tell me where I can find the up to date CDS price for all the banks? Must admit if I had that I would be happier to make a decision re my money.