Kaupthing Edge blame UK savers for collapse

rosgar

Noticed this being reported tonight, thought it a bit over the top. Apparently its all the fault of the savers who mixed them up with other Iceland banks. Would be interested to know why people did withdraw in a hurry.
Personally I made a 1st withdrawal which was already scheduled. At that point I was unaware of any problems with any Icelandic banks. The later and much larger withdrawal was made purely and simply because the Icelandic government themselves succeeded in, for me anyway, creating the panic due to their own actions. If that hadn't spooked me most of my funds would still have been there. Feel a bit angry to be accused as part of a group acting irresponsibly...


Headline from Telegraph
Icelandic bank chief blames British savers for collapse of Kaupthing

The chairman of Iceland's biggest bank has blamed Britain's panicking savers for sparking the collapse of his financial institution.





Sigurdur Einarsson, chairman of Kaupthing, believes his bank's UK customers became muddled up in the hysteria which followed the demise of rival savings operation Icesave, and rushed to withdraw money from all Icelandic banks.
The government of the troubled Nordic country stepped in to to nationalise Kaupthing on Thursday, only days after the collapse of the country's third-biggest bank, Glitnir, and the second-biggest, Landsbanki, owner of Icesave.
"People in the UK got Kaupthing Edge, which was a very strong bank, mixed up with the problems of Landsbanki's Icesave," Mr Einarsson said. "You could say that this is what meant we had to turn to the Icelandic government, that led to its takeover."

gogsboy

We pumped money their way...recently as did friends, obviously we are not rich enough to counterbalance the mass exodus!

The UK are too often blinded by the media, sucked in like a rabbit to xenons.

As the saying goes, don't believe everything you read in the papers....

Or the one I run by, dont believe anything you read in the papers, infact don't buy a paper and if you must look at one....just look at the picutres

Walletwatch

Well, like every controversial issue, there are two sides to this:

Firstly, with the Icesave fiasco, and the Iceland Government refusing point-blank to honour their commitment to UK savers was a major factor in conveying a general impression to KE savers that Icelandic banks as a category were a No-No for anybody's hard-earned savings. The subsequent fall of Heritable only served to accentuate the fall in confidence in Iceland and their banks in general.

On the other hand, KE was, unlike Icesave, a fully FSCS compensated bank, so the argument would be, why take your money out of KE if it was relatively safe compared to Icesave (of course, the Government ended up extending that same guarantee to Icesave deposits and in fact, went the entire distance, so as to make the guarantee for Icesave unlimited beyond the 50000 threshold as well).

My personal opinion is that while this can be debated on forums like the MSE, I find it a bit rich when the Iceland Government talks about it. What confidence do they expect any saver to have on any Icelandic bank when the country itself is bankrupt? Or are they clutching at straws, saying that British savers should have been fully aware of and reliant on the FSCS protection, which frankly, is none of their business !!! I don't even want to get into details on why fear would take over when a country is branded as bankrupt and dishonest in its dealings with global customers of its banks and savers would choose not to wait for the FSCS protection to kick in (which could take months) and withdraw their money.

I am fuming at this and the funny part is (a) I don't even have a KE account and (b) I am from India, am not even a British citizen to label it blind patriotism and indignation.

rchddap1

In my eyes Iceland is politically trying to find any excuse that will wash with the Icelandic people. Ie, the usual governmental "its not our fault honest" approach. Whilst I'm sure the UK's actions didn't help...our government was doing its job (for once) protecting the interests of the people of the UK. If roles had been reversed I'm sure Iceland would have done exactly the same.

If Iceland's compensation scheme would have guaranteed british savers 100% of their money then I might disagree....but it didn't. Only Icelandic savers. So we had to protect our own.

Besides, as said above, who wants to wait months to get their money.....no-one. You want it as and when you need it. So when things start to get 'interesting' you move it. And iceland has clearly been on a downward spiral for quite some time.

lectureral

Worry not rosgar - the guy needs some excuse to explain the disparity between his reassurances and the reality. He needs to point to some external factor. It remains the case though that he and his peers took a risky course in pursuit of growth and it came back to bite him.

opinions4u

Herd mentality is an evil thing, but I think we all understand the fear individual savers are suffering.

To be honest, £50k limit or not, there is a logic to seeking out the safest place for your money in times of uncertainty.

Also, as 30% of UK savings balances (estimate) are in accounts with more than £50k, it would only take the movement of a small percentage of the big balances to screw most banks.

rosgar

Worried about the comments from Iceland I am not, angry would be a better description. However until I actually get the money I pulled out, worry is still a factor. Just think for the Iceland govt to pass the buck for their poor fiscal reactions is a bit cheap. They did undermine confidence in their banking by taking a series of panic measures, did they think the savers wouldn't notice?

roddydogs

No bank in the world can cope with loads of withdrawals at one time- as Banks borrow "short" with instant access accounts, and lend "Long" with mortgages, and fixed term loans. How many people could, for example pay off their Mortgage in full if asked.
Im amazed that people cant understand this.

manhattan

The Icelandic PM caused the panic by freezing British and Dutch customers accounts. Also by stating that they were not going to pay British Icesavers the guaranteed €20k.

rosgar

roddydogs wrote: »

No bank in the world can cope with loads of withdrawals at one time- as Banks borrow "short" with instant access accounts, and lend "Long" with mortgages, and fixed term loans. How many people could, for example pay off their Mortgage in full if asked.
Im amazed that people cant understand this.

I think everybody clearly understands that, the issue is that they caused the run by their own actions, then blame the 'customer' for reacting in a way which is inevitable. Many people held their entire life savings here.
The balance of accounts held by KE including the billion or so by uk councils, charities, etc should have at least been enough to keep a supply of funds.
Panic measures by Iceland as stated here by others destroyed confidence at a time their government should have been reassuring investors. Yes after that the fall was fully predictable. People are human after all.

LongTermLurker

rosgar wrote: »

Noticed this being reported tonight, thought it a bit over the top. Apparently its all the fault of the savers who mixed them up with other Iceland banks. Would be interested to know why people did withdraw in a hurry.

It would appear most people are idiots.

They can read but choose not to; they have a brain but choose not to think; they were born with common sense but were unable to retain it into adulthood.