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Concern In Keys Over £8Bn Fall In Bank Deposits


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Isle of Man banks are part of the UK clearing system *only*. It seems that Barrie came across an inexperienced or just stroppy bank employee.

 

I said that they all refused even when I asked to see the higher ups. I went to several banks...They all said "No"!!!!

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.I think you will find that the Isle of Man is not part of the UK banking system! That has been my experience. (See Arnigaut poster above)

Nonsense Barrie!

 

I don't know about your strange experiences, which in no way coincide with mine over the last 30 years. Maybe IOM Bank has a special status? But the IOM subsidiaries of UK banks such as Barclays are certainly operationally part of the "UK banking system". As such, all electronic transfers from Barclays IOM (which is a subsidiary, not a branch - and as such an IOM bank regulated by the FSC, and thus 'covered' by the DCS and not the UK's FSCS) go via UK clearing banks (which, by the way, is where those KSFIOM depositors who tried to move their funds in the days before the crash - the so called 'in-flighters' - had their transfers blocked). Transfers from IOM to UK banks are made through BACS, "the system used to send money between most banks and building societies in the UK." Most importantly for me, ns&i in the UK - which requires a "UK bank account" for its operation - readily accepts Barclays IOM for the purpose; I know because I use it. As funds are recovered from the KSFIOM liquidation, they are rapidly moved off-island in this way! Once bitten ....

Edited by anrigaut
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Isle of Man banks are part of the UK clearing system *only*. It seems that Barrie came across an inexperienced or just stroppy bank employee.

 

No I did not make it up! I only speak as I find.

 

Two years ago ...or more now ...I tried to pay £100 cash to the bank account of the Hyperbaric Chamber with the Isle of Man Bank in Douglas.

 

I had by then no Island bank account of my own from which to transfer direct as I wanted to sever all ties and had closed all Manx connections.

 

I had also no UK bank account as this was proving difficult to get after 26 years without one!

 

All of the banks I tried in Chelmsford High Street refused to take the money direct as they said that it was for an offshore account.

 

I tried RBS, Nat West, Lloyds TSB and Barclays. They all refused.

 

RBS and NatWest explained that I would have to obtain a paying in slip from the Hyperbaric Chamber with its Isle of Man Bank clearing code & etc bring it in and they would send that and the £100 cash to the Island......by physical means that is and which surprised me that they could not do it direct. They actually said that!

 

The same applied to a cheque. It could not be direct over the counter.

 

Even a cheque plus Isle of Man Bank paying in slip they said would not go through the clearing system from a UK input but would be sent physically to the Island for paying in to the system over there! I was not going to be allowed to "pay in" directly over the counter.

 

The alternative was a telegraphic transfer costing £26 which was in effect me paying the bank to use its own money as an internal arrangement.

 

In the end I bought a postal order and posted it to the Chamber...

 

The local UK branches of RBS are/were unable to view my account when I had one on their computers. I could however draw out cash and see the balance on the ATMs

 

There is no seeming problem in the sorting code between banks but trying to pay in over the counter is a problem so there must be a difference somewhere....So I say that the Isle of Man is not directly part of the UK banking system but it does have sorting code representation.....

 

What about other banks outside the UK?

 

 

 

 

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What about other banks outside the UK?

 

... the more I read this the more it makes sense. You were trying to take cash offshore, there are various HMRC directives which stop this, here's just one example:

 

"Most contractors will find that agencies will now refuse to pay to offshore bank accounts due to these directives from HMRC. However, if an individual is considered UK non-domiciled, then receiving funds outside of the UK could be tax advantageous under the remittance regulations."

 

http://www.capitaltaxconsulting.com/faq/offshore-taxation/can-i-be-paid-into-an-offshore-bank-account/

 

The correct stone-age approach would have been to send a cheque. The correct 21st century approach would be electronic transfer.

 

I've been with the IOM bank for ~40years, every now and then it has been necessary to read them the riot act. Fourtunately the new manager of my branch is one of my mother's former pupils, so she knows me and can vouch for what I'm up to.

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What about other banks outside the UK?

 

... the more I read this the more it makes sense. You were trying to take cash offshore, there are various HMRC directives which stop this, here's just one example:

 

"Most contractors will find that agencies will now refuse to pay to offshore bank accounts due to these directives from HMRC. However, if an individual is considered UK non-domiciled, then receiving funds outside of the UK could be tax advantageous under the remittance regulations."

 

http://www.capitalta...e-bank-account/

 

The correct stone-age approach would have been to send a cheque. The correct 21st century approach would be electronic transfer.

 

I've been with the IOM bank for ~40years, every now and then it has been necessary to read them the riot act. Fourtunately the new manager of my branch is one of my mother's former pupils, so she knows me and can vouch for what I'm up to.

