Several hundred people met yesterday outside the Icelandic parliament to take part in a protest organised by the Voices of the People movement – the same group behind this winter’s protests which helped lead to the fall of the old government.
Several protesters lit a disk of fireworks which made a lot of noise; but the protest was otherwise peaceful, mbl.is reports.
The Voices of the People said 1,000 people protested, but the police put the figure at just 100. People mbl.is spoke to put the figure at “several hundred”.
Hordur Torfason, the group spokesman, said the protest went well and the atmosphere was good. Another protest has been organised for next Saturday.
The rally was called to protest the Icesave deal being debated by parliament and to protest the difficult situation households and companies are facing. Many believe the government is not doing enough to help.
Those protestors want the Icesave deal to be rejected by parliament, so I guess they accept the risk that Iceland would be expelled from the EEA, the IMF would withdraw financial support, and the Netherlands and UK would apply financial sanctions. I wonder if those protestors would then move to Norway, Denmark or Sweden in order to find work…
Of course the bankers and politicians don’t care about the difficult household situations! The Icelandic Mafia members are still taking home over one million krona a month, so who cares about the ordinary tax-payers, that by the way will pay for the Icesave disaster.
WELL, ICELAND IS REALLY FOKT UP. IT IS SAD. BUT THE POLITICIANS ARE TO BLAME NOT THE PEOPLE. THE SAD THING IS THAT IT IS A LONG WAY BEFORE THEY CAN ACCOUNT THOSE CRIMINALS, AND FIND OUT WHAT REALLY HAPPENED HERE. BUT THAT IS ONLY THE BEGINNING. ICELAND NEEDS NEW LAWS, NEW POLITICAL CLASS… THAT MONEY NEEDS TO BE PAID, NO DOUBT OF THAT. I THINK ICELANDERS WONT HAVE OTHER CHOICE. I THINK THAT ICELANDERS NEED TO MOVILIZE, PARTICIPATE MORE IN POLITICS, AND SPECIALLY BE MORE CRITICAL. ICELANDIC SOCIETY IS VERY MARKED BY THE LUTHERAN RELIGION IN WHICH PEOPLE HAVE TO SHUT UP AND DO WHAT THEY ARE TOLD TO DO, NEVER PROTEST AND OBBEY … AND THAT MIXED WITH THE VINKING IDENTITY STUFF, AND A CLOSE MENTALITY TO EVERYTHING THAT IS “FOREIGN” WELL… THIS COUNTRY NEEDS TO CHAGE BECAUSE NOW IT IS REALLY AKWARD. IN THE NEWS TODAY THEY SAID 200 CRIMINALS ARE IN THE STREET IN ICELAND BECAUSE THERE IS NO PLACE FOR THEM IN THE ICELANDIC PRISIONS. AMONG THEM MANY RAPERS… SO GO FIGURE, THIS IS A REAL BARBARIAN COUNTRY.. CRIMINALS IN THE STREET, PEOPLE THAT STEAL BILLIONS AND NO ONE DOES ANYTHING…
LIKE IN THE WORST SOUTH AMERICAN COUNTRIES… SO MUCH CORRUPTION
On Jun 21, 2009, Jim said:
Netherlands and UK would apply financial sanctions.
The EU has ONE policy and Germany lost vast amounts too, so the EU would apply sanctions and probably the US as well (they don’t side with fraudsters).
SIR EURO, your description doesn’t fit with Iceland but with Italy definitely! No kidding, just move here for a while. You’ll see with your own eyes. Otherwise don’t tell me we are one of your best customers so do you prefer to defend us for your sake. I’d not buy a jewel anymore, sorrrry.
Sir Euro strikes back.
The sad truth is that Iceland is slowly but surely becoming a third world country! That’s what happens when a country doesn’t have a trustworthy bank and/or political system. Biggest indicator is the value of their currency is worth 100% less than what it was a year ago, and it’s getting worst every day. O’yeah, the bankers and politicians are still taking about a million krona per month, which is worth half of what it was a year ago.
Sir Euro is talking out of his ass!!
‘Iceland is a real barbaric country’ What a crock of s##t. I would choose walk the streets of Reykjavik after dark, over any city in my own country. (UK)
Iceland is a small economy, and has been hit hard and fast by an international system collapse. The bigger economies are on the same track, but with them, it will take longer for the poop to hit the fan. They may not feel the pain so much, as they have far bigger populations that they can bleed money from in the form of more taxes. I really hope, that for Icelands sake, the government has the good sense to stay out of the EU. Iceland fought long and hard for the right to their fishing grounds, and in the present international situation, those same grounds are the best and safest bank that the country has. There is a whole armada of european vessels, rubbing their hands at the prospect of getting access to those grounds. Joining the EU will mark the end of Iceland.
Truth says that Iceland, doesn’t have a ‘trustworthy bank and/or political system’ I would challenge him to name me one country that does.
I have worked in Iceland for some time now, and have great faith in the resolve of its people. They are tough, and will find a way to dig their way out of this hole. I can’t say the same for many other countries that will soon find themselves in a similar position.
>Those protestors want the Icesave deal to be rejected by parliament,
If it is rejected then no doubt this retched Directive 94/19/EC must go in front of impartial judge, which the EU commission wants to avoid like the plague.
However, the memberstate owed monies do no want that, and have not wanted that right from beginnning.
( Not really I think because it will take some time — as thanks to Red Green coalition it has already been a long time on their desk — but because they simply do not want an impartial third party looking at this Directive )
Directive 94/19/EC is discussed more deeply here by Bjarni:
http://www.icenews.is/index.php/2009/06/16/where-have-all-the-billionaires-gone/comment-page-1/#comment-82056
Steingrímur and Jóhanna still continue to amaze me in showing the country just how useless they are.
Steingrímur by ignoring the experts in reconstructing banks for months. And still now not doing the right thing.
Jóhanna and the other hard left by concentrate on things like this idiot idea from Norway to force a quota of females onto the board of companies and this deceitful idea that the last election was about EU member ship which she gets mandate from it on. She didn’t.
Higher tax — not a surprise — but this supertax. Gods what year is this? Is it 1979?
And why Steingrímur is not pushing against IceSave as he was before he became Minister Finance?
Is his next move to give in on EU membership as well?
* IceSave deal
Peter – London write:
>Netherlands and UK would apply financial sanctions.
>
>The EU has ONE policy and Germany lost vast amounts too, so the EU would >apply sanctions and probably the US as well (they don’t side with fraudsters).
Really? What an expert on justice you seem to be Peter – London.
How do other countries looking outside — and UK people also — feel about what Brown and Darling did to KSFIOM depositor through they not giving back that GBP 550 million they took?
http://www.icenews.is/index.php/2009/03/16/kaupthing-uk-legal-case-makes-high-court-progress/
At least we should see Kaupthing Singer Friendlander seizure travesty in front of a UK judge.
I have faith that the proceedings will be done fairly in this review with facts being bought into the light which no doubt will not show Brown or Darling to be reasonable and good faith kinds of guys.
Perhaps Germans are less angry because they retail depositors have got their money back from Kautphing Edge with no problem:
http://www.icenews.is/index.php/2009/04/20/all-kaupthing-edge-deposits-in-germany-to-be-repaid/
LAIN ” I would choose walk the streets of Reykjavik after dark, over any city in my own country”
LAIN YOU ARE TOTALLY NOT AWARE OF HOW DANGEROUS THE STREETS OF REYKAVÍK ARE BECOMING. WE WACHT THE NEWS HERE. ATTACKS WITH KNIFES ARE AN USUALL THING IN THE NIGHTS IN REYKJAVÍK. THERE IS A LOT OF CRIMINALITY, TOO MUCH FOR A SMALL TOWN LIKE REYKJAVÍK.
THERE IS SO MUCH DRUG SELLING GOING ON, CAR STEALING, AND REYKJAVÍK AREA HAS A RECORD IN EUROPE IN BREAK-IN HOUSES. THERE IS AN AUTHENTIC PANDEMIA NOW AS PEOPLE IS IN TRAVELLING AROUND THE COUNTRY AND THEIR HOUSES ARE EMPTY.
