Iceland wins EFTA ruling on UK/Netherlands deposits

Scofflaw

Interesting and very rational turnup for the books, and very good for Iceland:

Iceland wins UK compensation battle

The court of the European Free Trade Association ruled that the Icelandic state was not obliged to pay back the British and Dutch governments for failing to honour deposit guarantees for savers in Icesave because the country suffered a systemic financial crisis.

...

The Icesave saga has dragged on for four years after Iceland refused to compensate UK and Dutch depositors lured by high interest rates from the web offering of Landsbanki, a bank that subsequently collapsed. The UK and Dutch governments instead paid the savers and claimed the money back from Iceland. But spurred on by anger at the use by the UK of anti-terrorist legislation, the Icelandic public twice rejected repayment terms at referendums.

The ruling raises a doubt as to the effectiveness of deposit guarantee schemes when there is a big financial crisis. Iceland had argued that such schemes were designed to protect people when single banks failed rather than the entire system.

The EFTA court, which makes rulings only for Iceland, Norway and Liechtenstein that are not binding on the EU’s European Court of Justice, said that the ruling could have been different under the latest version of the deposit guarantee directive issued in 2009, after the Icesave case.

European officials attempted to downplay the significance of the ruling for the wider EU but admitted it could knock confidence in a deposit guarantee system still being constructed. The European Commission has proposed that member states put aside funds equal to 1 per cent of insured deposits.

http://www.ft.com/intl/cms/s/0/4258b6da-693b-11e2-b254-00144feab49a.html

I'd have to agree with the Icelandic claim that the Deposit Guarantee Scheme wasn't really fit for the purpose of dealing with the collapse of an entire banking system.

I don't doubt this will set off a fresh wave of "we should have done what Iceland did", but I don't recall stiffing the international depositors in Irish banks ever having been on the cards. If anything, the ruling suggests that had the Irish banking system collapsed, depositors in general might have found themselves whistling for their money.

cordially,
Scofflaw

gallag

Scofflaw wrote: »

Interesting and very rational turnup for the books, and very good for Iceland:



http://www.ft.com/intl/cms/s/0/4258b6da-693b-11e2-b254-00144feab49a.html

I'd have to agree with the Icelandic claim that the Deposit Guarantee Scheme wasn't really fit for the purpose of dealing with the collapse of an entire banking system.

I don't doubt this will set off a fresh wave of "we should have done what Iceland did", but I don't recall stiffing the international depositors in Irish banks ever having been on the cards. If anything, the ruling suggests that had the Irish banking system collapsed, depositors in general might have found themselves whistling for their money.

cordially,
Scofflaw

The uk has received nearly 90% of the money backto date tthrough the estate of the failed banks, sort of a non news, bit crazy that iceland saw fit to refund the losses of their own citizens though?

NAP123

Scofflaw wrote: »

Interesting and very rational turnup for the books, and very good for Iceland:



http://www.ft.com/intl/cms/s/0/4258b6da-693b-11e2-b254-00144feab49a.html

I'd have to agree with the Icelandic claim that the Deposit Guarantee Scheme wasn't really fit for the purpose of dealing with the collapse of an entire banking system.

I don't doubt this will set off a fresh wave of "we should have done what Iceland did", but I don't recall stiffing the international depositors in Irish banks ever having been on the cards. If anything, the ruling suggests that had the Irish banking system collapsed, depositors in general might have found themselves whistling for their money.

cordially,
Scofflaw

Having your deposit wiped out with increased taxation over a period in order to repay parri passu bondholders, is not very parri passu.

There was nothing fair about the Irish bank guarantee or the reasoning behind it.

Iceland was right all along. Some of us, knew it from the start, but most of you, made sure we were perceived as wrong.

Now you try and convince us that all sides were right and everybody is a victim.

NAP123

gallag wrote: »

The uk has received nearly 90% of the money backto date tthrough the estate of the failed banks, sort of a non news, bit crazy that iceland saw fit to refund the losses of their own citizens though?

Yeh, complete madness. Imagine an elected Govt looking out for the people it was elected to represent?

Who told you the UK got 90% of their money back?

karlth

gallag wrote: »

... bit crazy that iceland saw fit to refund the losses of their own citizens though?

Not Icelandic citizens, but deposits in Iceland. Doesn't matter who owned them.

donaghs

Scofflaw wrote: »

I don't doubt this will set off a fresh wave of "we should have done what Iceland did", but I don't recall stiffing the international depositors in Irish banks ever having been on the cards.

Why not? I remember lots of people advocating to let the banks fail. Of course our government(s) may not have been able to stomach this option. Read interviews with Icelanders who voted in favour of paying back the money - but now admit they were wrong: http://m.npr.org/news/front/2100747?singlePage=false

Scofflaw wrote: »

If anything, the ruling suggests that had the Irish banking system collapsed, depositors in general might have found themselves whistling for their money.

Why? The people in Iceland kept their money, and even the UK and Dutch depositors were bailed out by their governments, who in turn were able to re-coup a lot of the money.