Actions regarding Isle of Man and vouchsafe depositors

Our Ref: .ISS01084683 / PC58724

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Dear Mr Davison

Thank you for your email dated 12 August 2009.

Your query

I understand from your email that you are seeking information on the steps that were taken by the UK Government in response to the collapse of Kaupthing Singer & Friedlander (Isle of Man) Limited.

Background information

On 8 October 2008, The Isle of Man Financial Supervision Commission suspended KS&FIOM's banking licence. Accordingly Kaupthing Singer & Friedlander (Isle of Man) has ceased to trade as a bank. The Isle of Man Financial Supervision Commission has stated that the provisional liquidation is necessary because of Kaupthing Singer & Friedlander (Isle of Man)'s financial position and to ensure that the best interests of customers and creditors are served.

On 8 October 2008, the Her Majesty's (HM) Treasury undertook actions in relation to UK subsidiaries of Icelandic Banks the Banking (Special Provisions) Act 2008. These actions included freezing of assets and transfers of business.

I appreciate that you wish the Government to answer your questions in relation to Kaupthing Singer & Friedlander (Isle of Man). The FSA has endeavoured to provide a regulatory response. However, if you wish to raise further concerns regarding the role of the UK Government, I recommend you speak directly to HM Treasury. I have included a link below for your convenience:

http://www.hm-treasury.gov.uk/

Compensation

I believe that it is important to reconfirm that the FSCS is separate and independent organisation from the FSA, and decisions on claims under the scheme should be referred directly to the FSCS in the first instance. However, it is our understanding that depositors with KS&FIOM are not covered by the scheme, even where funds may be in the UK for routing and clearing purposes.

The Isle of Man is an offshore territory and is not part of either the UK or the European Economic Area - it is autonomous with regard to financial services and has its own regulator, the Isle of Man Financial Services Commission, which makes its own decisions with regard to compensation arrangements.

The following statement has been issued to customers of KS&FIOM by Mike Simpson, the Liquidator Provisionally for the firm on 13 March 2009.

General Information

The Joint Liquidators Provisionally continue to work with the Isle of Man Treasury in helping develop its proposed Scheme of Arrangement.

As outlined previously, the Joint Liquidators Provisionally understand and empathise with creditors seeking more information regarding the detail of the Scheme of Arrangement. However, as the Scheme of Arrangement is still being drafted it cannot be shared with creditors at this time. When this information becomes available, this information will be placed on the website. The Joint Liquidators Provisionally appreciate your continued patience in this regard.

As outlined on the website updates of 20 February 2009 and 6 March 2009 some level of detail has been provided in relation to the Scheme of Arrangement. For the purposes of clarity, the Scheme will be presented to creditors who will then have the opportunity to vote for or against it. In order to approve the Scheme more than 50 percent in number and 75 percent in value of those voting in each class of creditors need to vote in favour.

The Joint Liquidators Provisionally would like to emphasise that they continue to protect the assets of the Bank and are engaged in the realisation of those assets for the benefit of creditors. There is no further news regarding the realisation of assets at this time.

Contacts

As previously, the best way to make contact is to write to the bank or to email [email address]. If you need to telephone the bank, please use the main switchboard number +44 1624 699222. '

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I trust this is of assistance.

Yours sincerely

Joe Tatnell (Mr)
Customer Contact Centre
Financial Services Authority
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