 

No it was not a case of sending cash offshore! I asked them about this and about money laundering and about "Know your customer" and all of that but they said that was not the problem.

 

Clearly, the fact that they would have undertaken the transaction in cash provided that I had an Isle of Man bank paying in slip from the Isle of Man proves this.

 

Likewise they would have undertaken the transaction with a cheque provided that I had a paying in slip from the Isle of Man Bank

 

The problem was the clearing system was not directly geared up for it.

 

They said the Isle of Man clearing and sort codes are part of the offshore system not the UK system....It is coming back to me now! (And I argued the matter with them!)...

 

This is why I could not use one of the slips on the counter ie take a slip, enter the sort code and account number and hand over £100....I tried. The cashiers in all four banks looked at it, took it away and a man came back and said it could not be done as the Isle of Man is not part of the UK system as it is part of the offshore system!

 

This happened four times!

 

Of course I could have made a direct transfer from a UK or Isle of Man bank account electronically if I had either one of them. I did not. Don't ask me the difference but there is one.

 

Apparently, electronic transfer is international and not domestic to the UK I am told. Paying over the counter is domestic to the UK so even if I had the Isle of Man Bank's own paying in slips or even one from the Hyperbaric Chamber's own cheque book they (The UK bank) would have to post it to the Island...this is what they said!....They said they could not process the paying in slip in the branch in the UK...It would have to be sent away!

 

They would happily have accepted either cash or cheque as I said but would have had to have been provided with an Isle of Man Bank paying in slip with the Chamber's bank account number and of course Isle of Man Bank sorting codes & etc..

 

The Isle of Man banks, those incorporated on the Island, I suppose RBS International, Isle of Man Bank, are not directly part of the UK banking system.

 

On the other hand, my neighbour has retained his Isle of Man bank account with HSBC PLC as opposed to “Isle of Man Limited” and has no problems using the local branch in Chelmsford...

 

When you look at an Island bank see if it is PLC or IOM Ltd...I suppose that makes a big difference? Does it?

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It simply never occur to me that this was not up to UK standards and I made no enquiries. Had I done so, while I may have discovered the lower compensation limit,

 

I may be wrong on this one, but I think it WAS up to UK standards, but the UK upped their game when the banks started to go pop.

 

As far as the depositor compensation scheme is concerned (and that was the point at issue), you are wrong. The IOM DCS has never been up to UK standards - notably in terms of its funding mechanism, guarantees on timely payment and the way the compensation limit is interpreted for those with larger deposits (more favourable in the UK scheme). The amount covered has also generally lagged behind (at one time 75% of £20k vs 100% of £35k), except for the brief period from a couple of days before the collapse when the DCS maximum was upped to £50k - in line with UK at that time - until (from memory) around the end of 2009 when the UK, but not IOM, increased to £85k (in line with an increase to 100k euros in Europe).

 

Where UK 'upped their game' as the banks collapsed was in deciding to pay-out retail depositors 100%. This is another matter and is not what this discussion was about.

Perhaps you should bank in the UK then.

 

Indeed!! The problem is that it's almost impossible to open a UK account when you have no UK address. Obviously my main bank account has long been in France anyway. But as I wish to keep some sterling for use on visits etc, I now have a savings account with ns&i (one of the few possibilities I've found), but you still need a bank in the UK banking system (which of course includes IOM) to operate it. To help other depositors, I have recently negotiated a possibility with one mainland branch of a major UK bank willing to open accounts for non-residents under certain conditions. But as these do not suit my personal needs, I am obliged, despite my misgivings, to retain a minimal current account in the IOM.

So where do you live, France? I take it by "mainland" you are referring to Europe.

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The fantasy

 

The Isle of Man, I think, has led the world with its Depositors’ Compensation Scheme. It has done since 1991. I believe that we continue to lead the world [with our DCS] …” Juan Watterson MHK , chairman of Tynwald Select Committee on KSFIOM, in Tynwald 13 July 2011.

 

The reality

 

In the event there was another bank failure while KSF (IoM) is still ‘live’ or in the future any systemic or major bank in default, it is highly unlikely that there would be sufficient funds to compensate depositors to the full value of the threshold limits.” Tynwald Select Committee on KSFIOM Final Report July 2011 [106]

 

…there is no time limit for payment of compensation…” Financial Supervision Commission. Isle of Man Depositors’ Compensation Scheme.

 

The amount of compensation paid and the timing of compensation payments will depend upon the size of the deposit taker which fails and the amount of funding contributed. The payment period will also vary according to whether, and to what extent, the DCS borrows, the timing of the contribution from the Treasury and the timing of levies from participants” Financial Supervision Commission. Isle of Man Depositors’ Compensation Scheme.

