British savers who stand to lose millions of pounds through the collapse of the offshore arm of an Icelandic bank received a boost today when a liquidation hearing was postponed.
Kaupthing Singer & Friedlander Isle of Man (KSFIOM), part of Iceland’s biggest bank Kaupthing, was due to be put into liquidation today, after being placed in provision liquidation on October 9.
But the Isle of Man Treasury successfully applied for the winding up hearing to be postponed until November 27 so that high-level negotiations to recover the bank’s assets could continue.
The move is good news for the 10,000 savers who collectively have £840m (€1,044m) deposited with the bank.
If KSFIOM had gone into liquidation, the Isle of Man depositor protection scheme would have kicked in, guaranteeing people payments of only the first £50,000 (€62,100) they had lost, plus anything else the liquidator was able to recover in due course.
Action groups representing savers had called for the hearing to be postponed while work continues to recover the group’s assets.
It is understood that £550m (€684m) of savers' money was being held in the UK and was frozen by the UK Government alongside other assets belonging to Icelandic banks. The Isle of Man Treasury said this action forced KSFIOM to close.
A delegation of senior officials from the island’s government travelled to London today to hold a meeting with members of the Treasury and Financial Services Authority in a bid to recover this money.
In a separate move the Isle of Man is also being represented by the UK Treasury in discussions with the Icelandic government, which now owns KSFIOM’s parent Kaupthing.
Kaupthing had guaranteed all deposits with KSFIOM and the Isle of Man wants the Icelandic government to stand by this guarantee.
The Isle of Man’s Treasury Minister Allan Bell said of the liquidation hearing postponement: “This is a very helpful development which provides a breathing space for negotiations to continue.
“The government is doing everything it can to achieve a resolution that is best for both the bank’s depositors and the Isle of Man.”