The Icelandic government’s economic advisor Tryggvi Thor Herbertsson, on a leave from his post as CEO of Askar Capital Investment Bank and two years after his whitewash report on the Icelandic economy with Columbia professor Mishkin, with some interesting promises to the BBC on October 4, 2008.
What happened next? The Independence Party’s voters elected Tryggvi as an Althingi MP.
Also in the beginning, a certain someone who says he tried to warn everyone about the impending disaster.
Related posts:
John Ervinn
1 year ago
Hi Dadi,
My name is John Ervinn and I am a seeker of truth. I am a British citizen and lost money in Landsbanki Guernsey, a subsidiary of Landsbankii which has not been bailed out by any government and will not receive money from the Icelandic people. I do not hold any grudge against the people of Iceland or indeed any peoples of the world. However to understand a situation you have to have the facts and you never get this from politicians or the media.
For example I hear over and over again Icelandic people talking about repaying the debt of Icesave being unfair. However as far as I understand they are being asked to pay up to 21,000 Euro per account as required under EEA agreements not pay all the money lost by account holders. I know this is still a huge amount of money and crippling for Iceland, but if this is the case I see little option for Iceland other than pay up under EEA regulations.
I would appreciate if you or any of your readers could clarify the situations. Has Iceland to pay the full debt or 21,000 per account as I believe?
Many thanks to you and all your readers no matter what their views. We are all victims of manipulation, all though many of us unfortunately prefer to be victims than see the truth for what it is.
I can be contacted at johntowler@thebankthatsank.co.uk
Dadi
1 year ago
John, thanks for the comment.
There is much confusion about the amount at stake amongst the public but it is about the roughly 21.000 Euros. The difference was covered by the UK and Dutch governments by their own discretion albeit only for individual investors, not professional investors or as you would know Guernsey and Isle of Man customers.
Bromley86
1 year ago
There’s a very good (and very long) blog, apparently by an ex-central banker, here:
http://reservedplace.blogspot.com/2010/03/on-thin-ice.html
But to answer your question, the EU directive (94/19/EC) is not at all clear on whether the Icelandic state is required to back the 20,887 euro guarantee. It would only be the 20,887 euros though, not the full amount.
The Icelandic position is that they are not legally required to back it, the UK/NL (& EU) position is that they are. The balance of legal opinion available to Joe Public so far is that Iceland is responsible. For example, the (non-binding) opinion of the experts that met for the arbitration that Iceland pulled out of back in Nov 2008 (it’s in English after the intro):
http://www.island.is/media/frettir/31.pdf
Iceland’s position appears to be that it is morally obliged to guarantee the 20,887 euros per a/c. I say “appears” because the fact that they don’t accept the legality of the guarantee means that all of the negotiations have included the Icelandic side treating the fact/nature of the guarantee as a negotiable element. I also say “appears” because it’s not clear just how morally obliged it would feel if they could secure the IMF/Nordic loans without having to resolve the Icesave issue
.
Regarding what Iceland would have to pay, somewhere between 88% – 100% (depending on whether the Icelandic deposit fund has priority over the UK/NL or not) of the 20,887 euro per a/c guarantee (~4bn euros) is expected to be covered by the dissolution of Landsbanki. So the actual cost to Iceland is the interest and say 12% of 4bn euros.
Not that that’s inconsequential, but it is much less that you’ll often read. Roughly, it’s 4k-5k euros per person rather than the 13k-18k euros that is often reported. Not sure how that compares to the situation in the UK (and I’m not sure that I want to know
).
JP
1 year ago
Jonh Ervinn, what drove you to put money in Landsbankinn Guersney ?
Why didn’t you choose one of some British banks ?
What do you think now ?
Was it worth it?
Bromley86
1 year ago
Can’t answer for John, but common (non-tax evasion) reasons given are either that that people live in Guernsey or that they live abroad and were therefore effectively unable to maintain a UK a/c. Ditto IoM.
Not very nice of you to bait him.
Bromley86
1 year ago
Some (unverified) poll statistics on depositors of LBG:
37% are Islanders. 44% are British nationals living abroad. 14% fall into the potentially suspect category, in that they’re British nationals in the UK.
(And I realise that I may well be doing a number of people a disservice by saying “potentially suspect” – I simply don’t know enough about the reasons for UK resident people to have an offshore a/c.)
http://info.landsbankiaction.org.gg/taxonomy/term/10
JP
1 year ago
Poor John and poor habitants of Guernsey.
So there are no bank except for Landsbankinn branch ?
What a pity!…
Andrew
1 year ago
There isn’t a problem for UK citizens who are non-residents to keep UK accounts (like me). You simply declare yourself non-resident. Normally you pay tax in the place where you live, not in the UK. This is different from the US, where you pay some US taxes no matter where you live.
