Iceland

shindigger

Swipe wrote: »

I asked and was told it's not possible until it matures

Which, in itself, will stop people like you, and me, all removing our money at once. Which in itself will prevent a run.

Reaper

I remember back in March/April when the panic was on about Icesave some people were posting that they were cashing in their ISAs to get their money out asap - not even transferring them because they were in such a hurry.

They lost their ISA entitlements and look pretty foolish now.

As I understand it the Icelandic banks don't have much exposure to the sub-prime market (correct me if I am wrong), their worries are that their currency has devalued affecting the cost of borrowing. To me that sounds far less worrying because at least the exposure is known, unlike sub-prime exposure where some bank boards are still not sure how much they stand to lose.

Of the two banks Icesave seems to be particularly cash rich, which made it all the stranger that they were the focus of worries rather than Kaupthing. The panic seemed to be based purely on their "passport exemption" rather on whether they were actually likely to fail. But then markets and savers don't always act rationally.

edwinac_2

According to reports this weekend, Wachovia Corp., the giant North Carolina-based bank holding company, could be the next big bank to fail.

"Wachovia is widely reported to be in "fire sale" talks with Citigroup, Wells Fargo and Spain's Banco Santander.

Such a merger may occur, or the buyers may wait, as J.P. Morgan Chase did with Washington Mutual, and buy the bank from the FDIC after it is closed.

However it occurs, it is likely that Wachovia will soon cease to exist as an independent bank."

According to a report in the FT back in March 2007, the Icelandic Landsbanki entered into a joint venture partnership with Wachovia Bank:

"Brent Osborne, a managing director in Landsbanki's commercial finance business, said co-operation between the two should allow Wachovia to use Landsbanki's infrastructure and contacts in Europe and give Landsbanki better access to North American markets.

If Wachovia collapses, as many are warning it will, I wonder what this will mean for Landsbanki?

Wachovia apparently specialised in providing credit from $5m to more than $1bn (£517m) to private equity financiers.

I wonder how exposed the joint venture with Wachovia has left Landsbanki to those bad loans?

Jonbvn

IMHO, as a depositor in almost any bank you are likely to be fine regardless. The reason being that as soon as a bank starts to struggle, a buyer comes in to pick up the pieces so to speak. Even if the whole bank is not purchased, the deposits are seen as a prime asset, given that most banks are struggling with liquidity.

B&B deposits being taken over by Abbey/Santander are a good example of the above.

genny

Swipe wrote: »

I asked and was told it's not possible until it matures

If you were worried, then you'd have not opted for a 2 year fixed rate at all, surely?? The market tumoil has been going on for a long time, it's not just happened overnight.

Will you return here in 24 months to confirm everything was safe and you enjoyed the high rate after all?

Listen to Jonbvn and iSofa on this thread, they are the only two with any sense.

edwinac_2

genny wrote: »

Will you return here in 24 months to confirm everything was safe and you enjoyed the high rate after all?

Or will he be back asking for urgent help to recover some of his money under the Icelandic compensation scheme?

What a worry that would be.

Of course, since "genny" (off the internet) assures everyone the Icelandic banks are "safe", we don't need to worry about that scenario at all!

But does she remember the saga of Providian Bank? We got burnt in that bank crisis...

The following is from The Independent (12 Jan 2002):

"The British arm of the US-based Providian National Bank said this week it was in detailed discussions with several potential buyers and it expects to continue trading.

It stopped taking new business in November when the American parent company was in serious financial difficulties.

Providian refused to say if the 10,000 depositors in the UK bank would get all their money back.

Readers of The Independent have complained about the failure of the bank to repay deposits, even when they forfeited interest to make urgent withdrawals.

One reader told us his request arrived at the bank by recorded delivery on 17 December, but he was still waiting to be repaid."

It was common knowledge in the USA that Providian was in big trouble, yet the British press stayed stony silent because the Bank had a big advertising spend.

"Don't bite the hand that feeds you"

So don't expect the paid scribblers in the media to keep you informed should Icesave, Heritable or Kaupthing start heading for an iceberg.

Maybe they are on that course already...

genny

With the media, especially the tabloid press, reporting constant "worries" about Icelandic Banks (to which there is often no foundation whatsoever), I doubt they'd stay silent. UK banks are in at least as much trouble as those overseas, they were reporting on Sunday that B+B might get taken over, whilst actually the foolish government were buying all their debt.

Although I don't know the details of Providian, were the protected by the FSCS or Passport scheme to 35K?

Swipe

genny wrote: »

If you were worried, then you'd have not opted for a 2 year fixed rate at all, surely?? The market tumoil has been going on for a long time, it's not just happened overnight.

Will you return here in 24 months to confirm everything was safe and you enjoyed the high rate after all?

Listen to Jonbvn and iSofa on this thread, they are the only two with any sense.

Shortly I after I transferred £2k over to the 2 year fixed rate bond the whole scare about the Icelandic banks emerged in the press and on the forums. The previous day to this scare, I had arranged for another £30k to be transferred into another 2 year fixed rate bond. After hearing this and about the whole passport scheme, I got cold feet and cancelled my direct debit just in time. I can tell you I have slept a whole lot better knowing that my £30k is safe in a UK fully protected bank now rather than out of my reach stuck in that Icesave 2 year bond, especially with the current situation. No one knows what's around the corner and how the UK Govt would react to a foreign UK based bank going down.

Mr_Mumble

Odd time to defend Iceland considering one of its big three banks has just been nationalised.

http://ftalphaville.ft.com/blog/2008/09/29/16423/another-nationalisation/

The OP completely misses the point. Its not that UK banks can't go under, its that depositors will be protected if they do. Iceland is such a small country that bankruptcy is a real possibility.

The stresses in the financial system are such that if Iceland does go pop the UK government could be dealing with far bigger British fish at the same time. The Treasury/FSA are unlikely to protect the deposits of those in foreign banks above the FSCS limit, and those below the limit could have a long anxious wait.

occamsrazor

I also just read the news about Glitnir's takeover with some concern. I've been very happy with Kaupthing so far, but as a customer of their Isle of Man operation (with its less-than-fully-comforting compensation scheme) it does make me a bit nervous as I've more deposited than that covered by the scheme.

Can anyone insightful comment on what effect the continued fall in the Icelandic currency might have on Kaupthing? They seem also to have been taking large deposits in euros, sterling, dollars and generally seem less exposed to the sub-prime crisis, at least from what I've read, but am no expert.

The news last week that the Qatari Emir took a 5% stake in the company gave me some reassurance, but now I'm slightly less so.

All that said if I was with Kaupthing's UK operation and had less than 35K I wouldn't have these concerns...