A FRIEND OF MINE TOLD ME THAT THEY HAVE TO ATTEND LOTS OF PEOPLE DURING WEEKENDS SPECIALLY, THAT HAVE BEEN ATTACKED OR INJURED BY KNIFES OR CUTTING WEAPONS, OR BROKEN BOTTLES, THEY ARE GETTING A MEDIA OF 10 RAPPED WOMEN PER NIGHT AT REYKJAVÍK HÓSPITAL DURING THE WEEKEND NIGHTS. THAT IS THE TRUTH AND THAT IS SOMETHING EVERYONE KNOWS. THE SITUATION IS SO BAD NOW THAT THE ASSOCIATION FOR THE FIGHT AGAINST RAPPING ARE THINKING ABOUT WHAT TO DO, LAST YEAR THEY WENT PUTTING PLACKARDS EVERYWHERE ( KARLMENN SEGJA NEI VIÐ NAUÐGUM= MEN SAY NO TO RAPPING.
AND IF YOU ARE A TOURIST IN REYKJVAÍK AREA REALLY, WACHT OUT!! IT IS VERY COMMON FOR ICELANDIC RAPPERS TO PUT SOMETHING IN YOUR DRINK. THAT IS A HUGE PROBLEM THAT HAS BEEN IN THE NEWS MANY TIMES IN ICELAND.
GO 4 O´CLOCK TO LAUGARVEGUR, THE MAIN STREET OF BARS AND YOU WILL SEE MANY FIGHTS AROUND THE CORNERS, WHERE MANY PEOPLE IS INVOLVED. MANY ICELANDERS GET VERY NASTY AND SPECIALLY AGRESSIVE WHEN THEY ARE DRUNK, MEN AND WOMEN, BOYS AND GIRLS.
IF YOU ARE LIVING ALONE OR ARE ON YOUR WAY TO YOUR HOSTEL OR HOTEL BE VERY CAREFUL THAT NO ONE IS FOLLOWING YOU, IF YOU SEE SOMEONE FOLLOWING YOU GET CLOSE TO PEOPLE, NEVER WALK ALONE IN THE STREETS OF REYKJAVÍK. A FRIEND OF MINE WHO IS A POLICEMAN HAS TOLD ME THAT THEY ARE RECIEVING LOTS OF PEOPLE, MAINLY TOURIST THAT HAVE BEEN STOLEN THINGS DURING THESE DAYS.
I THINK THAT MANY PEOPLE HAVE AN IDEAL IDEA OF ICELAND THAT IS NOT TRUE. YOU MIGHT THINK THAT THIS IS A SAFE PLACE BECAUSE IS A SMALL POPULATION AND SUCH.
THE TRUTH IS THAT WE GET HORROR NEWS EVERY EVENING ABOUT. 4 POLICEMEN GOT DAMAGED WHEN A GUY STOLED A FIREMEN´S CAR AND DROVE IT CRAZY ALL THE WAY THROUGH REYKJAVÍK, I AM WATCHING THIS ON THE NEWS NOW. 3 GUYS THAT LITERALLY CUT THE HALS OF ANOTHER ONE WITH A BIG KNIFE ARE NOW IN THE STREET BECAUSE THERE IS NO PLACE FOR THEM IN THE ICELANDIC PRISIONS. AS THERE IS NO PLACE FOR OTHER 200 CRIMINALS THAT WALK FREELY ON THE STREETS OF REYKJAVÍK…
REYKJAVÍK IS TOO INSECURE !! DON´T CONFY EASILY BECAUSE YOU CAN GET A SURPRISE!!
I WENT TO AKUREYRI, A GIRL WAS TOTALLY DRUNK ON THE FLOOR, HALF OF HER BODY ON THE WAY AND THE POLICE DROVE BY AND DID NOTHING, THEY DROVE AGAIN AND I HAD TO GO TO TALK TO THEM TO DO SOMETHING. I TOLD THEM: “WHAT ABOUT IF IT WAS YOUR SISTER, OR YOUR FRIEND?, WHAT ABOUT IF SOMEONE COMES AND TAKES ADVANTAGE OF HER?? REALLY, NO DOUBT THAT THERE IS SO MUCH RAPPING IN THIS COUNTRY,
JUST BECAUSE OF THE MANY THINGS I SEE IN ICELAND, HOW NOISY ICELANDERS ARE WHEN THEY ARE DRUNK IN THE STREETS, SHOUTING TO EACH OTHER LIKE BEASTS, AND ALL THIS POLICE IRREPONSIBLITY AND ALL THE VIOLENCE I SEE, REALLY, IT IS FOR ME LIKE A BARBARIAN COUNTRY…
DENSOU ”
SIR EURO, your description doesn’t fit with Iceland but with Italy definitely”
WAKE UP DENSOU! ACTUALLY IN ITALY THERE ARE SPECIFIC LAWS TO ARREST AND APPLY JUSTICE TO THE MAFIA, AND IT IS REALLY WORKING, THE HAVE EVEN ARRESTED ENTIRE FAMILIES… ICELAND HAS A MAFIA AND THEY WALK FREELY ON THE STREETS, STEAL BILLIONS TO THE CAYMAN ISLANDS, AND THEN GO TO FOREIGN COUNTRIES TO LIVE LIKE KINGS WHILE THE AVERAGE ICELANDER HAVE TO SURVIVE IN THE COUNTRY.
AND AGAIN, IT IS NOT ABOUT COMPARING ICELAND WITH OTHER COUNTRIES, IT IS ABOUT TELLING THE TRUTH OF WHAT IS HAPPENING HERE, ALL THAT WE SEE IN THE NEWS THAT PEOPLE ABROAD DON´T REALLY KNOW ABOUT ICELAND. IT IS ABOUT CHANGING THIS COUNTRY AND MAKING IT A BETTER COUNTRY TO LIVE, A BETTER COUNTRY FOR ALL OF US.
BUT YOU DENSOU ARE THE TYPE OF GUY THAT DEFENDS THAT ICELAND IS THE BEST COUNTRY OF THE WORLD. THERE IS SO MUCH RAPPING, DRUG SELLING, POLITICAL CORRUPTION, VIOLENCE AND CHAOS, AND A VERY INCOMPETENT POLITIC CLASS… THIS IS LIKE THE WORST SOUTH’AMERICAN COUNTRIES REALLY, AND NOW ICELAND IS HEADING RAPIDLY TO BE A THIRD WORLD COUNTRY. THERE IS A LOT OF POVERTY GOING ON… THE KRONA HAS NO VALUE AT ALL…
WTF!!!
On Jun 22, 2009, Fisy said:
“How do other countries looking outside — and UK people also — feel about what Brown and Darling did to KSFIOM depositor through they not giving back that GBP 550 million they took?”
Utter garbage. As you are probably aware, the money was transferred to the UK and it was loaned out by the Icelandic owners of the bank. The liquidator will be able to recover a certain amount over time.
It was Kaputhings commercial descision where the money was invested.
The unfortunate KSFIoM investors would have had depositor protection if they had banked with the EU, but they very deliberatly did not.
ICELAND stole the KSFIoM depositors money and *completely* refused to honour the *guarantee* to the depositors.
KSFIoM depositors are of course desperate to get thei life saving back – they know Iceland will never honour a guarantee so they are hoping that the UK will bail them out. There is zero chance of that.
It’s simple, Fysi.
Because only Jóhanna can give him the chair of Finance Minister or whatever. And he knoew that this is his LAST chance to sit in this chair before going back to to his permanent “opposition” bench.
So he will do anything she tells him…
The good thing – we’ll get less people with rose illusions at next elections ;-)
Sir Euro,
I am a young foreigner living in Reykjavik. One of the things I like about the weekends here is how raucous, fun, boistrous and safe they are. Plenty of shouting, the odd fistfight but very little more than that.
Sure it’s getting worse. I can’t deny that. But it’s still waaay better than any other equally lively and fun town or city in the West.
The problem is that Icelanders like to believe they have the same problems as everyone else to make them feel big. But don’t believe all you hear. Knife crime, rape and drugs are all horrible and do exist here – but a big problem? Gimme a break!
On a related note, I’ve just bumped into a contradiction. Part of the reason why the whole Icesave thing is a problem is, I believe, that there is a likelyhood that Iceland will have to repay some of the actual principal debt itself. Somewhere between 5% and 25%:
http://www.icenews.is/index.php/2009/06/06/icesave-deal-agreed-%E2%80%93-final-confirmation-next-week/
That ties in with what Bjorgolfur Thor Bjorgolfsson has always said – that the assets should pretty much cover the guarantee.
