Icesave- Martin is wrong.

chris1

ps646566 wrote: »

If it does not, is it 100% certain that the UK FSCS will cover the whole £35000 ?

This bit is certain, the UK FSCS will only cover the amount from ~£15K to £35K, they will not cover the first ~£15K.

ps646566 wrote: »

would any interest be earned on the money during the process?

Unlikely. Also, it's is unclear whether claims would include interest accrued but not paid.

gt94sss2

ps646566 wrote: »

If a bank in Iceland or Ireland fails will the national government be willing an able to do a Northern Rock ?

If not, then will their local compensation scheme be able to cover it all ?

Yes.

As I linked to in this post, Iceland has a formal agreement with the other countries in the Nordic region to co-operate in the event of a banking crisis. So actually Iceland wouldn't have to bail out the banks - Norway, Sweden and Finland would (in addition to Iceland)

One can imagine a scenario where a bank based in a small country goes belly up.

If you read the rest of that post, you will see Iceland is not really a small country economically..

Regards
Sunil

ianmr65

Alternatively.

One can imagine a scenario where a large mortgage specialist bank based in the UK goes belly up, finally hammered by it's exposure to the degenerating UK housing market, and the continuing and escalating credit crunch. Shortly followed by a second smaller mortgage bank.
The FCSC is well over the £4bn, compensation cap at about £50bn. The goverment and BoE are struggling to shore up the huge and global lack of confidence in the rest of the UK sector, badly damaged by the Northern Rock fiasco, and the goverments & FSA inabaility to manage what the rest of the world saw as a small local problem; Followed by the two latest cataclysimic collapses.
After several months' delay while the issue of whether the bank's are irredeemably insolvent is resolved, the FSA scheme has difficulty raising the funds from other banks (who are in deep trouble themselves). The whole thing drags on, and meanwhile the goverment will not act. The governor of the bank of England resigns. The chief executive of the FSA resigns, and the prime minsiter, a enfeebled and imbittered former shell of man is isolated. The cabinet's focus turns inwards, jockying for position and displaying a lack of focus, levels of procrastination, and political infighting that were previously unheard off since the Micheal Foot era.

Eventually a group of depositors threatens legal action against the FCSC, which then proposes to offer full compensation to £35,000. but Goverment/ BoE/ FSA-FSCS infighting and counter briefing have desended into all out war. So the Tresury lanches a counter claim to stop the compenstaion being paid.
The legal process drags on for more than a year, bouncing around between the courts. The aggrieved depositors then think in terms of going to European courts which muddies the waters further.
Foreign bank depositors line all through this is "We told you so, you should have invested outside the UK" The icelandic Government concerned for it's countries investment in the UK Retail market offers a line of cheap credit.

After seventeen months, UK depositors get 25% of what they are entitled to from the new Tory goverment, who have been forced to introduce austerity measures, following the run on the pound, and latest rise to 22% intrest rates, to counter the hyper-inflation threatning the nation. And also have to concentrate on quelling the growing civil unrest.
The investors also suffer total loss of interest payments for the whole period. One is quoted as saying 'to be honest i'm not sure why we're bothering by the time we get paid the money won't be worth anything anyway'

The legal actions continue, and the European Commission launches an enquiry into whether a pan_European compensation scheme should be implemented, with target introduction date 2015."


Think i'm going over the top. Well perhaps: but the kondratieff downwave is about 20 years overdue. And all the factors are in place for a deep deep downturn here, and in the states.

ianmr65

chris1 wrote: »

Don't be so rude. Yes, I have it in writing, a written answer to my written question, I'm not that stupid, and I am telling the truth. I was just trying to be helpful by answering the previous poster's question. Ask them yourself if you don't believe me, it's not a secret!

Well can we see the written answer then. I can't find it on their website. It would certainly lay this one to rest.

Lavendyr

chris1 wrote: »

This bit is certain, the UK FSCS will only cover the amount from ~£15K to £35K, they will NOT cover the first ~£15K.

You say it's certain, but with all due respect, you have presented no evidence. I would be interested to see the written response from Icesave myself, as to me it sounds horribly contradictory of everything else I've ever read or heard regarding this scheme. So I'd be very interested to see the exact response you received and to know who gave it, otherwise it's just someone on the internet telling me "this is fact" - not the most credible source, you must agree.

StevieJ

chris1 wrote: »

Well, "incorrect" is a bit strong, as if the Icelandic scheme paid up you would have the same protection, the FSCS covering the next ~20K. However if the Icelandic scheme did NOT pay up, the FCSC would NOT step into their place and pay on their behalf. For example, if you had less than ~£15K and the Icelandic scheme did not pay you would not be able to make a claim to the FSCS and would receive nothing.

Why is incorrect a bit strong? The email says:
Either way, these accounts have exactly the same protection as UK deposits.

No shades of grey here it is is either right or wrong.

chris1

StevieJ wrote: »

Why is incorrect a bit strong? The email says:
Either way, these accounts have exactly the same protection as UK deposits.

No shades of grey here it is is either right or wrong.

You have the same amount of protection, just from two different sources. If either one fails to pay they will not compensate for each other.

chris1

Lavendyr wrote: »

You say it's certain, but with all due respect, you have presented no evidence. I would be interested to see the written response from Icesave myself, as to me it sounds horribly contradictory of everything else I've ever read or heard regarding this scheme. So I'd be very interested to see the exact response you received and to know who gave it, otherwise it's just someone on the internet telling me "this is fact" - not the most credible source, you must agree.

As I said previously, the response was from the FSCS not from Icesave, and applies to all the 'passport' schemes.

I wrote "Thank you. Just to clarify, if you had say £10,000 (less than 20887 Euro) in Icesave and the home state compensation scheme did NOT honour the deposit protection, am I right in thinking that the FSCS would NOT pay ANY compensation?"

And the FSCS wrote "I confirm that you are correct to say that if the amount held with Ice save is less than the Euro 20,887.00, you would not be entitled to make a claim to the FSCS."

I must admit I was shocked to hear that, I had thought the FSCS would have covered the whole amount if Iceland didn't, but apparently not.

ianmr65

chris1 wrote: »

.

I wrote "Thank you. Just to clarify, if you had say £10,000 (less than 20887 Euro) in Icesave and the home state compensation scheme did NOT honour the deposit protection, am I right in thinking that the FSCS would NOT pay ANY compensation?"

And the FSCS wrote "I confirm that you are correct to say that if the amount held with Ice save is less than the Euro 20,887.00, you would not be entitled to make a claim to the FSCS."

I.

Thanks for that chris.

I thought i'd ask them a more general question:


===========================================
Sent: 06 April 2008 18:13
To: 'enquiries@fscs.org.uk'
Subject: EEA firms that have topped up

Hi

Please can you explain the scenario, in case of an EEA firm who’s home scheme fails to pay up. What would the scenario be, and what would the FSCS position be, and how much compensation might be expected from the FSCS?

Thanks

============================================


I'll post the reply when it arrives, and depending on the answer : it might be worth lobbying Icesave to become full memebers of the FSCS scheme.

chris1

ianmr65 wrote: »

Thanks for that chris.

I thought i'd ask them a more general question:
Please can you explain the scenario, in case of an EEA firm who’s home scheme fails to pay up. What would the scenario be, and what would the FSCS position be, and how much compensation might be expected from the FSCS?

Good luck with that.

ianmr65 wrote: »

it might be worth lobbying Icesave to become full memebers of the FSCS scheme.

It would be great if they did that, it would eliminate the issue altogether. Not sure how easy it would be though, involving branch/subsidiary status change.