jimjones

I commented on the sentiments of the first paragraph above.. I couldn't imagine there would ever be the scenario where the depositors would be left to get together and bring a class action against the icelandic government as private individuals.. I agree with the last 2 paragraphs - which is what I saw as "the risk". Thanks for the spelling tips.

Sorry.. but just to add... In your example if the windows fell out after a year and I went to get the guy to repair them, would you all be stood on the sidelines heckling that the guy shouldn't repair them because I DESERVE to get ripped off for hiring the guy in the first place? Because that's what seems to be happening here.

Fair point.. But if I knew where the guy lived and controlled a proportion of his food then I wouldn't be so worried... It wasn't a guy in van though was it was a large financial organisation regulated and ran in this country and an EU country.. We pay the FSA to ensure that banks etc can meet their obligations - if that guarentee wasn't sustainable then they should of stepped in. It looks like there will be enough assets in lansbanki to cover the the deposits anyway, and if not iceland will probably cough up... so the worst has kind of happened..

Darwin : That's my understanding, because the Guernsy account wasn't covered by the FSCS guarentee. Flat Bear: Of course you're right.. Nobody could of forseen things playing out quite like this... But I think most felt (me included) that in the unlikely and exceptional chances of a problem, then they would be able to get it back from the icelandic fund, and if there was a problem with that (basically an EU nation defaulting on their debt) then the UK government/FSA would step in to ensure they paid. Of course there was the very very slight risk that all of this could of happened, and the FSA/UK government would say "tough luck, all you savers will have to bring a class action against the icelandic government" through the courts.. but I think we're getting into pretty extreme circumstances there..

Any risk assessment obviously has to include what guarentees are provided. If the guarentee didn't exist, then it becomes a different ballgame - but it does.

And if you'd read my post above, you'd see I'd already said that IMO the compensation should stop at 35k as it was still at 35k (not 50) when it ran aground... Considering the hype around the 35k you'd be mad to have more than that anywhere.. and FFS it's hardly betting is it... you know your economy is screwed when people start calling putting money in a savings account "betting"!

But up to 35k there wasn't a risk to the depositor (other than the hassle of getting your money back if something went pairshaped) - so you're right it was illogical to bank anywhere with lower interest rates :-P If the banks risk was really that great then they wouldn't of been allowed to join the compensation scheme and approved by the FSA - that's not the depositors fault.

I totally understand risk/reward - it seems it's you obviously don't understand what a guarentee is.. A guarentee is exactly that, I'm sorry that it makes you so unhappy that a guarenteed savings account, turns out to be.. erm.. guarenteed... I can only presume you thought it wouldn't pay out and the depositors shouldn't get their due compensation (though a legal contract says otherwise), and now you're upset because you were wrong.. If you think Icesave shouldn't of been part of the FSCS and should of failed regulation by the FSA then that's something to take up with the FSA but flaming the depositors for putting money in a regulated and approved bank account, is more than a little silly... No matter how hard you wish it not to be so, that guarentee exists, if it didn't I'm sure many people would of gone elsewhere - but it does, so live with it.... The guarentee effectively means that there is no relationship between risk and reward below the 50k limit (other than the risk of having to get your money back)... it might suck but it's true.. Personally, I think the 35k upper limit on claims should be applied - as that was the compensation level when this kicked off....

I've answered this elsewhere... but it's not always correct that higher interest=higher risk. There should be no risk as it was a guarenteed savings account. AFAIK nowhere offered 7%, their rates were not that much more than a good highstreet deal (infact B&B out performed them..). Bottom line, most icesave customers assessed the risk, realised there wasn't any (below 35k) because they would get compensation if there was a problem. So they got higher interest rates, and are getting their deposits refunded (just as they would expect) - so who's the stupid one? I can't help but feel this is sour grapes on the part of those who mistakenly thought the risk was higher than it was. And that now something has gone wrong they are incredulous that compensation is being paid out because they thought it wouldn't. That's how that letter reads, "I invested elsewhere for lower interest thinking icesave was unsafe. Now I'm annoyed because it turns out it was safe and they will get compensation and I would of been better of with icesave after all. Right I'm going to start a campaign of hatred because I can't stand being wrong". Anyway, the real question isn't the rights and wrongs of paying out compensation, it's how if an Icesave savings account was so risky why did it get a double a rating, and approval from the FSA. Surely it's the industry regulators who get paid to ensure everyone plays within the rules of the banking industry.

I think the illegal part wasn't that the Landsbanki went under. It was that when it started to look slightly dodgy, the icelandic government siezed control of it and the PM said the domestic deposits would be safe then said "it's every country for themselves!" - that's a direct quote. So the illegal part is guarenteeing the icelandic deposits and anouncing that you have no intention of paying compensation to foreign account holders. Tbh - I think icesave is only part of picture, the whole economy is collapsing in Iceland, and I'm pretty sure the whole thing is going to unravel, so I suspect freezing all of icelands assets is more about reducing our exposure to that risk. Remember Kaupthing has now gone too, who's investiment porfolio was always seen as higher risk than icesaves.. Also Icesave didn't default it's not officially in liquidation, the goverment stepped in and seized control of it.. Then announced foreigners wouldn't be getting their money back but icelanders would.. we don't know for sure the bank was in crisis (though I'm sure it probably was) - effectively they paniced and seized control of our assets..

In fairness I think Iceland have got more than enough to worry about.. They're worrying about where their next meal is comming from and the complete collapse of their economy, and savers deposits from another country are probably the last thing on their mind (remember they have potentially lost EVERYTHING!). I think it's worth feeling a bit of pity for the icelanders, afterall, it was us that brought their banks to their knees. Yes, they had economic wobbles last week, but it's the fact all UK depositors panic and withdrew our funds which pulled the rug out from under landsbanki, and will enevitably lead the collapse of the icelandic economy. Incidently if RBS goes the same way, we'll bein the same position as iceland..