But I recently saw a bunch of stories about UK councils looking to recover 95% from Landsbanki accounts. These were not Heritable (as that’s mentioned separately), but Landsbanki itself. i.e:
http://www.marketrasenmail.co.uk/news/Icelandic-banks-to-pay-up.5300305.jp
http://www.cambridge-news.co.uk/cn_news_home/DisplayArticle.asp?ID=424830
Obviously both positions can’t be true, unless the councils were somehow depositing with another Landsbanki subsidiary rather than with Icesave. And I can’t see their advisors managing to lie that much (i.e. they’re actually looking at ~1% recovery but they’re told 95%). Any ideas?
Sir Euro
You should realize that you are not helping anything to this country so you might just as well shut up!!! I am a foreigner living here for 4 years now and had been a witness to everything but in my own opinion, I would still prefer to live here than in any other country. So, please stop exaggerating things and mind your own business.
@Runeston
Totally agree with you, your comment is closer to reallity spesially:
“The problem is that Icelanders like to believe they have the same problems as everyone else to make them feel big. But don’t believe all you hear. Knife crime, rape and drugs are all horrible and do exist here – but a big problem? Gimme a break!”
Sir Euro,
I talk from experience. I don’t rely on sensationalised stories, or third hand accounts for my opinion. Maybe you would like to give me an example of a safer capital city than Reykjavik to be in.
>Maybe you would like to give me an example of a safer capital city than Reykjavik to be in.
Tórshavn? :) But your point still stands.
well, Iain, ‘safety’ is a matter of numbers or of own feelings, imo. So how can an example be made ?
(what I meant: -e.g.- statistics reports there are 75 crime acts for every 1000 inhab. but it applies to WHOLE municipality -it’s AVERAGE-, while, very often, just a bunch of districts are filled with the most criminal activity. Otherwise you are feelin’ safer in Nydalen rather than Sinsen or Torshov. Not kidding: I had less fear in Grønland than in my hometown downtowns)
P.S. I WANNA live in Tórshavn almost once in my life :°°°
Brumley86 wrote:
>But I recently saw a bunch of stories about UK councils looking to recover >95% from Landsbanki accounts. These were not Heritable (as that’s >mentioned separately), but Landsbanki itself. i.e:
http://www.marketrasenmail.co.uk/news/Icelandic-banks-to-pay-up.5300305.jp
>http://www.cambridge-news.co.uk/cn_news_home/DisplayArticle.asp?ID=424830
>
>Obviously both positions can’t be true, unless the councils were somehow
>depositing with another Landsbanki subsidiary rather than with Icesave.
>And I can’t see their advisors managing to lie that much (i.e. they’re
>actually looking at ~1% recovery but they’re told 95%). Any ideas?
From first link :
“WEST Lindsey District Council could recover up to £6.4 million of the £7 million it has at risk in collapsed Icelandic banks.
The authority’s latest financial advice suggests that Landsbanki – where the Council has £4 million invested –should be able to repay the council all it is owed. However, the authority is being advised to use 95 per cent as an estimate.”
Form second link :
“The council invested £4 million with Heritable and £5 million with Landsbanki.
Cllr Nimmo-Smith said: “The prospect for at least 80 per cent recovery of the £4 million with Heritable continues to be confirmed. We have been given a schedule of repayment dates from July this year.
“We have £5 million with Landsbanki. The advice from the consortium taking forward our claims and working on refunds is that we will get of the order of 95 per cent of that. “The news is better than we reported in April.”"
What is the contradiction ? As I and other have said — there was assets backing this — longer term loans in many cases that are being paid.
This seperate deposits would be so called wholesale deposits with accounts held in Landsbanki’s London Branch. ( It was also given to UK companies. )
The Landsbanki asset freezing order allowed money to keep on being paid into the branch — and now that money is meant to be unfrozen as asset freezing order of Landsbanki asset in UK made under Anti-terrorism, Crime and Security Act of 2001 should have been lifted June 15th — so that money available.
( Its been acruuing interest for UK Treasury during that time. )
@Bromley86 – Well, I read it all depends on creditor prioritisation and who’s at the front of the queue of investors. And UK councils have apparently heavily influenced the administrators. It’ll be interesting to see how the assets are eventually allocated (repayments are not expected to start until spring 2010).
@Jim
AFAIK there’s no prioritisation of councils over other depositors in Icelandic law. As I understand it, all depositors are equal (and first in line ahead of other creditors). Might be wrong though, which would answer my question.
@Fisy
But those long term loans and other frozen assets would have been taken into account when the 75%-95% coverage was calculated. Coverage of the EEA guarantee, note, not of the total deposited at Landsbanki/Icesave.
This was my understanding:
1. Landsbanki will be dissolved under Icelandic law.
2. Icelandic law prioritises all depositors equally (i.e. there’s no sub-clause that grants charities, councils etc. priority over Joe Smith).
3. The EEA guarantee covers the first 20,887 euros per depositor. Councils count as one depositor, even though they deposit a lot more than Joe Smith.
4. Per my first link, the concern is that there will not be enough to cover the EEA guarantee. i.e. just the 20,887 per depositor, not the total deposits at Landsbanki/Icesave.
5. If that is so, councils can look forward to receiving 20,887 like any other depositor.
Okay, perhaps the way their deposits are structured means that they count as a number of depositors, but in the West Lindsey case they’d need to count as 181 depositors to get 95% back! It doesn’t work that way.
BTW, any news on the Althingi signing the Agreements? I find it odd that the UK agreed to lift that before they had a finalised deal.
On Jun 23, 2009, Bromley86 said:
“3. The EEA guarantee covers the first 20,887 euros per depositor. Councils count as one depositor, even though they deposit a lot more than Joe Smith.”
Not my understanding, only retail depositors (individuals)are covered by depositor protection. Institutions are creditors who wait for a %age return based on the disposal of assets.
@Bromley86 – In the event of bank failure, deposit insurance schemes typically place creditors into priority classes. If UK local councils get “preferential creditor status” (which the CIPFA expects), then those councils will have priority over secured creditors. It is NOT the case that all depositors are treated equally (evidenced by the allocation of creditors to classes), but it is the case that (for example) class allocation cannot be based on nationality.
To Bromley86:
>>>>Obviously both positions can’t be true, unless the councils were somehow depositing with another Landsbanki subsidiary rather than with Icesave. And I can’t see their advisors managing to lie that much (i.e. they’re actually looking at ~1% recovery but they’re told 95%). Any ideas?
One of the problems with news reports, is that they typically do not refer to actual original sources for any statements, but often rely instead on quotes by some people that are supposed to be in the authority to know.
There is a report that was just released yesterday (6/22) by the resolution commmittee of Landsbanki, that estimates that 83% of preferential claims (mainly deposits) will be covered.
The 83% is a lower estimate than from the earlier report presented in February, which then was around 90%. According to the following bulletin report:
http://www.cipfa.org.uk/pt/download/laap82.pdf
the estimated recovery is considered between 90%-100% and then the midpoint of was then recommended to be used. This is possibly the basis for the 95% that you are mentioning and has been quoted widely in the press.
Here are the different reports from the Landsbanki resolution committee:
http://www.lbi.is/Uploads/document/CurrentSituationofLandsbankiÍslands.pdf
http://lbi.is/Uploads/document/Landsbankinn_OCM_survey_english_190209.pdf
http://lbi.is/Uploads/document/Landsbanki-OCM-en-version-190209.pdf
For some reason, all the LBI reports are using ISK only, which in my view does not make whole lot of sense, as most of the amounts originate in other currencies. This means that all the quoted numbers will move up and down quite widely over time has the exchange rates fluctuates.
Anyway, it looks like they are currently estimating the total claims for customer’s deposits to be around 1330B ISK (6.4B GBP, 7.4B EUR), about half of which includes the IceSave 20K payment to be guaranteed by Iceland. It looks like the Council’s and other local government entities are counted in the other half, so they are currently being assumed as preferential claims also. At least that seems to be the case according to the position put forth in the CIPFA document.
The total recoverable assets are currently estimated at 816B ISK (3.9B GBP, 4.6B EUR). Added to this, the new Landsbanki (NBI) is estimated to pay back 284B ISK (1.4B GBP, 1.6B EUR) to cover the value of the Icelandic assets it took over last October. This gives total assets of Landsbanki 1100B ISK (5.3B GBP, 6.1B EUR) or 83%.
