Landsbanki Guernsey Fiasco Ends after 8 Years. Depositors LOSE 8% in Unsafe “Haven”.
Banking in Guernsey: That well-known crown dependency of the UK, offshore tax haven and a reliable custodian of your cash.
Or NOT as the case was.
Nestling amongst the allegedly safe banks on Guernsey was Landsbanki, an Icelandic owned bank guaranteed by its huge parent company Landsbanki in Iceland. What could go wrong? All these countries are EU, right? Icelandic banks were well-known and reliable, right? Guernsey was a world-class banking haven insulated from grasping Gordon Brown and not stupid enough to invest in US mortgage debt. Cash was safe in Guernsey everyone thought.
Iceland is not EU. Nor, technically, is Guernsey (although they bow to the EU savings directive and are a UK Crown Dependency).
Well, Guernsey is not safe any more it seems! In October 2008 the Icelandic government nationalized Landsbanki Iceland. In turn, all its affiliates and subsidiaries around the world toppled like a house of cards.
However, what of Landsbanki Guernsey? Well nobody noticed before, but Guernsey lacked depositor protection. Savers relied on its stringent financial regulation [sic] not to let minnows and “Johnny-come-lately” types into Guernsey.
However, while Lyndon Trott – the big cheese on the island – and some of his cohorts were bigging it up in the Orient on Labrador fried rice at the taxpayers expense, Guernsey was wobbling as a trusted financial centre.
Landsbanki Guernsey went into administration. The administrators have paid out 30p in the pound within a couple of weeks of the bank’s collapse, and made further payments in 2009 (25p), 2010 (12.5p), 2011 (17.5p), 2013 (4.6p) and 1.96p at the end of May 2016.
What of the 8% shortfall? Guernsey won’t pay. The UK won’t pay. Iceland has managed to slither out of its commitments abroad even though they nationalised the parent bank.
FACT: In 2016 UK-based and other international savers lost 8% of their cash in Guernsey.
Guernsey is finished as a retail financial centre – simple as that. Nobody wants to invest money in a “financial centre” where people lost their cash – it’s that simple!
If people want risk, they can get that earning 17% interest in Ukraine. They can get a government backed guarantee in Russia and 10% interest with no government stealing some of the interest. Why will they mess about for 4%-6% in Guernsey where the cash has a tendency to do a credible impersonation of Houdini?
Guernsey’s “depositor protection scheme” is worthless. That is called “closing the stable door after the horse has bolted” – Guernsey’s DPS has as much value and credibility as one from Zimbabwe.
This site says: The Guernsey Government should compensate savers for the 8% shortfall. Every other government in the world appears to be doing this in their own jurisdictions. This is called depositor protection.
Guernsey say they cannot afford to pay. Really?
They could use some of the £15m a year they make from information snooping for the tax authorities in the UK, or maybe some of the tax and other monies they made from Landsbanki to date.
Regulation appears to have been insufficient or ineffective.
Landsbanki Guernsey was poorly regulated and inadequately supervised. Until Guernsey pays the Landsbanki savers (dont hold your breath) they will pay the price with their reputation.
Don’t put your money in Guernsey, folks!