 

www.iombankfailure.com

Edited by TonyC
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In the event there was another bank failure while KSF (IoM) is still ‘live’ or in the future any systemic or major bank in default, it is highly unlikely that there would be sufficient funds to compensate depositors to the full value of the threshold limits.” Tynwald Select Committee on KSFIOM Final Report July 2011 [106]

 

That is exactly what was said. Moreover in the last budget report because of this it was proposed that £300m be taken out of general reserves and used to shore up the fund as a contingency against a further failure. They voted against it on budget day and to this day not one penny has been applied to give any additional undertakings to international depositors. If another failure occurs Tynwald will be solely responsible for the fact that no protection may be available. Then they wonder why bank deposits are leaving? Morons.

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There is insufficient protection for depositors in the event of a bank failing, the interest rates are rubbish and likely to remain so for the foreseeable future - thus savings are losing value as the cost of living rise is higher than interest rates - and you get to pay tax on what little interest you receive. I have been spending my modest savings and will just keep enough for a rainy day. There is no incentive to save in the present financial climate. If enough people and institutions take my approach, banks will not have the funds to invest, offer mortgages/loans and so forth. The banks caused the present situation, made worse by government bail-outs, so it's a case of 'What goes around comes around'.

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The fantasy

 

The Isle of Man, I think, has led the world with its Depositors’ Compensation Scheme. It has done since 1991. I believe that we continue to lead the world [with our DCS] …” Juan Watterson MHK , chairman of Tynwald Select Committee on KSFIOM, in Tynwald 13 July 2011.

 

The reality

 

In the event there was another bank failure while KSF (IoM) is still ‘live’ or in the future any systemic or major bank in default, it is highly unlikely that there would be sufficient funds to compensate depositors to the full value of the threshold limits.” Tynwald Select Committee on KSFIOM Final Report July 2011 [106]

 

…there is no time limit for payment of compensation…” Financial Supervision Commission. Isle of Man Depositors’ Compensation Scheme.

 

The amount of compensation paid and the timing of compensation payments will depend upon the size of the deposit taker which fails and the amount of funding contributed. The payment period will also vary according to whether, and to what extent, the DCS borrows, the timing of the contribution from the Treasury and the timing of levies from participants” Financial Supervision Commission. Isle of Man Depositors’ Compensation Scheme.

 

www.iombankfailure.com

 

The same would be true of any Government...........if RBSI had gone tits up (& it came very very close 3.5 years ago) and was then closely followed by another then the UK Gov would have been well in the crapper.

In the case of KSF IOM it didnt really fail, it became insolvent and unable to trade as a Bank without its parent which failed. I'm sure that in the next few months I will receive another payment which will bring my return to 90% and I'm hopeful I and everyone else will get all my money back and maybe interest within a few more years. The wait isn't ideal but I doubt a 100% return would be possible if one of the big 3 or an Irish Bank had been left to go bust.

Essentially the DCS is a short term loan which in KSF IOM's case will hopefully be 100% fully repaid. With hindsight I personally think the IOM Gov should have taken over the Bank and wound it up gradually......it would potentially have avoided a lot of reputational damage and bad PR.

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With hindsight I personally think the IOM Gov should have taken over the Bank and wound it up gradually......it would potentially have avoided a lot of reputational damage and bad PR.

 

I'm not sure that this would have been legally possible as the Gov. would have been liable for debts which could have required borrowing by the gov. which isn't allowed. Better legal minds than mine (i.e. Grannie Clanger) can confirm this.

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So where do you live, France? I take it by "mainland" you are referring to Europe.

 

Yes, I live in France. But no, by "mainland " - in the context of the UK banking system - I meant ... the UK (onshore). It is not possible to have a sterling cheque account in euroland.

Edited by anrigaut
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The fantasy

 

The Isle of Man, I think, has led the world with its Depositors’ Compensation Scheme. It has done since 1991. I believe that we continue to lead the world [with our DCS] …” Juan Watterson MHK , chairman of Tynwald Select Committee on KSFIOM, in Tynwald 13 July 2011.

 

The reality

 

In the event there was another bank failure while KSF (IoM) is still ‘live’ or in the future any systemic or major bank in default, it is highly unlikely that there would be sufficient funds to compensate depositors to the full value of the threshold limits.” Tynwald Select Committee on KSFIOM Final Report July 2011 [106]

 

…there is no time limit for payment of compensation…” Financial Supervision Commission. Isle of Man Depositors’ Compensation Scheme.

 

The amount of compensation paid and the timing of compensation payments will depend upon the size of the deposit taker which fails and the amount of funding contributed. The payment period will also vary according to whether, and to what extent, the DCS borrows, the timing of the contribution from the Treasury and the timing of levies from participants” Financial Supervision Commission. Isle of Man Depositors’ Compensation Scheme.