There are still two main dangers regarding recovering the money for the depositors:
1. That the actual assets recoverable will be lower than the current estimation of 80-90%.
2. That other creditor’s (mainly bondholders) will succeed in overturning the emergency laws from October, and subsequently gain equal priority to the depositors.
If either of this were to happen, it would of course throw into turmoil all current calculations, and have potentially devastating consequences for Iceland.
To Bromley86:
>>>>BTW, any news on the Althingi signing the Agreements? I find it odd that the UK agreed to lift that before they had a finalised deal.
From what I am hearing, the new laws that authorize the guarantee, will be submitted to Althingi in the next few days. Although its likely, it is not yet fully clear whether there is enough majority for the law to be passed. Most of the questions seem to be around the Left-Green party support. If the law fails to pass, it will be very difficult for the government to stay in power.
To Bromley86:
>>>>3. The EEA guarantee covers the first 20,887 euros per depositor. Councils count as one depositor, even though they deposit a lot more than Joe Smith.
Payment amounts from Tryggingasjodur is based on Article 10. in the following Icelandic law:
http://eng.vidskiptaraduneyti.is/laws-and-regulations/nr/1165
and simlar worded Article 6. the following regulation:
http://eng.idnadarraduneyti.is/laws-and-regulations/nr/1166
“In the event that the assets of the Department in question are insufficient to pay the total amount of guaranteed deposits, securities and cash in a Member Company, the payment from each Department shall be divided between claimants so that the total claim of each claimant, up to a maximum of 1.7 million, shall be paid in full, and amounts in excess of that figure shall be paid in equal proportions to the extent permitted by the assets of each Department. This amount is linked to the price of the Euro (EUR) based on the purchase price on 5 January 1999. No further payment can be claimed from the Fund even if the loss of a claimant has not been paid in full.
Should the total assets of the Fund prove insufficient, the Board of Directors may, if it sees compelling reasons to do so, take out a loan in order to compensate losses suffered by claimants. ”
According to this, it seems that 1.7M ISK (20887 EUR) for each depositor would be paid first, before any other claims from larger depositors would be considered. After that all depositor claims, independent of how large, who they are, and where they are would be considered equally.
This two-step payment method does not match various news/reports that have been put out so far. The resolution committees are probably governed instead by bankruptcy laws, which requires all claimants from the same class to be treated equally.
@Peter. Just checked 94/19/EC and you are correct. They may be excluded. However I’m pretty sure that the Icelandic law 98/1999 didn’t excluded them.
@Jim. The deposit insurance scheme is separate from the insolvency itself. The scheme will pay out a set amount per (foreign) depositor period, whether the liquidation of (old) Landsbanki generates enough money to cover that or not. I don’t believe that it is even allowed to prioritise creditors, as that would contravene the clause in 94/19/EC that requires non discrimination (and which is often cited as the reason why Iceland has to take on the Icesave guarantee).
I’m having trouble tracking down the emergency law (Act 128/2008), but I’m pretty sure it just moves depositors as a whole to the front of the queue in liquidations.
Not that that matters. The thrust of my point was that if there are not enough assets in Landsbanki even to cover the guarantee, then the insolvency is basically of no interest to anyone other than the Icelandic government.
> The deposit insurance scheme is separate from the insolvency itself
Well, the creditor prioritisation process during the insolvency process will determine how much is transferred to the deposit guarantee scheme. That insolvency process is bound by creditor classes, not the EC equality laws applying to the deposit insurance scheme. So, theoretically, I can’t see why the insolvency process couldn’t transfer most of the assets to creditors without transferring any assets to the deposit insurance scheme – and leave the Icelandic state to then fund a lot of it instead. That all depends on creditor prioritisation during the insolvency, not on deposit guarantee law.
Thanks Bjarni! I’ll read that lot tonight.
@Jim. The following is from the Icelandic law on deposit guarantees, 98/1999. As usual, IANAL, but it looks to me like the deposit guarantee fund gets first dibs on Landsbanki assets (subject, of course, to there not being a surprise in Article 112, but I don’t want to drill down that far :) ).
Pretty sure that’d be the case everywhere, as governments do like to cover themselves. But, as usual, IANAL so I might be misinterpreting this.
http://www.tryggingarsjodur.is/modules/files/file_group_26/log/log-98-1999-ens.pdf
I did a some quick analysis in a spreadsheet, how on much the Icelandic state would have to pay each year to UK/Netherlands.
I assume the recovery rate will be 83% or about 2880M GBP, based on the most recent report (6/22) by the resolution committee. To make things easier and to avoid currency exchange fluctations, I am converted all the computations to GBP, since thats the largest currency involved.
To see what difference it would make, how fast those recovered payments will come in, I computed 4 different scenarios:
a) All 2880M recovered first 7 years (2880/7=411.6M/year)
b) 2/3 recovered first 7 years (262M/year), 1/3 next 8 years (131M/year)
c) Equal amount recovered each 15 years (192.1M/year)
d) All 2880M recovered in last 8 years (360.1M/year)
I then added the 5.5% interest for each year and computed the equal payments per year, that Iceland would have to make to cover the rest of the loans. The percentage of exports assumes total exports will be around 2000M GBP per year (which is about what they are now).
a) Unpaid debt year 8: 1648M, yearly payment 8-15: 290M, percent of exports: 15%
b) Unpaid debt year 8: 2885M, yearly payment 8-15: 377M, percent of exports: 19%
c) Unpaid debt year 8: 3463M, yearly payment 8-15: 417M, percent of exports: 21%
d) Unpaid debt year 8: 5051M, yearly payment 8-15: 529M, percent of exports: 26%
It is relatively unlikely that all the recovered payments will be all early or all late during the 15 year period. Therefore we can most likely assume that the yearly payment including interest will be closer to scenarios b) or c) which is somewhere around 400M GBP year or about 20% of total exports for Iceland.
These IceSave payments would of course be on top of any other foreign debt payments and interest that Iceland already has to make. The only way Iceland can cover foreign currency payments like these, is through a positive trade balance, which is easy to realize is extremely unlikely to be at over 20% year after year. Therefore sovereign default of Iceland would be very likely as a result of this agreement.
@Bromley86 – Note that the interest on the agreed sum will probably end up comprising over a third of the eventual total payment – and that interest cannot be categorised in the priority class during the insolvency process…
Thanks Jim. I’d read that but it hadn’t sunk in.
So:
1. Either, as Bjarni is saying, the 75%-95% quoted by the government is actually the same thing as the 95% quoted by the councils. There’s just a difference in the data fed into the recoverability equation. For example, using the Feb figures assets equalled 90% of deposits, but using the April figures that had fallen to 83%.
In this scenario, the deposit guarantee fund would not have priority over depositors. The interest is being ignored in the 75%-95% statement as it is effectively unrecoverable as an unsecured, non-prioritised creditor.
2. Or the deposit guarantee fund does have primacy over even the prioritised creditors. In this case, the only way the 75%-95% statement can be seen to be accurate is if it refers to the total debt arising from the agreement, including interest. So 75% would be the expected recovery if interest is not recoverable, but 95% if it is.
It looks to me that the interest will be about £1.4bn, assuming most of the assets are sold before year 8 and that the government payments of the balance happen year 8 onwards. So the total debt from the Icesave agreement (both UK & NL) would be just under £5bn, or ISK 1,030bn at current official rates. Which is 93.5% of ISK 1,100bn.
The problem is, whilst Bjarni’s makes more sense, I can’t get past the fact that from what I can see of the bankruptcy laws, the deposit guarantee fund will get primacy over depositors.
It’s difficult to be sure without seeing 128/2008, but I’d guess that it merely reorganised the priority of deposits within Article 113, rather than moving them up to a Article 112 priority claim like wages, deposit guarantees, etc.
http://eng.domsmalaraduneyti.is/laws-and-regulations/english/nr/6570
Whether it’s (1) or (2) makes a huge difference to the affordability though, as you’d expect. My quick spreadsheet had Iceland effectively just paying the interest at £180m/yr in years 8-15, rather than the £400m from Bjarni’s figures. So 9% vs 20% of exports.
One thing I didn’t know, but it looks like you did Jim, is that secured creditors trump the deposit guarantee fund. That could totally throw everything out.
