Manx Kaupthing S&F savers “hung out to dry”

ISLE OF MAN residents with savings of more than £50,000 in Icelandic bank subsidiary Kaupthing Singer & Friedlander (KSF) fear they will be forgotten by the UK government.

Around 200 creditors are understood to be owed at least £26m following the collapse of KSF.

One Greater Manchester business owner, who had around £500,000 in personal savings with KSF’s Isle of Man branch and is resident there, told TheBusinessDesk that he felt the Isle of Man had been “hung out to dry”.

The entrepreneur did not want to be named because he feared it might wrongly lead people to think his business was in financial difficulty.

“We are in a No Man’s Land,” he said. “The Isle of Man is the innocent victim – the UK government has frozen the assets and forced it out of business, with no comfort given to savers that it will look after us.

“I want the UK government to fight our case on our behalf – they make tax off the Isle of Man.

“People will think I’m rich and not worry about it. But I’m a normal person choosing to live on the Isle of Man just because it’s a beautiful and safe place to live. We are not just rich people sat on a rock.”

Business people and other private savers with more than £50,000 deposited will be competing alongside the likes of UK local authorities and charitable institutions in the rush to get their cash back.

KSF Isle of Man managing director Aiden Docherty told over 100 investors at meeting on October 9, that the support he was expecting from the Icelandic parent company had not come and when the bank’s assets in London were frozen, it had left KSF unable to repay investors.

The Isle of Man government is pressing the Icelandic government to honour a September 2007 guarantee made by Kaupthing Bank to protect depositors in the Isle of Man subsidiary.

And Isle of Man Chief Minister Tony Brown said he would request that the UK government get involved.

“The UK government has responsibility for us in international affairs,” he said.

Andrew Noon, banking partner at law firm DLA Piper’s Liverpool office, said it was a question of priorities.

“The harsh reality is that some people will lose out unless some miracle solution is found. The UK government would like no one to lose out but choices have to be made over who it protects.”

The ideal outcome would be for Kaupthing to be bought by another bank, which would then take over its liabilities, he added.

But Mr Noon does not think these events will spell the end of the Isle of Man’s financial sector.

“A sophisticated investor will still look at the Isle of Man and other offshore vehicles, if the decision is tax driven and the benefit is good enough,” he said.

“But there will be a much higher degree of caution and people will look at the ability of the jurisdiction to prop up the banks if a problem is encountered.”

Mr Noon added that for high net worth individuals, the popularity of National Savings, Northern Rock, and Irish banks would increase considerably.

“People are looking for government guarantees and even guilds and bonds. There is a very low return but that is the price you pay,” he said.

A campaign website – www.ksfiomdepositors.com – has been set up by those affected, to try to raise awareness of their plight and maintain momentum.