The Guernsey branch of Landsbanki used to be a branch of the Cheshire Building Society ( a small and conservative financial firm). Many of the depositors simply kept their deposits on dispute the name change, thinking it would be business as usual ( see the stories on the website set up by the depositors).
The Guernsey financial regulator seems to have the attitude ” it’s up to you to gauge the level of risk”. (caveat investor!
)
On the brighter side, the liquidators have reported that they should be able to refund about 91% of deposits eventually. At the moment they have realized about 60-ish percent.
Bromley86
1 year ago
Andrew. This might affect me in a couple of years time, so do you mind me asking who you bank with? Also, are you using a relative’s UK address?
Andrew
1 year ago
@Bromley86
Any UK bank should allow you to change your address to being out of the UK. I did the same when I lived inGermany. I also have local bank accounts of course. The UK has tax treaties with lots of countries so that you don’t get taxed twice. Of course this means you have to report any earnings in the UK to the local tax authorities.
Bromley86
1 year ago
Thanks Andrew. Maybe it’s different if you’re within the EU? Because people certainly have had a lot of difficulty maintaining onshore UK a/cs when they head off to the ME/Oz/etc.
e.g. a recent thead on MSE:http://forums.moneysavingexpert.com/showthread.html?t=2338445
nn
1 year ago
JP: what the hell are you getting at? John put his money into a BANK, not a high-risk mutual fund, and as the Icelandic government had been saying for months before the crash – there wasn’t supposed to be any risk involved.
I keep some of my savings in http://www.s24.is – do I also deserve to lose all that because it carries a higher interest rate than anything on offer by the Landsbankinn (what remains of the ones behind Icesave)?
Andrew
1 year ago
@bromley86
post a comment on my blog re bank accounts
http://www.strivetoattain.wordpress.com
to avoid dragging this thread further off topic!
Sorry Dadi, keep up the good work. The Black report is being printed. Should prove interesting…
John Ervinn
1 year ago
Hi JP,
Sorry not to be able to get back sooner to your comments but have been travelling.
To answer your question, I did not put my money in Landsbanki Guernsey, I put it in Cheshire Guernsey which was a Guernsey registered subsidiary of a British building society. In 2006 Cheshire Guernsey was taken over Landsbanki to form Landsbanki Guernsey. People in Cheshire Guernsey were not “sophisticated investors”, in fact most of them would never have left there money in Landsbanki Guernsey if not for the words of assurance that they were given by Landsbanki Guernsey which included a parental guarantee and assurance that they had been carefully vetted by the GFSC (Guernsey Financial Services Commission).
The rest is history. Two years later Landsbanki Guernsey went bust and the GFSC are still not willing to take any responsibility.
I have a website dedicated to the people who lost money in Landsbanki Guernsey. Many of them are frail and elderly. You might like to look at an interview with a 98-year-old depositor, Elizabeth Castle at http://www.thebankthatsank.co.uk/elizabeth-castle
Hopefully after seeing this you may change your mind. You can see other interviews and part one of the documentary I am working on at http://www.thebankthatsank.co.uk
Finally another point I would like to make is that due to the emergency laws past by the Icelandic government the Landsbanki Guernsey depositors are being treated as second class creditors as opposed to Icesave depositors and certain British County Councils. The result of this is that as things stand there will not be enough money to pay anything to us out of Landsbanki assets. This is just another example of the disgraceful way Landsbanki Guernsey depositors are being treated. Because there are in fact not enough assets to pay all creditors of Landsbanki, the 90% recuperation of debts by Landsbanki is actually a figure which is dependent on people like us being stabbed in the back.
anrigaut
1 year ago
In response to some of the comments above, while some UK banks and Building Societies with whom you have an existing account will indeed allow you to change your address to one outside UK, it is now virtually impossible to open a new account in the UK if you have no UK address. When I left the UK 25 years ago, my UK bank (Barclays)advised me to move my account to their offshore subsidiary in the Isle of Man. So I did. As a result, I can no longer open an account in the UK.
In 2001, looking for a safe place to deposit a lump sum from my UK superannuation scheme, I opened an account with the Isle of Man subsidiary of the Derbyshire Building Society. In late 2007, Derbyshire Offshore was sold to Kaupthing (Iceland). Like the former Cheshire depositors in Guernsey, I was persuaded by the assurances given by the Derbyshire, including the parental guarantee which is now disputed by the Kaupthing Winding-up Committee, and left my money in place. The rest is history for me too. Kaupthing Singer & Friedlander (Isle of Man) was put into provisional liquidation on 9 October 2008.
For more information on the Kaupthing Isle of Man disaster, see the KSFIOMDAG site at http://www.ksfiomdag.com