My original point was that a growing list of creditors (eg UK councils) appear to be successfully lobbying to be placed in the same insolvency priority class as the guarantee fund. There will obviously be insufficient assets to meet all the claims in that priority class and so the assets will inevitably be spread pro rata amongst those claims. The government will then have to top-up the gap in the guarantee fund and also all the subsequent interest. The claims classification in the insolvency process may end up being a big shock to Icelanders. I mean a huge shock…
To Bromley86 and Jim:
All the computations I made were based on the assumption that the resolution committee used in their report, that all the depositor classes (Icelandic / foreign / governments) during insolvency would be treated equally as preferential creditors and that the other creditors would not have the same priority.
There is of course no guarantee that this assumption will hold up in court. You may very well have a valid point that while deposit guarantee fund (Tryggingasjodur) claims on behalf of the depositors they cover, would be treated according to Article 112, other depositors might not have the same priority claim. They would of course then contest this in the bankruptcy court just as the other creditors almost certainly will.
The main problem that I see for Iceland, is that even if everything goes well and most of the IceSave claims (75-90%) eventually gets recovered, if this process takes TOO LONG time (complex bankruptcy cases tend to do that), just the interest payments that are added during this period will be too large for Iceland to ever be able to pay it.
On the 75% recovery rate, I do remember also seeing this mentioned in few places earlier. My guess is this is either a very early estimate by the LBI or some number that someone else estimated at one point. There are so many numbers being thrown around, many without any references or justification, that its very easy to get confused.
As far as I know the LBI resolution committee is the ONLY entity that has systematically gone through the whole loan book and evaluated each loan in respect to its recoverability. And even they put a lot of disclaimers in their official reports, so in the end no one really knows. Especially, since they do not publish fully what assumptions they are using. In the meantime, their current estimation of 83% is the only real one and probably the best we have.
Just to show you how crazy the things have become, Johanna (PM) quoted the 95% as being the recovery estimate of an esteemed british accounting authoritity and therefore we (Icelanders) should not have to worry too much whether we can pay back the loan (btw, she and most other politicians have almost universally totally ignored the interest payments, which in my view are even more difficult).
Only later did we learn that this percentage was in fact from the previously quoted CIPFA report, which based its calculations the midrange between the then current LBI report of 90% and 100% assumed somehow from the 284B and then some report from IMF that Iceland had committed to treat all depositors and creditors equally and therefore “full repayment of depositors remains possible” resulting in 100% (see points 24-26). To me this deduction makes absolutely no sense!
If this is how the top people involved are “making up” their assumtions which they are then using to make their decisions, then we truly have a case to be very worried about our future.
When concerns were raised (publicly) March/April 2008, relating to Icelandic Banks – the issue was addressed by a UK consumer advice website.
I was reassured by the IceSave response, “backed up by a document from the Icelandic Financial Services Association; confirming the legal strength of the info.”
Further reassurance was gained by from the IceSave response stating –
“ In the extremely unlikely event that the Icelandic government wasn’t in a position to meet all claims, all the Nordic countries have an arrangement where they will step in and help any one of the participating countries that are in trouble so there is an additional layer of reassurance and cover.”
http://blog.moneysavingexpert.com/2008/04/01/icesave-how-safe-are-your-savings-facts-and-myths/
Can anyone enlighten re this? If this was the case – surely there would be no debate about UK & Dutch loans.
Stop that Bjarni! I like to think that governments are better briefed than Joe Public. Guess I haven’t learnt anything from the WMDs issue :) .
BTW, is there an interest rate associated with the IMF/Nordics/Poland loans? I’d assume yes, so does anyone know it? Likewise, if the Russian loan comes through at a lower rate it can be used to pay a chunk off. Probably only £500m max, but that’d make a big difference if it happens in the first year.
To Terry:
>>>>When concerns were raised (publicly) March/April 2008, relating to Icelandic Banks – the issue was addressed by a UK consumer advice website. I was reassured by the IceSave response, “backed up by a document from the Icelandic Financial Services Association; confirming the legal strength of the info.”
I can maybe help shed some light on this for you. The main issue is that this is not only a legal question (does the EU directive require deposit guarantee of 20K Euro minimum – Yes it does), but rather the EU directive did not foresee or adequetly deal with what should happen if:
a) The guarantee fund runs out of funds
b) The whole home banking system collapses
c) The total amount of depositors is larger than the population of the home country
d) The deposits are in a different currency than the home currency
>>>>Further reassurance was gained by from the IceSave response stating – “In the extremely unlikely event that the Icelandic government wasn’t in a position to meet all claims, all the Nordic countries have an arrangement where they will step in and help any one of the participating countries that are in trouble so there is an additional layer of reassurance and cover.”
There has been for years an agreement between the Nordic countries that the central banks would step in to help each other if one of the countries ran into problems with their currency. When the crash came in October, it became soon very clear that any immediate help would not be available from the other Nordic countries, and Iceland would have to make a deal first with the IMF. In any case, this help was always intended to be for supporting the currency, not to cover any deposit insurance. If someone in fact claimed that the other Nordic countries would be willing to do so, they were clearly just wrong.
>>>>http://blog.moneysavingexpert.com/2008/04/01/icesave-how-safe-are-your-savings-facts-and-myths/
>>>>Can anyone enlighten re this? If this was the case – surely there would be no debate about UK & Dutch loans.
The debate about the UK/Dutch loan, is whether the Icelandic government is required to step in an guarantee the loans for the deposit insurance payments.
You could actually call this a classic subprime loan, since its very clear that Iceland has financially no ability to ever pay it back, not even the interest (see previous comments here above for more details on this subject).
Icelandic parliament intends to take up the first formal discussion tomorrow (Friday) in Althingi, on the new law submitted by the government, that will authorize this loan guarantee. Whether this law is voted up or down, will have major repercussions for Iceland in the future, possibly deciding on its very survival.
Well, my position is that it’s clear that from the very first stages of the collapse of Icesave the decision was made to sidestep the guarantee.
That said, the position of someone like Fisy is that the guarantee was going to be honoured until the UK (a) attacked Iceland’s credibility by branding them terrorists and (b) maliciously sank the last surviving bank.
I suspect that the Nordic countries thing refers to swap agreements that Iceland had with the Nordics. Were they enough to allow Iceland to support Kaupthing (if the UK FSA hadn’t moved against it), restructure Glitnir and Landsbanki and support the guarantee? No idea, but we’re talking something like 1.5bn euros maximum (500m each from Norway, Sweden and Denmark). Doesn’t sound like enough to me – after all, it’s less than the Nordics have now pledged.
Some serious – and excellent – analysis here. Why isn’t Bjarni advising the Icelandic government?
My gut feelings:
1. Assumed recovery rates are way too high.
2. Yep, secured creditors are going to take this to court – and win. Those secured assets won’t be able to go towards the depositors.
3. Court cases about applying to 100% guarantee to Icelandic depositors to overseas ones will drag on and the foreigners will lose. Maybe with some form of partial and additional compensation.
4. My guess (I stress, a guess) is that sometime in 5-10 years time the UK and Dutch Icesave loans will be rolled over and rescheduled with longer maturities.
4. Last big point: on one issue you’re wrong Bjarni. States can pay back national debts stretching to 250% of GDP. Michael Hudson also says it has never been done and can’t be done. He also is wrong. It’s been done before – the UK in 1945 had exactly that sort of debt burden. It took sixty years to pay it off. Many Icelanders claim they always pay back their debts. Well, here’s your opportunity to demonstrate the toughness of the nation. All it needs is rationing for ten years, no expenditure on national infrastructure for twenty years, all productive effort going to export or the generation of foreign income, currency controls for 34 years, and many many years of grim austerity.
Can Icelanders achieve what the wimpy, soft and untrustworthy Brits did? :-)
Keep up the intelligent dialogue guys – it makes a change in blogs!
> “If this is how the top people involved are “making up” their assumtions which they are then using to make their decisions, then we truly have a case to be very worried about our future”
Indeed, but at least this is just about asset recovery. It’s not as if the goverment is deciding whether to invade a country on the assumption that they can launch WMDs in 45 minutes – because of someone’s Masters thesis on the Internet…
> “2. Yep, secured creditors are going to take this to court – and win. Those secured assets won’t be able to go towards the depositors.”
My understanding is that, if some secured creditors obtain preferential creditor status, whether by pre-lobbying (as the CIPFA expects UK councils have) or by legal complaint, then all those preferential creditors would be in the same priority class as the deposit guarantee fund (as far as the insolvency is concerned) and so the recoverable assets would be divided pro rata between those claims. Can anyone confirm if that actually is the intention of Landbanki’s administrators? Or is Landabanki being treated as a special legal case in Iceland?
