Government The Inquiry Into Collapse Of Kaupthing Iom

[The Voice of Reason]

Whose rules are these? iI may have missed it but it doesn't appear clear from the link

KSFIOM was a subsiduary of Kaupthing hf (Iceland) so the PDF file is Iceland's statutory adoption of the EU regulations to which I referred earlier. All EU countries have adopted these regulations, & as a Crown dependency & a trader with the EU the IoM is subject to the same regulations.

 

It may have been more relevant if you had posted the IOM "rules" as justification of your position. "The regulations are unlikely to apply to an IOM bank"

[Bobbie Bobster]

...as a Crown dependency & a trader with the EU the IoM is subject to the same regulations.

 

I'm sorry to make a direct criticism of you but if you actually believe this rubbish then your ignorance of regulatory frameworks generally, the scope of their application and the relationship of the IoM to the EU is breathtaking for someone who purports to present an informed opinion.

 

If you're just trolling or spinning for your own nefarious purposes, than I apologise and say good luck to you, but you need to create a less easily rebutted tissue.

[007Pimpernel]

So a Thai prawn fisherman who sells prawns (trades) with the EU is subject to all EU regulations?

 

Interesting.

 

S

We are talking about regulations governing risk management in funds transfer between banks, specifically between KSFIOM and KSFUK. I think, sir, that you have accepted the evidence that the FSC has a case to answer.

[Sebrof]

I think, sir, that you have accepted the evidence that the FSC has a case to answer.

 

I regret, sir, that your thoughts have led you to a quite unwarranted conclusion.

 

Now stop pedalling this piffle, please, Pimp.

 

S

[thesultanofsheight]

So, again with the benefit of hindsight, I think Darling should have co-ordinated a nationalision KSFUK and KSFIOM.

 

Nationalise KSFIOM? How can the UK Government "nationalise" anything that is not legally domiciled in the UK?

 

Put the brain in gear. I said co-ordinate. In other words, operate in tandem with the Manx gov. so that both acted in unison.

 

S

 

Hang on a minute. You've been blathering on about the taxpayer not picking up the tab on this for months. Now you suggest that IOMG should have nationalised the bank so the taxpayer took on all the liabilities? You really are not only a complete fool but also contradict your own arguments. What pure unadulterated tosh.

[Tugger]

Whose rules are these? iI may have missed it but it doesn't appear clear from the link

KSFIOM was a subsiduary of Kaupthing hf (Iceland) so the PDF file is Iceland's statutory adoption of the EU regulations to which I referred earlier. All EU countries have adopted these regulations, & as a Crown dependency & a trader with the EU the IoM is subject to the same regulations.

 

The IOM isn't subject to these regulations. Please stop lying

[thesultanofsheight]

Whose rules are these? iI may have missed it but it doesn't appear clear from the link

KSFIOM was a subsiduary of Kaupthing hf (Iceland) so the PDF file is Iceland's statutory adoption of the EU regulations to which I referred earlier. All EU countries have adopted these regulations, & as a Crown dependency & a trader with the EU the IoM is subject to the same regulations.

 

The IOM isn't subject to these regulations. Please stop lying

 

As neither the IOM or Iceland are EU States I'd be pretty bloody surprised if they did too.

[triskelion]

Rules on large exposures incurred by financial undertakings Article 3 refers

The FSC transferred 60% approx of KSFIoM assets to KSFUK, thus breaking the rule by 35%.

Except that for a bank, deposit monies are a liability, not an asset.

[Sebrof]

So, again with the benefit of hindsight, I think Darling should have co-ordinated a nationalision KSFUK and KSFIOM.

 

Nationalise KSFIOM? How can the UK Government "nationalise" anything that is not legally domiciled in the UK?

 

Put the brain in gear. I said co-ordinate. In other words, operate in tandem with the Manx gov. so that both acted in unison.

 

S

 

Hang on a minute. You've been blathering on about the taxpayer not picking up the tab on this for months. Now you suggest that IOMG should have nationalised the bank so the taxpayer took on all the liabilities? You really are not only a complete fool but also contradict your own arguments. What pure unadulterated tosh.

 

 

You don't really understand very much at all, do you? Not just about banking and business, but about how to have a discussion in a civilised manner. It's a pity that, like certain other people here, you so frequently resort to insults as a substitute for arguments.

 

I believe it is likely that the UK would have been better off - perhaps much better off - if Darling had nationalised KSFUK. Had he worked with the IOM gov. on this, it might well have made sense for the IOM to have nationalised KSFIOM at the same time. The £500million would then have remained a KSFIOM asset, and we would not now been in all this trouble.

