Iceland sinking....

WTF?_2

Another very bearish piece from Peston. Looks like another recruit to the Doomsayer's club :rotfl:

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/creditors_call_time_on_iceland.html

The best way of seeing Iceland is as a country that turned itself into a giant hedge fund.
..
Here are the lethal statistics about Iceland: the value of its economic output, its GDP, is about $20bn; but its big banks have borrowed some $120bn in foreign currencies.
..
On Friday, had anyone wished to take out insurance in the credit default swaps market to guarantee repayment of debt issued by Kaupthing, he or she would have had to pay a premium of £625,000 to guarantee the return of £1m.
Which is simply to say that Kaupthing couldn't issue new debt, even if it wanted to.
And even the Icelandic government is classed by the markets as a lousy credit risk. On Friday, the cost of insuring $10m of Icelandic debt was $1.5m up front and $500,000 a year - a cripplingly large premium.

That's what you get when you have Kerry Katona as your public face, I suppose

Generali

I was chatting to a mate of mine last night in the pub (I decided against the Paribas deal) who is an underwriter at Lloyds of London. He reckons that the market for CDSs and other forms of default insurance is under major pressure now as people don't want to finance this stuff.

artisan_2

will this mean problems for those with Kaupthing and Icesave accounts?

lynzpower

artisan wrote: »

will this mean problems for those with Kaupthing and Icesave accounts?

Doubt it. Ive a KE account, and its guaraunteed up to 35k in any event, as part of the FSAunderwriting. I dont have more than 35k in there so should be OK

WTF?_2

lynzpower wrote: »

Doubt it. Ive a KE account, and its guaraunteed up to 35k in any event, as part of the FSAunderwriting. I dont have more than 35k in there so should be OK

Bear in mind that the host nation of the bank is supposed to be your first port of call for compensation in the case of foreign banks operating in the UK.

There's no way that Iceland could make good on compensation for depositors/creditors if their banking system went under so you'd then have to go to the FSCS after the Icelandic system failed to compensate. That probably means a lot of extra faffing about and waiting.

The name of the game for savers right now is safety, not good interest rate returns.

steadysaver

!!!!!!? wrote: »

Bear in mind that the host nation of the bank is supposed to be your first port of call for compensation in the case of foreign banks operating in the UK.

There's no way that Iceland could make good on compensation for depositors/creditors if their banking system went under so you'd then have to go to the FSCS after the Icelandic system failed to compensate. That probably means a lot of extra faffing about and waiting.

The name of the game for savers right now is safety, not good interest rate returns.

Maybe in the case of Icesave who operate under the passport scheme, however KE account holders would go straight to the FSCS.

I hold a good slice of my cash in Icesave, can't say I am in a rush to move out yet, however I would imagine that another bank would take over the deposits like abbey did with B&B should they fail. Maybe even the EU or scandanavian nations would come to Icelands rescue. I believe that the banks of the scandanavian nations have an agrement of understanding between them to help in times of crisis. How deep this understanding is tho, I dare not hazard a guess

mewbie_2

Economic meltdown = Iceland sinking

lostinrates

I've recently emptied our Icelandic accounts....mainly KE. I decided, and am amazed my timing was o good, that the first wa about to go under, and that while the guarantee under FSA is there I don't want to wait for a protracted period of time and lose interest on it. I also felt that with the press so tetchy any escalation in poblems could result in a un on the banks. The money is currently in signifiantly lower interest accounts, while I work out what I'm doing with our ISA allowance and where to put the rest.

ad44downey

lostinrates wrote: »

I've recently emptied our Icelandic accounts....mainly KE. I decided, and am amazed my timing was o good, that the first wa about to go under,

I must have missed something? Which Icelandic bank went under? And if so, did any saver lose any money?

PasturesNew

I think I got as far as having an account approved with KE. But never put any money in. It's all so difficult trying to open accounts that I have many potentially abandoned accounts all over the place

luvpump

lynzpower wrote: »

Doubt it. Ive a KE account, and its guaraunteed up to 35k in any event, as part of the FSAunderwriting. I dont have more than 35k in there so should be OK

You are Clearly not familiar with Kaupthings T&C's, which state they can, should they choose to do so, "Novate" or transfer your funds from the u.k operation to Kaupthing HF, in which case the FSCS has no sway ! . & you would have to claim off the Icelandic version , Its for that reason I got out..