The Sunday Times 10th January 2010
Just How safe is your money in a foreign bank ( an extract)
So has anyone lost out?
Nobody with deposits in the UK arm of an Icelandic bank has lost any money ó but only because the British government went over and above the remit of the FSCS.
Savers who invested through Landsbankiís Guernsey arm, however, have so far received compensation of only up to 67.5p in the pound. The administrators hope the final figure will be between 85p and 91p.
The Independent Sunday 10th January 2010
Timetable of failure: Warning signs of meltdown were ignored
By Greg Walton
IceSave lured customers with promises of impossibly high interest rates and quick returns before its collapse in 2008 which cost British and Dutch savers more than £3.4bn. The British subsidiary of Landsbanki offered customers interest rates of up to 6.7 per cent ? well in excess of high street rivals ? and required an initial deposit of only £1,000. Nearly 300,000 British savers had IceSave accounts frozen in October 2008 when the global slowdown crippled Iceland's overstretched banking sector. In total, British investors had £4bn saved with the online bank.
In addition to unsustainably high rates of interest, the online bank aggressively sought to increase deposits through a slick advertising campaign managed by a big City PR firm. "As I recall they received some marketing awards. They did advertise quite a lot," said Iceland's Progressive Party leader, Sigmundur Gunnlaugsson, whose InDefence group has campaigned for a referendum on the repayment of debts to the UK and the Netherlands. Mr Gunnlaugsson says: "The breakthrough was being listed on the online comparison sites where the IceSave account was often had the highest rate of interest."
The press too played a role in attracting savers to the scheme, often holding up the bank's cash ISA as the market leader. In late January 2008, The Mail on Sunday recommended IceSave's easy-access account to readers in an article entitled "Safe homes for your cash as panic spreads on markets", just months before Iceland's banking sector ran into difficulty.
Warning signs before the collapse were largely played down by commentators. The entire Icelandic banking sector was under scrutiny in the months before the demise of IceSave. Credit rating agency Moody's launched a review into the country's financial services industry at the end of January 2008 and Standard & Poor's warned of difficulties for its major banks, including Landsbanki. Despite these signs of impending meltdown, the online account was still recommended to British savers.
COMMENT by firstname.lastname@example.org
Having read the article above would you believe the Guernsey Financial Services Regulator when he is still trying to tell everyone he carried out satisfactory due diligence on about £39 million of Landsbanki Guernsey Depositors money being up streamed to Heritable in the months prior to the collapse. He relied too heavily on the UK FSA and failed to do his own due diligence.