 

www.iombankfailure.com

 

The same would be true of any Government...........if RBSI had gone tits up (& it came very very close 3.5 years ago) and was then closely followed by another then the UK Gov would have been well in the crapper.

In the case of KSF IOM it didnt really fail, it became insolvent and unable to trade as a Bank without its parent which failed. I'm sure that in the next few months I will receive another payment which will bring my return to 90% and I'm hopeful I and everyone else will get all my money back and maybe interest within a few more years. The wait isn't ideal but I doubt a 100% return would be possible if one of the big 3 or an Irish Bank had been left to go bust.

Essentially the DCS is a short term loan which in KSF IOM's case will hopefully be 100% fully repaid. With hindsight I personally think the IOM Gov should have taken over the Bank and wound it up gradually......it would potentially have avoided a lot of reputational damage and bad PR.

 

With respect, it would not be true of any government - or at least to nothing like the same extent. We're not talking here about bailing out failed banks at 100% to depositors, but about respecting the statutory compensation scheme to the announced limit in a timely fashion. The UK FSCS is pre-funded by the participating banks and has a laid-down maximum delay (was 20 working days and I believe is now even less) for paying out the full amount. The DCS has neither. When a bank fails the government and FSC have to scramble around to collect levies from the banks and vote through government loans before any payments, even partial, can be made. Naturally both the amounts they can demand from the participating banks and the amount of government loans is capped, both annually and over a 5-year period; hence the frank appraisal by Mr Watterson's committee, also implicit in the information provided by the FSC (more precise than it was pre-KSF), to the effect that the scheme cannot be relied on - indeed in certain (far from inconceivable) situations it would be "unlikely" to be able to live up to its promises.

 

Which puts Tynwald's rejection of a constructive proposal to set aside a reserve fund, which would at least enable payments to depositors to begin with minimum delay, totally beyond comprehension. The Sultan, above, is spot on.

 

If you really believe the DCS is up to international standards, you are (IMHO) living in cloud cuckoo land, presumably having fallen for your government's PR spin - at which they excel. It's time for the Manx to wake up to reality.

http://www.ksfiomdag...cles&Itemid=102

 

I should add that the 90% we will have back by mid-June is a result, as you say, of the fact that KSFIOM was not strictly speaking insolvent (but had 'simply' made the unpardonable error of upstreaming to KSF-UK at a time when the writing was on the wall for Kaupthing) and owes nothing - but nothing - to any efforts of IOMG. We were also 'lucky' in being the first (since 1991) to call on the DCS, so that - after a great deal of scrabbling around - the DCS did finally (one year after the collapse) manage to pay out in full to the announced £50k limit. But the victims of any future collapse may not be so fortunate and may have even greater need of the compensation, which may or not be forthcoming.

Edited by anrigaut
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In the event there was another bank failure while KSF (IoM) is still ‘live’ or in the future any systemic or major bank in default, it is highly unlikely that there would be sufficient funds to compensate depositors to the full value of the threshold limits.” Tynwald Select Committee on KSFIOM Final Report July 2011 [106]

 

That is exactly what was said. Moreover in the last budget report because of this it was proposed that £300m be taken out of general reserves and used to shore up the fund as a contingency against a further failure. They voted against it on budget day and to this day not one penny has been applied to give any additional undertakings to international depositors. If another failure occurs Tynwald will be solely responsible for the fact that no protection may be available. Then they wonder why bank deposits are leaving? Morons.

 

They obviously decided that rather than risk possibly losing the £300m to non locals in the next banking collapse it would be much better for them to do nothing with it and use it to fritter away on diesel trains and £300k roundabouts. They could have made an attempt to generate better publicity and goodwill in the Islands banking sector by doing the right thing but no the council of village idiots just decided to look after themselves again.

 

 

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Here's one explanation (which might explain at least part of the fall):

 

http://www.guardian.co.uk/business/2012/may/07/tax-evasion-global-action?CMP=twt_fd

 

Excerpts:

 

'The G20 crackdown has pressured many offshore financial centres to sign co-operation treaties. Jersey and Guernsey have signed 18 and 19 such treaties respectively. According to Johannesen and Zucman, BIS data suggests that these bilateral treaties typically lead to a 3.8% fall in the deposits held on behalf of individuals or companies from the treaty partner.

 

Bank deposits in Jersey have dropped by more than a half, a fall of $110bn over four years; deposits in Guernsey have declined by 15%. By contrast, Johannesen and Zucman said, Cyprus has signed only two co-operation treaties meeting OECD criteria and saw deposit levels rise by 60%.

 

"The deposit gains and losses correlate strongly with the number of treaties signed by each haven," the academics found. "The least compliant havens have attracted new clients, while the most compliant have lost some, leaving roughly unchanged the total amount of wealth managed in tax havens."'

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