> “Can Icelanders achieve what the wimpy, soft and untrustworthy Brits did? :-)”
We bulldog Brits didn’t begrudge that huge loan from America because it was used to rebuild the country after WW2 and so the benefits were obvious and tangible. I suspect the benefits to Iceland of the Icesave loan won’t be as obvious or tangible!……
To Mike (UK Nordic analyst):
>>>>Last big point: on one issue you’re wrong Bjarni. States can pay back national debts stretching to 250% of GDP. Michael Hudson also says it has never been done and can’t be done. He also is wrong. It’s been done before – the UK in 1945 had exactly that sort of debt burden. It took sixty years to pay it off.
Please note that I was not debating the size of the total national debt, which I do agree has in some cases in the past grown into multiples of GDP for other countries, without necessarily resulting in sovereign default.
Rather, my point was that the quick repayment period of 8 years (2017-2024), and high interest rate of 5.55% over 15 years (2009-2024), would almost certainly cause Iceland to default, even if most of the Landsbanki assets were recovered.
I was intriqued by your comments of the 250% GDP debt after world-war II. I did some google-ing (UK war debt), and found that the original US loan was $586M (145M GBP) and a further $3750M (930M GBP). This was to cover any equipment for the war effort that was left over and still needed in Britain after the war.
This was of course sizeable amount at this time, even if the price of the equipment was calculated at only 1/10th of the original US production costs.
The loan itself was for 50 years at only 2% interest, with UK allowed to defer payments, when and if they needed to (which they did 6 times). The loan was finally paid up in 2007 with a final payment of $83M (45.5 GBP), which UK could of course quite easily manage.
I also found this analysis of UK fiscal stance since World War II.
http://www.ifs.org.uk/bns/bn26.pdf
Its interesting to see how quickly the debt went down from 250% GDP to 150% GDP in just 10 years after 1947 and then continuing downward trend towards the 70′s. The paper gives few reasons for this rapid decline, high inflation, high real economic growth, and low deficits.
I think if Iceland had been offered the IceSave guarantee loans at 2% interest and given 50 years to pay it with ability to defer payments when needed, it would get much more positive response in Iceland. There are actually many people in Iceland that believe we should pay for IceSave, but for anyone that looks at the actual loan terms, its difficult to see how that can be done.
I did a quick recalculation of the IceSave loan with 2% interest using scenario b) and got yearly payments of 148M GBP which is about 7-8% of exports. If the loan term is extended to 50 years instead of 15, the yearly payments would be 38M GBP or about 2% of exports, clearly much more manageble.
>>>>Can Icelanders achieve what the wimpy, soft and untrustworthy Brits did? :-)
I would never consider calling the post-war Brits “wimpy, soft and untrustworty”. These were different times and different people then.
To Bromley86:
>>>>BTW, is there an interest rate associated with the IMF/Nordics/Poland loans? I’d assume yes, so does anyone know it? Likewise, if the Russian loan comes through at a lower rate it can be used to pay a chunk off. Probably only £500m max, but that’d make a big difference if it happens in the first year.
As usual none of these interest rates ever gets published in any of the press releases.
The IMF apparently uses something they call “rate of charge” based on the SDR Interest Rate. The actual rate seems to be heavily subsdized:
http://www.imf.org/external/np/tre/sdr/burden/2009/062209.htm
http://www.imf.org/external/np/fin/data/sdr_ir.aspx
http://www.imf.org/external/np/exr/facts/howlend.htm
http://www.imf.org/external/np/exr/facts/sdr.HTM
I am no expert in IMF lending matters, but the rate seems to be variable and currently around 1-2% (if someone knows better, please correct me).
I would assume the loans from other countries have higher rates, but have not seen any published information on those.
From what I understand, most of the IMF loan and the other loans have not been used yet by Iceland, and are therefore probably not drawing any payable interest yet.
This is shapiing up to be the best thread of all so far on this forum — back to quality of days prior to December.
Of course because of the good analysis and research of Bjarni in particular — but expect of more agressive moderation by Alex.
This is exactly what Internet posting can be good for. Getting to meat of issues — civilized postings — and making sure politicians dont get away without scrutiny of decisions that effect us all for years to come..
>4. My guess (I stress, a guess) is that sometime in 5-10 years time the UK and
>Dutch Icesave loans will be rolled over and rescheduled with longer maturities.
That is at discretion of UK and Holland. I do not trust a stronger party to act responsibility toward a weaker party.
We suffered long and hard under Denmark — who treated our people as mere cattle for their merchants — for long enough to know that in such a situation with a contract with a stronger party they will extract what they can — and sometimes more.
Now was the time to dig in the heels and insist on that if agreement cannot be made on reasonable terms ( and it is very clear that this term is too short and this interest rate too high ) this go to arbitration in another court.
That Jóhanna and I hate to say it — Össur — are weak minded enough to think that this is a deal to accept on behalf of all taxpayer now and future of Iceland — is not a surprise. They are messianic complex enough to truly believe that EU membership is all that matters and can force it through in opportunistic way that Social Democrat have shown is they way in recent years.
What is a surprise is that Steingrímur is going along with it.
Why has it been dropped that idea of getting a third party to judge this case. I think his policy platform crazy — and am surprised to see how he has moderated this in office — but in this area it was his core reason for popularity ( along with staying out of the EU ). To fight against debt slavery from IceSave.
I frankly am shocked. Where has his deeply held convictions gone?
>There are actually many people in Iceland that believe we should pay for
>IceSave, but for anyone that looks at the actual loan terms, its difficult to see
>how that can be done.
I am certainly one of these but this simply is a bad deal that has been “negotiated”.
I truly think that Jóhanna and her colleague are deluded enough to think that some kinds of special deals will come after taking this and then applying for EU membership.
That is more than reckless. Once a contract is signed we the taxpayer are bound. And must agree to discretion of other parties in any renegotiation.
I believe this will be used as a tool in negotiations over EU membership to get better terms out of Iceland than otherwise we would be offered.
It stinks.
( Even with the expectations of oil and has income coming to Icelandic taxpayer that will not happen for 3 years and between now and then we will already be well down the path of this unreasonable loan repayment period which will be around our neck during this EU negotiations as no doubt used as a stick. Already it is hinted at as this “cheaper” loans from EU was a platform of Social Democrat in February election. )
You are the one ad fljóta sofandi ad feigdarósi Jóhanna over signing this IceSave deal — and that you have accomplice in Steingrímur is most shocking thing of all. People vote for him because they know he does not give in. But here he is doing exactly that. In the worst way possible.
I hope that this government fall and Left-Greens assigned to dustbin of history because of this action.
>2. Yep, secured creditors are going to take this to court – and win. Those secured
>assets won’t be able to go towards the depositors.
In all discusisons of other aspects of this case of banks and debts — there is always this explanation that this court of judge or that court or judge will rule on this or that aspect.
Why in the gods name is that not the case with this IceSave settlements. It cries out for it on grounds of equity and justice.
It is obviously the good faith thing to do.
The EFTA Surveillance Authority ( which is EFTA state’s version of EU Commission as executive role ) had this to say about the splitting of old and new banks in they annual report 2008:
“The Icelandic measures have raised questions as
regards their compatibility with EEA law, in particular
the treatment of depositors outside of Iceland. In
October 2008, the Authority started investigations on
its own initiative. The Authority has invited the Icelandic
Government to submit its observations in relation to
these issues. The assessment of the Icelandic measures
will continue in 2009.”
Again, why is the IseSave settlement not going to court or arbitration. Every other single thing is being reviewed by impartial judge at some point — but not the deposit guarantee loan repayments with UK and Holland.
With this deal we float asleep at the mouth of death’s river and not just for us but for our children and maybe grandchildren as well.
I am sorry to say this is no exaggeration.
To Jim,
>>>>My understanding is that, if some secured creditors obtain preferential creditor status, whether by pre-lobbying (as the CIPFA expects UK councils have) or by legal complaint, then all those preferential creditors would be in the same priority class as the deposit guarantee fund (as far as the insolvency is concerned) and so the recoverable assets would be divided pro rata between those claims. Can anyone confirm if that actually is the intention of Landbanki’s administrators? Or is Landabanki being treated as a special legal case in Iceland?
