Kaupthing Edge, Should I Avoid?

Vectra

genny wrote: »

In total agreement.

Me Too

We had a run of this doom stuff on the forum way
back in Feb this year

papolo

LucyTheDwarf wrote: »

Tell it often enough, and the worst will happen.

you are right LucyTheDwarf

sandspider2000

From the Kaupthingedge website:

Important Information about Current Market Environment:

The past few weeks have been unusual and uncertain in the world of banking so we want to tell you about our financial stability and the security of your savings.


On Lehman and US Mortgage Market:

Due to our conservative business model, Kaupthing has minimal exposure to either Lehman or the US sub prime mortgage market.


On Glitnir:

The recent events of the Icelandic Government purchasing a 75% stake in Glitnir, a small Icelandic bank, has little impact on Kaupthing - other than the fact that we were encouraged to see the Government act quickly and decisively to strengthen and support the Icelandic financial system.


Credit Rating Agencies:

In recent months, many banks have been downgraded due to market conditions. In line with this, we have recently been downgraded by Fitch. We anticipated this downgrade and remain comfortable with the quality of our loan portfolio which is well diversified geographically and by industry sector. Kaupthing remains a profitable and very liquid bank.


On UK Financial Services Compensation Scheme (FSCS) going up to £50K:

There is much speculation that the current £35,000 protection offered under the UK Financial Services Compensation Scheme will be increased to £50,000 but this is not yet implemented or agreed to our knowledge. As a UK bank, we would welcome the increase of the Financial Services Compensation Scheme, as it helps to give customers peace of mind about their savings.


Your Financial Protection:

Funds deposited with Kaupthing Edge UK are deposited with Kaupthing Singer and Friedlander Ltd (KSF). KSF is Kaupthing Bank's UK subsidiary. It is a UK bank authorised and regulated by the Financial Services Authority in the UK. Deposits are covered by the UK FSCS.

Admittedly, I'm sure they're hardly likely to say "Yep, we're bankrupt", but still somewhat comforting.

http://www.kaupthingedge.co.uk/About/ImportantInformation.aspx

I have substantial savings with them, and for now at least, they will remain there.

Giles

Andrew64

prudryden wrote: »

The report is that the Credit Default Swaps (CDS) of Kaup has gone through 2500bp - that is huge in any language and something to be concerned about.

According to this story, Kaupthing's CDS is now a mind-blowing 3,306:

http://www.telegraph.co.uk/finance/3129201/Kaupthing-demands-more-cash-from-clients.html

poppy10_2

I'm pulling my £10k out of KE. This is too scary to contemplate. Reyjkavik is in serious danger of going under, they have no money to bail out the banks, and the Krona is collapsing. The cost of insuring against a default by Kaupthing has reached record levels, as pointed out by Andrew above.

From the FT:

Listen to my man in Reykjavik.

They are fighting powers that they are powerless to fight. It’s like tackling a storm raging in the sea with a teaspoon.

The main supermarket can’t get imported goods because they have no currency. The shops are half empty. One of the store managers has advised people to start hoarding. We’re running out of oil. And winter came last night - about a month early.

Rumours about the possible formation of an emergency government and the implosion of various companies are swirling around the capital.

And also:

Whispers, unanswered telephone calls, stone-walling, firm “no comments”… Something was up in Iceland on Friday.
The immediate focus was Kaupthing - one of Iceland’s two largest banks. The price of its CDS has now spiked through 2500bp, suggesting the credit markets believe default is imminent. Sources suggest emergency talks are now underway between Kaupthing and the Icelandic authorities.

But this is a run on a country’s financial system, not just one institution. The collapse of the Icelandic krona continued apace, threatening to hit 156 against the Euro on Friday.
And, behind the scenes, some furious finger-pointing is underway. The snap nationalisation of the third largest Icelandic bank, Giltnir, has led to accusations that the central bank, the Sedlabanki, has intensified the crisis by drawing attention to severe liquidity problems affecting all the country’s banks.

The confusion about the compensation schemes is the last straw. Having £20,000 covered by the Icelandic compensation scheme is useless if the Icelandic economy goes bankrupt.

sandspider2000

Just FYI, I just phoned Kaupthing. Everything there was normal, my call was answered quickly and helpfully. I asked how things were, and the woman said they were fine, just that a few people were phoning up to query the level of savings cover.

EalingSaver

poppy10 wrote: »

The confusion about the compensation schemes is the last straw. Having £20,000 covered by the Icelandic compensation scheme is useless if the Icelandic economy goes bankrupt.

Your confusion I believe. KE is covered fully under the UK scheme, it does not operate under the passport system. Its IceSave which operates under the passport system.

Reaper

The city and savers seem to spend their time looking round for the next target. It would be sad if everybody decided to pick on Kaupthing. Yes their CDS rate has shot up but that by itself won't cause them a problem. As a spokesman said:
"Kaupthing does not intend to issue any bonds in the near future, and so the size of the CDS spreads has little practical meaning"

You can't ignore the CDS as it shows the sentiment of the city, but don't read too much into it either. If you have less than £35k then do yourself and them a favour and leave it there.

EalingSaver

Andrew64 wrote: »

According to this story, Kaupthing's CDS is now a mind-blowing 3,306:

http://www.telegraph.co.uk/finance/3129201/Kaupthing-demands-more-cash-from-clients.html

Leaving aside the point about CDS rates. Their is another take on this story. This story is saying that KE is asking for greater margins from its leveraged brokers. You could view that as a prudent step i.e. they are more concerned about their broker customers not being able to cover their positions, and are simply looking to reduce KEs risk, even at the risk of losing broker business to elsehwere. If that is the way to read it, who can blame them ?

Satscene

About time some here cut out malicious rumours...... from Kaupthing...."On UK Financial Services Compensation Scheme (FSCS) going up to £50K:There is much speculation that the current £35,000 protection offered under the UK Financial Services Compensation Scheme will be increased to £50,000 but this is not yet implemented or agreed to our knowledge. As a UK bank, we would welcome the increase of the Financial Services Compensation Scheme, as it helps to give customers peace of mind about their savings."from UK Government...http://news.bbc.co.uk/1/hi/business/7650551.stmThe Financial Services Authority (FSA) has raised the limit to the amount of deposits that are guaranteed should a bank go bust to £50,000. The new limit will come into effect on Tuesday 7 October. Previously, the first £35,000 of savers' deposits had been protected. So what more do you want???!