As we reported last week, most savers in Icelandic banks have been rescued by the government, but for UK depositors in Guernsey and Jersey there’s no compensation scheme if a bank fails. Since then, the administrator has said that savers at bust bank Landsbanki Guernsey will get back just 30% of their cash from administrators. “Some of the stories are harrowing, as many retired expatriates, relying on their savings to survive, may have to return to the UK and live solely off the state pension,” reports Thisismoney.co.uk. The website Landsbankiguernseysavers.co.uk is fighting for a better deal.
At least in the Isle of Man the safety net was recently strengthened to the same level as Britain’s Financial Services Compensation Scheme (FSCS). But even that may be an illusion. Now that Kaupthing Singer & Friedlander (KSF), part of failed Icelandic bank Kaupthing, has been put into administration, “7,000 UK savers could lose savings worth £860m tied up in KSF (IoM)”, says Cliff D’Arcy at Motley Fool. “Although the upgraded IoM scheme now covers the first £50,000 on deposit per person, the IoM government simply doesn’t have the cash to pay out £350m (7,000 x £50,000)”. Yet KSF has been operating in the Isle of Man since 1971, “a record which may have convinced savers of its stability”.
Finally, some better news for those whose savings were ‘transferred’ from Kaupthing Edge and Heritable Bank to ING Direct. After a 27% tumble last Friday in parent group ING Group’s shares, a €10bn (£7.7bn) cash injection arrived from the Dutch government. That might seem worrying, but it proves the Dutch are behind the bank. What’s more, ING won’t be paying a dividend this year to conserve cash, and the directors won’t be paid any bonuses. ING credit default swap – insurance against default – premiums fell sharply, a good sign. And if ING were to fail, the Dutch compensation scheme covers savings up to €100,000 (£77,000).