As far as I know this will be treated as any other bankruptcy case in Iceland. Somehow I seriously doubt its going to be completely up to the resolution committee alone to decide exactly who is included in which priority class.
As with other countries, there is a lenghty law that covers the subject of bankruptcy in Iceland:
http://eng.domsmalaraduneyti.is/laws-and-regulations/english/nr/6570
The interesting terms on priority are in articles 109-115. According to the Icelandic law on the Deposit Guarantee Fund (Tryggingasjodur), as Bromley86 has been quoting here above, their claims will get the priority described in Article 112.
If that holds, then the question will become what will be the priority of all the other claimants (various different types of depositors and creditors). Figuring all this out will almost certainly become a long and torturous legal process that will take years.
>The loan itself was for 50 years at only 2% interest, with UK allowed to defer
>payments, when and if they needed to (which they did 6 times). The loan was
> finally paid up in 2007 with a final payment of $83M (45.5 GBP), which UK could of course
>quite easily manage.
It must not be forgotten that because of the UK war debt from fighting WWI and then WWII the United States did force the British to give up they empire and they influence in the world in favour of the Americans.
Debt is always used as a stick between nations.
The UK became the weaker party after the second world war and despite that the terms of the loan were what they were — which could say reasonable — this was as the result of fighting a world war!
And we are given much worse terms than even nations defeated in war as Germany and Japan — we are treated as the Kaizer’s Germany after WWI!
http://business.timesonline.co.uk/tol/business/economics/article5042460.ece
And why?
For this flawed application by EU burecrats of freedom of establishment and depositor insurance for which we must now bear the full cost — at the rate that other states set on repayment terms that they set?
Where is cost the EU burecrats must pay? None. So why again must we NOT put this out to ruling of third party when all the costs are borne by us.
Clearly the world of people, and they represenatives be it in EU member states or not — the international community — will NOT isolate Iceland simply for insisting that this loan settlement is put in front of impartial third party for ruling.
In fact I am sure that the UK reputation in particular as a safe haven for international capital will see an improvement by doing so.
( If EU commission try it they are going to hurt they reputation in the world. People worldwide do not like a bully. )
http://www.icelandreview.com/icelandreview/daily_news/?cat_id=28304&ew_0_a_id=336052
“Frida Fallan, an expert in the Swedish Central Bank, states in a draft of a letter sent to Lars Nyberg, the bank’s assistant governor, in early December 2008 that the UK, the Netherlands and the European Union should share the Icesave debt load with Iceland. ”
Fallan did write:
“.. the host countries of the Icelandic banks in particular and EU leaders in general should admit that Iceland’s problem was not only created because of irresponsible lending and an insufficient reaction by Icelandic authorities, but also, to a considerable extent, because of the obsolete supervisory system of the EU.”
Let Icelanders pay they debts as they always do. I do not dispute the amounts.
But an impartial third party must rule on the terms of payment of this debts. Where is the unreasonableness and unfairness in that ?
In the UK IceSave Loan Agreement we see support for Mike (UK Nordic Analyst) assertion about creditor classes:
“6.9 Treatment of Landsbanki creditors
lceland will not take any action which would result in the creditors (or any class of them) of
Landsbanki (including, for the avoidance of doubt, the creditors (or any class of them) of
Landsbanki London), being treated in a manner contrary to generally accepted international
or European principles of treatment of the creditors in an international winding-up.”
“3.2 Long stop date
lf the actions referred to in subparagraph 3. t have not been completed by the date the lcelandic
parliament goes on its 2009 summer recess, the Lender may, by notice to the Guarantee Fund
with a copy to lceland, terminate this Agreement. ”
Pass it quickly or else ! But at least it will not go through if it is voted down. So nice that our little parliament is allowed to vote on this. How generous.
“9.2 Gurrency
Each of the Guarantee Fund and lceland will make each payment to be made by it under this
Agreement in Sterling and in freely available and transferable funds.”
See: http://www.iceslave.is for interactive debt clock in GBP and EUR to ISK. ( Site in the style of http://www.indefense.is )
“16 CHANGE IN CIRCUMSTANCES
16.1 Occurrence of a change in circumstances
This paragraph ’16 applies if at any time the then most recently published Article lV
review by
the IMF in relation to lceland states that a significant deterioration has occurred in the
sustainability of the debt of lceland, relative to the assessment of such sustainability
by the
IMF as of 19 November 2008.
16.2 Meeting to consider change in circumstances
The Lender agrees that, iif this paragraph 16 applies and lceland so requests,
it will meet with
lceland to discuss the situation and consider whether, and, if so, how, this Agreement
should
be amended to reflect the relevant change in circumstances.”
Again how nice of them. They condescend to meet with our government represenatives if everything goes badly for us and economy and consider possibly some amendment. This is one sided and inequitiable.
Clearly this is intended never be nenegotiated once it is signed and agreed under terms of 3 Coming Into Force:
“(b) the lcelandic parliament (Alþingi) has authorised the guarantee given by lceland
under this Agreement and has adopted any other legislative act or authorisation
necessary to ensure that the obligations of the Guarantee Fund and lceland under
this Agreement and the Settlement Agreement are legal, valid, binding and
enforceable, and lceland has delivered to the Lender a copy of any such act or
authorisation when enacted or adopted; ..”
“17.2.2 The Parties agree that the courts of England are the most appropriate and convenient
courts
to settle Disputes and accordingly no Party will argue to the contrary.
Both UK and Dutch loans are to go though the UK courts. Fair enough.
But not this:
“17.2.3 This paragraph 17.2 is for the benefit of the Lender only. As a result, the Lender shall not be
prevented from taking proceedings relating to a Dispute in
any other courts wlth jurisdiction.
To the extent allowed by law, the Lender may take concurrent proceedings in
any number of
jurisdictions.”
More one sidedness and lack of equitable balance.
Overall this agreements is nothing less than Justice Under Siege.
( In the fairness some have reported that there is immunity of UK clause given in there against actions they took with freezing order and listing Landsbanki and by association Central Bank and Governemnt of Iceland with Al-Qaida, the Taliban, Belarus, Iran, North Korea, Sudan, etc.: http://www.indefence.is/News/News/~/NewsId/13
but I dont see that in the text of the contracts either UK or Holland ones. And not special addition in UK contract over Dutch one. If so that I would be there throwing eggs at Prime Minister office right now..
i.e. http://www.icelandreview.com/icelandreview/search/news/Default.asp?ew_0_a_id=335772
“They are similar in nature apart from a special provision in the agreement with the UK which states that British authorities cannot be held responsible for financial damages caused when they decided to freeze the assets of Landsbanki’s assets in the UK.”
Wish that journalists were better at they jobs. But of course would have been helped by Jóhanna and Steingrímur actually releasing this agreements instead of them being leaked.
And why o why did Jóhanna not release the reply from Brown? What is going through her mind?
http://www.icelandreview.com/icelandreview/daily_news/?cat_id=28304&ew_0_a_id=335650
Brown signed off his letter reply of April 24th kept secret by Jóhanna with:
“I have no doubt that the relations between Iceland and Britain have a bright future.”
Not with this current agreement they dont. Not bright for Icelander anyway. )
Mike (UK Nordic analyst)
” the UK in 1945 had exactly that sort of debt burden. It took sixty years to pay it off.”
Well analyse this:
http://www.telegraph.co.uk/finance/financetopics/recession/4700055/UK-national-debt-set-to-surpass-2-trillion.html
Some extracts
“the nationalisation of Bradford & Bingley, which pushes up the public sector net debt by a further £50bn, meaning that it is already at the highest level since 1977.”
Seems like the UK is at an all time high with regards to natinal debt…
Conclusion: the UK also failed miserably in becomming debt free…..
Mike “he UK in 1945 had exactly that sort of debt burden. It took sixty years to pay it off. Many Icelanders claim they always pay back their debts. Well, here’s your opportunity to demonstrate the toughness of the nation. All it needs is rationing for ten years, no expenditure on national infrastructure for twenty years, all productive effort going to export or the generation of foreign income, currency controls for 34 years, and many many years of grim austerity.
Can Icelanders achieve what the wimpy, soft and untrustworthy Brits did? :-)”
Its quite possible that you are going to have to repeat this soon,
when that happens you can rely on Icelanders to feed you like we did in WW2,
2% of the population was killed doing that and we lost most of our ships,
your lucky that we are not wimpy, soft and untrustworthy.