Alistair Darling: Looks like they try to wrangle the money, Iceland told them to bog off, so now they're doing what we knew they would do, seize icesave assets and try and repay everybodies deposits

Why exactly are they bastards? They haven't done anything fraudulent.... and unlike B&B and NR they weren't exposed to risky investments (subprime btl), so they've been a model bank in some respects. This hasn't come about by recklessness on their part (unless you count agressive marketing a stable product as reckless). There seems to be some misunderstanding about how banks are run - because I hear this a lot. Any bank lends it's deposits out - that's how it earns you interest, it is required by law to hold back a percentage, but if more than 30% of your customers come along and pull out their deposits then you're screwed.. Icesaves problem is that after the icelandic bank problems last week and the resulting jitters in their economy everybody (especially those in the UK) are pulling out their deposits, and it's caused icesave to collapse.. The sad reality is, if nobody in the UK had panic withdrawn their deposits over the last week then Icesave would be fine. On paper Icesave should have been safe bet, if it had been in another country and practised in the same way it would of been fine... It's also not the size of iceland that's caused icesave problems (other than make people more jumpy about withdrawing their funds), but that does have a bearing on the compensation payouts. I've seen people saying that there should of been warnings put out by the government, or that the media should of warned them, well in some cases they did, but people don't seem to grasp this is of their own making. Someone on moneysaving expert was bemoaning that they weren't told to withdraw their funds - but they fail to see that all that would of done is sped the process up by a week...

Bit of a myth there. It might of been part of the landsbanki, but it was a UK company, and part of the FSA - so therefore any icesavers haven't banked overseas it's in the uk. That's like saying people with abbey now bank in spain, or hsbc account holders bank in hongkong. Of course they way they subscribe to the FSCS is tad different than most banks - but it doesn't make them an overseas bank. TBH it would be shocking if the first amount of money wasn't repaid (even if iceland went under) after having the uk pm on tv saying "no british saver will lose a penny as long as their savings are within the compensation limits".

http://news.sky.com/skynews/Home/Business/...s=searchresults Says: If an Icelandic bank fails UK customers are protected up to £50,000 The first £16,170 of their money is protected by Iceland The remaining £33,830 is protected by the UK government If Iceland goes bankrupt, the UK will not cover the first £16,170 Joint accounts will be protected up to £100,000 I think that's pretty clear...

They could do an "adopt a saver" scheme, where each icelander selects a saver then works for many years until the saves debt is paid off.

According to bloomber, the Icelandic PM said it: and

"Icelands three banks have combined assets of £4 Billion and debts of over £100 Billion owed to other banks. The population of Iceland numbers around 300,000 which indicates a per capita debt of over £33 Million per head" - Wow... and you think you've got worries..

So a private organisation running into financial difficulty at a time of international financial instability - is the governments fault? You could argue they should of made 125% loans illegal, but if people want to borrow more than they can afford and companies are willing to lend it then they should have that choice - if it was outlawed then there would be uproar. Your savings in NR were never "not protected" it's just everyone panicked (understandably), so the government had no reason to rush in. This is a global problem, and blaming the current government just doesn't add up. Despite what the mail says, everything that goes wrong isn't the goverments fault, and everything which goes right isn't inspite of the government. You takes your chances and makes your choices.. You do know that FSA isn't Gordan Brown don't you? You've not lost your money yet... If you had read the terms when you opened your account then you would be fully aware of the situation regarding Icesave and the FSA. I'm sure nobody will lose anything just don't panic.

A country the otherside of the world has to sieze control of it's banks - how exactly does that relate to the labour government of our country?

I've been lurking here for some time.. but this is my first post.. I had 10k in an icesave account. I knew things were dire for them, but decided not to withdraw my funds as I didn't want to be one of those dumb people who panic and bring about the premature end of the bank... But yesterday it looked worse, so I transferred my funds. They have left my Icesave account but not appeared in my current account yet (in clearing), whether that will go through I'm not sure, hopefully it's left ICEsave, who knows. My understanding of the Icesave compensation scheme is that they haven't fully subscribed to the FSCS, and are part of the passport scheme which means the first x amount (16k for icesave) is covered by their native scheme (run by the icelandic government) and the rest (up to 35k) is covered by the FSCS. It's the part underwritten by the icelandic scheme which could cause an issue. If money needs to be claimed back it's not fully clear whether if the icelandic government can't meet their commitments the FSCS will step in and pay the whole thing anyway - or whether the FSCS will just pay it's share - or whether in that scenario the FSCS won't even pay it's share until the icelandic scheme coughs up. I suspect the former.. But I think all that's jumping the gun.. The bank isn't in recievership in the normal sense, it's still liquid. What has happend is last night the Icelandic government was getting concerned about it's banking system future BECAUSE everyone has been panic withdrawing funds after the Glimty bank (or whatever it was called) had to be bailed out last week. As an emergency measure they banned trading in bank stocks and have now seized control of the banks to try and control the situation, it's not so much that banks were in financial trouble it's just that if everyone withdraws their funds then they seriously will be. Because the UK savers withdrawing their funds were looking to bankrupt the icelandic economy, then they've done the sensible thing and stopped withdrawals from abroad, and made assurances to the icelandic people that their money is safe to try and calm widespread panic. My only worry is that I think this may all be a bit late, and that they will not be able to restore confidence, and the statement of "we will gurantee internal deposits" has the implication of "everyone else can go whistle" - though I'm not sure of the legalities of them doing that. Even if they can't revive it, I suspect the ICEsave business is worth a lot to another bank, so they won't find a problem in getting in another buyer... santander perhaps? :-)