Iceland and the Bank of England Scandal

Jonbvn

justpaper wrote: »

.....your 50k could be doing better then that, but if your happy with it be happy with it,

For some reason you have taken my comments to heart, as if i was talking on a 1 to 1 with you. I am not.

My 50k (well actually the OH's 50k;)) is only a part of our savings/investment portfolio. Of course returns on some of our equity/bond investments have returned far more over the last year or more.

I take nothing on t'nternet personally. It was that you needed to be taken down a peg or two, since your posts came across as very sanctimonious.

Jonbvn

apt wrote: »

So far it is not your Icelandic friends, but other British taxpayers and savers who put their money into sounder institutions who are helping to fund your 7.96% interest.

Please explain how money from savers with other "sounder institutions" was in any way involved?

Money was originally with Kaupthing, whose deposits were taken over by ING. AFAIK, no (UK) tax-payer money was involved in this transaction. Do you have any information to the contrary?

atypical

apt wrote: »

So far it is not your Icelandic friends, but other British taxpayers and savers who put their money into sounder institutions who are helping to fund your 7.96% interest.

Not if s/he was with Kaupthing Edge which was bought by ING Direct. But I don't remember them ever offering 7.96%. Their 3 year fixed term deposit was 7.67% gross or 7.15% AER as the interest isn't compounded.

7.67% gross compounded gives an AER of 7.95% if my maths is right.

edit: Johnbvn got there before me, but can you confirm where the 7.96% comes from? :huh:

edit2: Now I'm confusing myself because I've realised AER is by definition compounded. But I'm looking at a letter from Kaupthing which definitely says "7.15% AER (7.67% gross)" for the 36 month term.

apt

Jonbvn wrote: »

Please explain how money from savers with other "sounder institutions" was in any way involved?

Money was originally with Kaupthing, whose deposits were taken over by ING. AFAIK, no (UK) tax-payer money was involved in this transaction. Do you have any information to the contrary?

See 4.5 of the following http://www.england-legislation.hmso.gov.uk/si/si2008/em/uksiem_20082674_en.pdf

The sounder institutions have had to pay a higher FSCS levy as a result.

noh

Jonbvn wrote: »

Please explain how money from savers with other "sounder institutions" was in any way involved?

Money was originally with Kaupthing, whose deposits were taken over by ING. AFAIK, no (UK) tax-payer money was involved in this transaction. Do you have any information to the contrary?

http://www.hm-treasury.gov.uk/press_102_08.htm

"4. This action by the Tripartite Authorities protects savers’ money and provides certainty for retail depositors. The transfer of the retail deposit books has been backed by cash from HM Treasury and the Financial Services Compensation Scheme."

Jonbvn

atypical wrote: »

edit: Johnbvn got there before me, but can you confirm where the 7.96% comes from?

I may be mistaken in the exact %. The ING statement does not mention the rate (like every other bank). I only recall it was 7.15% AER on the 1 year fix.

Jonbvn

apt wrote: »

The sounder institutions have had to pay a higher FSCS levy as a result.

noh wrote: »

"4. This action by the Tripartite Authorities protects savers’ money and provides certainty for retail depositors. The transfer of the retail deposit books has been backed by cash from HM Treasury and the Financial Services Compensation Scheme."

Well thank you all UK savers and tax-payers. I will be sure to buy you a beer when I see you next.:beer:;)

agsnu

Jonbvn wrote: »

Please explain how money from savers with other "sounder institutions" was in any way involved?

Money was originally with Kaupthing, whose deposits were taken over by ING. AFAIK, no (UK) tax-payer money was involved in this transaction. Do you have any information to the contrary?

Where do you think the money came from?

Deposits are liabilities. ING didn't just go "Hi! I see people gave you £Xbn. That's OK, we can pretend they gave us that £Xbn, and now they can ask us for it back instead".

What happened when it was "sold" was this: ING agreed to take on the deposit liabilities from Kaupthing, in return for getting a certain payment from the FSCS. The FSCS borrowed from the Bank of England to fund the payment to ING, and then took the place of the depositors in the run-off of Kaupthing. (Actually HM Treasury also made some amount of payment to cover those with >£50k deposited, so that no saver lost any money.)

So, say the sum involved was £1bn of deposits, £800m of which was covered by the FSCS under the £50k threshold, and £200m of which was not covered. The FSCS would have made a payment of, say, £975m to ING to assume £1bn worth of liabilities (so it "costs" ING £25m, but they get a huge cash injection at a time when their own finances were looking shaky).

The FSCS would then have borrowed £780m from the BoE, and the Treasury would have paid £195m.

The Treasury and the FSCS then become creditors, who eventually recover 85p in every £1 from Kaupthing's assets, sometime around 2017. There is still a shortfall, and a cost of borrowing to both the FSCS and the Treasury. So that's £117m + interest the FSCS has to raise through levies, and about £30m + interest cost to the taxpayer.

The numbers are all made up but hopefully that should illustrate the situation clearer.

justpaper

Jonbvn wrote: »

I take nothing on t'nternet personally. It was that you needed to be taken down a peg or two, since your posts came across as very sanctimonious.

No your flaming because your a Icesave so called "Survivor"

Looking at my posts above I see you just jumped in, Asking me "why" i didnt tell people icesave was to good to be true,

Cannot win with you people.

baby_boomer

Those of us who warned v Icelandic banks got our fingers badly burned here on MSE by pro-Icelandic posters [no doubt sponsored by the desperate Icelandic banks themselves] with no protection from the MSE management who hid behind the government's protection scheme while pretending that debate on the site was impartial, which it clearly wasn't .

Let's put our own house in order first.

People in glass houses......