Axel says
you can rely on Icelanders to feed you like we did in WW2,
2% of the population was killed doing that and we lost most of our ships,
Which Iceland are you talking about Axel? The best guess is that 150-200 Icelanders were killed in the war. That’s less than 0.2% of the population – your figure of 2% is way out of order. Look at:
visindavefur.hi.is/svar.asp?id=5057
And we didn’t lose “most of our ships”.
And we made a very healthy profit to fish in the war. We were war profiteers, we didn’t fish for any moral reasons.
And if we try to get all moral then we remember the way we sent Jews back to the deaths before the war started.
And we declared a republic in a shameful way in 1944.
Watch out Axel!!!!!!!!
I have been reading all the news, but still have some unanswered questions (no real surprise there I guess).
1. Is the value of the assets of Landsbanki being based upon the price those assets were bought at or based upon their current sale value? Because as I understand it many of these assets (businesses and such) were purchased at prices well above normal market value.
2. Who does Landsbanki believe is going to buy these assets? I know that there is many that will be buying up assets, but isn’t it likely that they will be looking at “fire-sale” prices.
If 1 and 2 have the answers I fear, then what amount of debt is Iceland actually looking at if these pass in parliment?
According to the news the Dutch depositors who have lost money over the 100 thousand euros limit are now taking the icelandic government to the european court, claiming they are being discriminated against for not being icelandic (since Iceland guaranteed all accounts in full). Dutch local authorities claim to have lost 200 m euros not covered by the icesave agreement. These dutch depositors outside the Icesave agreement want at least 400 million euros.
The “over 100 thousand” depositors would be unsecured creditors but the Dutch could try and promote the local councils as the British have done.
For the British depositors who lost money over the 100000 limit, they can (and probably will) sue. The newspaper did not say how much they lost but the estimates for the “outside Icesve agreement” claims could be 2 billion euros (probably including the 1 billion pounds lost by local authorities). Not to mention Guernsey, Isle of Man et al. depositors, using the “parental guarantee” argument.
These creditors are not covered by the Icesave agreement. They are included as creditors in the Icelandic bankruptcy, but since they are unsecured low priority creditors (unless the British & Dutch govts help them get priority) and will get little or nothing it is better for them to pursue their claims outside bankruptcy court – by trying to seize Icelandic assets wherever they can. If these creditors win lawsuits in their own countries or EU court, they get a judgment claim, and can take this judgment claim to any country within the EU and try to seize Icelandic government assets. They will argue that have a right to any bank assets, or the assets of any company in which the Icelandic government is the majority owner. It’s true that they have a difficult fight to get money before the secured creditors, but it’s possible they could find some assets in some location where the rule is “first in time is first in line”, or they could threaten to fight the secured creditors or Icelandic government and use that threat for a pay-out.
So the Icesave agreement will not stop the creditors. They will keep coming.
Recently there were newspaper reports of a possible sale of Flugleidir. I wonder if this was a result of the Iceland government (now the owner of Flugleidir) trying to dump assets that could be seized abroad, once the creditors start getting judgment claims and trying to grab anything of value (such as jets). That would be interesting to see some Dutch lawyers chasing the big jets down the runways of Europe.
Does anyone have a link confirming this? All I’ve seen are things like the following, which can easily be read as referring to the prioritisation of all depositors over other creditors, as per the emergency law.
“The LGA said that its legal advisers were confident councils would be granted ‘preferential creditor status’”
http://www.lgcplus.com/finance-and-partnership/cipfa-positive-over-iceland-returns/5001740.article
Don’t think there was such a limit in the UK. It was either 100% for retail depositors or 0% (more likely the 20,887 euro guarantee) for councils/charities/etc. The offshore schemes were different, but neither IoM or Guernsey had a 100k guarantee.
>Don’t think there was such a limit in the UK. It was either 100% for retail depositors or 0%
Bromley86. Yes – this was the case with IceSave. 100% of deposits were reimbursed by UK Government.
Interestingly, UK retail depositors were quite savvy (or thought they were) – largely depositing sums within the Icelandic ‘guarantee’.
http://www.timesonline.co.uk/tol/money/savings/article4903329.ece
As far as I recall – IceSave was set up solely to sucker (sorry service) Joe public. Council/Charities etc deposited directly with Landsbanki UK.
I recall that you managed to get your deposit out before it hit the fan – but I was a little later, and found that when I tried to withdraw – my linked account had disappeared, and I had an ISA which couldn’t be extracted quickly. So, whatever I may think of Gordon – rather him than fisy!
Terry — as I say :
Let Icelanders pay they debts as they always do. I do not dispute the amounts.
But an impartial third party must rule on the terms of payment of this debts. Where is the unreasonableness and unfairness in that ?
IceSave in UK offered AER:
Online Instant Access ISA (6.10%)
Online Instant Access Savings (6.05%)
Online Fixed Interest Bond -6 month fixed term (6.76%)
Online Fixed Interest Bond – 1 Year fixed term (6.70%)
Online Fixed Interest Bond – 2 Year fixed term (6.60%)
Online Fixed Interest Bond – 3 Year fixed term (6.50%)
http://www.icenews.is/index.php/2008/02/26/icesave-cuts-interest-rate-on-savings-account/
Feb 26, 2008 :
“Icesave, a UK savings account offered by Landsbanki, last week lowered the interest rate on its popular savings account to 6.05 per cent.
When emailing customers about the drop in interest rates on the savings accounts, Icesave suggested that customers take out a fixed-rate savings account instead. The account offers 6.7 per cent fixed interest, regardless of reductions in the UK base rate. ..
Icesave isn’t the only bank offering high interest rates, particularly on fixed-rate savings accounts. The interest rates offered across the board are the best offered in the last seven years.
West Bromwich is paying 6.55 per cent on their instant access account while Anglo Irish Bank and the West Bromwich building society are paying 6.75 per cent on their short-term fixed-rate accounts.
“Since the credit crunch kicked in, it is short-term money the banks are after,” says Susan Hannums of AWD Chase de Vere. ”
Terry, one thing did raise my eyebrows about IceSavers — is that some did complain after FCSC guaranteed all they money about lost interest !
ING did drop the ball on they offerings during 2008 but it was okay for them in the end as they got the Kuapthing Edge and Landsbanki Heritible customer for a nice discount.
Bradford and Bingley was nationalised by Darling under Northern Rock Act 29 September 2008, and that includes it subsidiary in IOM, yet still:
http://www.icenews.is/index.php/2008/10/21/isle-of-man-savings-bank-releases-fixed-rate-bonds/
You know as soon as government enters any business it do not like competition and crushes it one way or other.
This I truly fear for the future of banking in general after this huge bailouts in UK and US as much as the cost to tax payer — this government banks are going to squeeze out the honest not reckless banks that kept they powder dry and did not act heedless.
Of course you will deposit in bank with a 100% government guarantee behind it. That is why so many government in EU were angry at the 100% bank deposit guantee that Ireland did give.
If they did not match it lots of money would have been going to Ireland from they banks.
( This is what happend with Northern Rock in UK for example. Money went out to other banks after it problems. Then it were nationalised and all money that left and more came out of the other banks like Barclays back to Northern Rock.
Because strangely Darling decide to guarnatee all NEW depositor to Northern Rock not just the old ones. )
> recall that you managed to get your deposit out before it hit the fan
Just in case you think that I’m savvy, I took it from Icesave and put it in KE :) .
Actually, that’s one of the reasons why I’m certain that KE was in the process of experiencing a full-blown run when the FSA closed it down. Because I was looking at it closely, I’d seen the developing panic that started *before* the collapse of Icesave when people spotted a novation clause in the T&C that allowed Kaupthing to transfer the accounts back to Kaupthing.hf, where they’d be covered by the Icelandic guarantee. That clause was eventually removed, but within a day or two UK Icesave accounts were frozen and Iceland was obviouly in the ****.
I was part of the herd stampeding out when it was transfered to ING. Not my finest financial hour.
And ditto on Gordon.
GREAT GOOD ON YOU ALL WHO PROTEST DOWN WITH ALL GOVERMENTS WHO MAKE US SLAVE TO THEIR SYSTEM, ONLY WISH THE ENGLISH COULD BE THIS UNITED IN THE FIGHT TO BRING A REAL CHANGE IN THIS WORLD … THIS HAS GIVEN ME HOPE.