What is the matter with some people here!

Hungerdunger

juicyjude wrote: »

Sorry hungerdunger I dont agree with your statement that savers should take more responsibility over where they deposit their money!( as opposed to investing). Investing assumes an element of risk, saving should not.

1) Apologies - I meant deposit; slip of the pen (or rather keyboard).

2) Where does it say savings should not assume an element of risk? The fact that savings have been seen as 100% safe in the past does not indicate a certainty that they should be safe in future. In fact the existence of the FSCS guarantee indicates to me that there is an element of risk above their guarantee limit.

Blah99

Hungerdunger wrote: »

In fact the existence of the FSCS guarantee indicates to me that there is an element of risk above their guarantee limit.

Actually it indicates the opposite. Unlike shareholders, retail depositors have no voice in how a bank is managed. If the bank fails due to poor business decisions it is right that the shareholders suffer, but the retail depositors should not be held responsible.

The FSCS reflects this by providing a safety guarantee to retail depositors who have chosen not to assume risk. Pick an example bank (and rewind 8 months): if you're a retail depositor you'll get something around the 4% to 6% interest mark, but if you're a shareholder you'll get more than double that.

This is the entire risk/reward equation, and actually it's why the FSCS should guarantee 100% of all retail deposits. If it doesn't we're all better off putting our first £50k in a bank account and the rest into the same bank's shares.

Entertainer

Oblivion wrote: »

I do agree with the general message contained in your OP nilrem, and it is certainly not nice to be sneering at anyone who has done their best to maximise returns on their savings. I too had significant sums deposited with Icesave and Kaupthing Edge, so I'm in no position to criticise anyone who put there money in either.

What I do find puzzling, however, is that so many people, having put their hard-earned money into these accounts, then decided to ignore all the evidence in the news that the Iceland economy was becoming effectively bankrupt, and also ignored, or even sneered at, posters who warned of the impending failure of this regime.

I took heed and got my money out a week before the crash. I'm not crowing or saying that I'm more clever than anyone else ... simply that I decided that the weight of opinion signalled a doomsday scenario.

I'm just left utterly bemused that others didn't take heed and get their money out in time.

Dave.

The problem is that there was nothing conclusive about the inevitability of this bank getting into trouble. Alot of speculation but nothing definitive. I remember reading the posts in March about this which were countered by assurances from the bank, government ministers, experts and others that they had secured sources of finance and were safe.

I am too busy (working) to check this forum every day for updates and frankly shouldn't be expected to. When you are dealing with an FSA approved European bank there are certain things you have to take on trust.

Of course the game has changed now. This is a wake up call for the future that your money is no longer safe beyond any guarantees, particularly with non U.K institutions which don't have the unofficial guarantee a la Northern Rock or Bradford and Bingley (and I expect all the deposit holders at ING to take note of that lest they be accused of cavorting with a "foreign owned bank" by hypocrites like Ros Altman.)

If savers were expected to be factoring in the real risk of default then it would have required a risk warning notice, designated by the government to be applied to all savings products. Howard would have been required to pop up at the end of a Halifax advert and say "your savings are at risk you may not get back your original investment above £50,000." Like I've said before, the ensuing multi billion pound run on the banks would be interesting to watch and would offer Darwinians (new found in the case of Ros Altman) a chance to gaze upon their handywork. Good luck with that.

meanmachine_2

Hindsight is a wonderful thing.

Since 2005 I was warning about a house price crash. Since it happened I haven't once used the old "I told you so" on this site, cos I know, for a lot of people it's been a worrying time.

In hindsight, OF COURSE I should have taken my money out when warnings first came out about icelandic banks, but at the time there was a very believable rumour that UK banks had fed these stories to the UK press, to try to rubbish their rivals.

Whether true or not it certainly seemed logical at the time.

That combined with assurances from all sides that these banks were safe meant that I didn't panic and pull my cash.

In hindsight that's cost me sleepless nights and potentially much more...

You live and learn.

Guesthouse

meanmachine wrote: »

Hindsight is a wonderful thing.

In hindsight, OF COURSE I should have taken my money out when warnings first came out about icelandic banks, but at the time there was a very believable rumour that UK banks had fed these stories to the UK press, to try to rubbish their rivals.

Of course, and you could have sensibly opened a savings account with the Bradford & Bingley and been proof that just because Iceland sounded a bad bet that any British institution would be safer in the current turmoil.

But as you point out, if you have enough time to spend all day reading forums etc on where to save the chances are you have no job and therefor no money or you have so much money you don't need to work.

Nick_C

meanmachine wrote: »

I've worked DAMN hard for my savings. I've paid THOUSANDS in tax over the years, and now I'm being "foolish" for not panicking like a headless chicken and taking MY money out before the damn bank crashed?!!!

I can guarantee you something for nothing, if that 4bn pounds isn't recovered, I and every Icesaver in the land will have every right to refuse to pay taxes (I'm not paying to support greedy banks, heroin addicts, the homeless, people on benefits, blah blah) and let sanctimonious people like you pick up the slack instead.

Deal? Then you REALLY would have something to complain about.

I have also worked damn hard over the years for my savings, which is why, when looking at savings accounts, I decided I didn't want to risk losing money by depositing in a bank that was not fully covered by the FSCS.

The first €20K of your savings were being underwritten by Iceland, not Britain.

I am not being sanctimonius, because there is no element of hypocrisy in what I have said - I would not expect other taxpayers to compensate me if I placed money unwisely in an institution that was not protected in the UK.

DX-SFX wrote: »

So if any bank or building society can fail without warning (which apparently they can), it makes no difference which institution we put our money in so it's just a game of roulette.