 

When you close a business down following a cataclysmic event , the costs of doing so are huge. Keeping it going, provided the underlying business is sound, is almost always the best way.

 

All businesses carry a lot of assets that are worth a lot while the business trades, and nothing when it stops doing so. I believe that had they been nationalised, both businesses could in due course have been sold on with much less cost and angst.

 

Obviously there is a considerable degree of speculation in this because I am not privy to all the figures. However, as a principle, I believe it is best to preserve a normally viable business.

 

Certainly Kaupting seems to think that there is merit in what I am saying because they are threatening to sue HMG over what has happened. I have no idea how far they have got on that.

 

S

[Sebrof]

Rules on large exposures incurred by financial undertakings Article 3 refers

The FSC transferred 60% approx of KSFIoM assets to KSFUK, thus breaking the rule by 35%.

Except that for a bank, deposit monies are a liability, not an asset.

 

No. The cash was an asset. There was a corresponding liability to those who had provided the money in the first place.

 

I would point you to Wikipedia's article on double-entry book-keeping, but it is so badly written that I won't.

 

S

[triskelion]

Well, anyway, found this on the FSC's website's rulebook:

 

Rule 8.36 - Large exposure management

Guidance Note

 

1. A licenceholder must —

1. not incur an exposure which (including accrued interest) exceeds 25% of its large exposures capital base (“LECB”), unless the exposure is an exempt exposure

...

Rule 8.38 - Exempt exposures

The following exposures are exempt exposures —

...

e. exposures to other group companies which are credit institutions in Zone A countries;

[Sebrof]

Well, anyway, found this on the FSC's website's rulebook:

 

Rule 8.36 - Large exposure management

Guidance Note

 

1. A licenceholder must —

1. not incur an exposure which (including accrued interest) exceeds 25% of its large exposures capital base (“LECB”), unless the exposure is an exempt exposure

...

Rule 8.38 - Exempt exposures

The following exposures are exempt exposures —

...

e. exposures to other group companies which are credit institutions in Zone A countries;

 

Watch your back, Triskellion. Bellyache and his pals won't like you for that.

 

S

[localyokel]

Rule 8.38 - Exempt exposures

The following exposures are exempt exposures —

...

e. exposures to other group companies which are credit institutions in Zone A countries;

 

It doesn't mean that the rule is either prudent or sensible though does it? Virtually every bank it regulates will be operating under that exemption which really makes a mockery of the system. In truth the FSC had to include that exemption in its rule book otherwise we'd have absolutely no banks operating here at all.

 

Its just bending the rules of prudence to accomodate what the banks with a presence here want to do which is just shunt their deposit books back to head office.

[Sebrof]

Its just bending the rules of prudence to accomodate what the banks with a presence here want to do which is just shunt their deposit books back to head office.

 

Yes, but that is inevitable. There would be little point in these banks being here if their parent compamies weren't going to use the money that people deposit with them.

 

We have to accept that a bank operating as a subsidiary company is really no more than a branch of the parent bank. It is set up as a subsidiary company rather than a branch for various reasons, such as:

 

1 Local regulations may require it.

2 There may be fiscal benefits

3 It is easier to dispose of, or walk away from, a separate company than a branch.

 

In most cases, however, such subsidiaries operate like branches, nothwithstanding their legal status.

 

S

[localyokel]

Its just bending the rules of prudence to accomodate what the banks with a presence here want to do which is just shunt their deposit books back to head office.

 

Yes, but that is inevitable. There would be little point in these banks being here if their parent compamies weren't going to use the money that people deposit with them.

 

We have to accept that a bank operating as a subsidiary company is really no more than a branch of the parent bank. It is set up as a subsidiary company rather than a branch for various reasons, such as:

 

1 Local regulations may require it.

2 There may be fiscal benefits

3 It is easier to dispose of, or walk away from, a separate company than a branch.

 

In most cases, however, such subsidiaries operate like branches, nothwithstanding their legal status.

 

S

 

The point remains that virtually all our banks operate on this basis and in my mind it is not that secure for depositors - in this context its interesting that the first quarter 2009 figures for Manx deposits shows that £1.2 billion has been taken out of Manx subsidiaries. I would expect that trend to continue as depositors find out that the risks are greatly increased when all your bank is is an offshore piggy bank for its shaky UK or Irish parent. I would certainly expect anyone banking offshore with an Irish bank to question whether allowing these banks to pass their assets 100% to the Irish parent is prudent in this climate. Its clear the Irish guarantee scheme is not worth the paper its written on so why not force these banks to diversify their exposure?