You are missing the point - it does make a difference. If you had £35K in B&B, your money was totally protected by the FSCS. If you had £35K in IceSave, you were at risk of losing the first £16K, which was not protected by the FSCS. If you had £15K in IceSave, you risked losing the lot.

To me, that is foolish - i.e. unwise.

Exo

Nick_C wrote: »

If you had £35K in B&B, your money was totally protected by the FSCS. If you had £35K in IceSave, you were at risk of losing the first £16K, which was not protected by the FSCS. If you had £15K in IceSave, you risked losing the lot.

To me, that is foolish - i.e. unwise.

I was fully aware of the Icesave Passport setup and the method of compensation.
From various sources, the compensation for the first £16K appeared to be stronger than that offered by the FSCS, as the Iceland scheme required the money to be actually available. The FSA was supposed to regulate and ensure the availability of such funds under the scheme.

None of us expected a bank/government in the western world, under the umbrella of Europe, to default on their guarantees. With the wisdom of hindsight, it was all smoke and mirrors.......................

The UK government is determined that confidence will not be lost in the UK banking system and is determined that no personal depositor will lose any savings with the collapse of any UK bank or foreign bank regulated in this country.

These are uncharted times and until recently, the FSCS had never been tested.

slipp_digby

Nick_C wrote: »

I am not being sanctimonius, because there is no element of hypocrisy in what I have said - I would not expect other taxpayers to compensate me if I placed money unwisely in an institution that was not protected in the UK.

It was part protected in the UK by the FSCS, and the FSA seemed perfectly happy with the compensation scheme covering the first £16k, otherwise why do you think they managed to get so many deposits from UK customers?

That is hardly 'an institution not protected in the UK' althouhg it serves your point to mis-represent these facts.

Icesave is not black and white, it is unfortuantely shades of grey and the events are un-precedented.

The FSA appear to have IMO failed in their duties, and allowed Icesave to con UK savers with a thin veneer of promises and false assurances.

Seajays

Don't forget as well, that right up to the time the bank collapsed Icesave were posting this on the website:

Are my savings protected?

Yes – in the very unlikely event that we are unable to pay any amount we owe you on your savings accounts, you will be able to claim compensation. The maximum compensation is limited to 100% of the first £35,000 (£50,000 with effect from 7 October) of your total deposits held with us (In the case of joint accounts the protection is £70,000 of your total deposits with us, rising to £100,000 with effect from 7 October).

The compensation itself is provided by two schemes (sometimes referred to as a passport scheme) – the end result being that the total amount protected is the same as if your savings were only protected by the UK Financial Services Compensation Scheme. The protection works as follows:

• The first level of protection is provided under the Icelandic Depositors’ and Investors’ Guarantee Fund (www.tryggingarsjodur.is). The maximum protection under this scheme is 100% of the first €20,887 (or the sterling equivalent) of your total deposits held with us.
• The second level of protection is provided by the UK Financial Services Compensation Scheme (www.fscs.org.uk). This scheme tops-up your protection so that the protection under both schemes, is equal to 100% of the first £35,000 (£50,000 with effect from 7 October) of your total deposits held with us.
• Under EU law compensation for any losses incurred due to the failure of a bank should generally be paid within three months - regardless of whether it is through a passport scheme or the UK Financial Services Compensation Scheme.

Why are there concerns about the Icelandic economy?

Just about every economy in the world is under scrutiny at the moment. Iceland is not alone. We have recently seen the US, UK, Ireland, Greece and other countries all come forward with measures intended to improve sentiment and boost
confidence in their respective economies.

The recent concerns about the Icelandic economy have been focused on the Government’s intervention with the Icelandic bank Glitnir, the weakening Krona and a rise in inflation. We believe concerns should be put in the following context:

• The quick and decisive action taken over Glitnir is a compliment to the Government’s strong resolve to strengthen the Icelandic financial system. We view this measure in a positive light and believe it will strengthen the system as a whole.
• Iceland has a strong Government fiscal position with negligible external debt and a fully funded pension system.
• Iceland is an economy driven by internationalisation and a growing financial sector, but otherwise anchored in sectors not affected by the current downturn, e.g. food production, technology and power utilisation and production.
• According to the IMF, Iceland has enviable long-term prospects. High living standards, strong infrastructure, a debt-free treasury and plenty of unexploited natural resources are among those characteristics which make Iceland's long-term prospects enviable. They should also help the economy to regain its balance in a time of international financial turmoil.

Is Landsbanki’s future dependant on the Icelandic or US economies?

No, Landsbanki’s future is not reliant on either the Icelandic or US economy.
Landsbanki has a sound business model of balanced international operations and we have no exposure to the US sub-prime markets. Our international focus meant that, as at 30 June 2008, 47% of our lending was outside Iceland and 59% of net operating income came from outside Iceland.

Landsbanki has also taken great steps in the last few years to insulate itself against a downturn in economic conditions through:

• Reduced reliance on capital market funding - As at 30 June 2008 63% of Landsbanki lending was funded by deposits (this compares to just 28% in the case of Glitnir - the Icelandic bank which recently had a 75% stake in it purchased by the Icelandic government)
• Landsbanki recently announced the sale of its stock broking and corporate finance units to enable it to focus on its core banking activities (lending and deposit taking) in Europe. The sale has the additional benefits of strengthening the Bank’s capital ratios by €380m and reducing costs to enhance profitability. The transaction has been well received by rating agencies, analysts and other market participants.

These are uncertain and challenging times. However, we are confident that Landsbanki’s focused banking model, generating diversified and stable recurring revenues, is a great advantage in confronting the challenge at hand.

Mark Sismey-Durrant
Managing Director - Icesave