Manx bank goes into liquidation

The Isle of Man bank is a unit of an Icelandic lender

The offshore arm of an Icelandic bank has been put into liquidation, paving the way for compensation payouts to thousands of savers.

A winding up order was made on Kaupthing Singer & Friedlander Isle of Man (KSFIOM) by the island's Deputy Deemster.

The bank's savers are to receive payments up to the first £50,000 lost from a depositors' compensation scheme.

Savers had rejected plans for the Manx government's Scheme of Arrangement.

Internet campaign

The Isle of Man treasury had claimed that 54% of depositors would get back all their money within three months under the scheme, while 76% would have received 100% within two years.

But the KSFIOM Depositors' Action Group argued that the scheme gave them little more than they would receive under liquidation, and they organised an internet campaign urging savers to vote against it.

It is understood that £540m of the £900m of assets needed to repay savers are currently under the control of the liquidator PricewaterhouseCoopers, including a loan book which needs to be run down.

But there is about £400m belonging to the bank which was held by its parent company, Kaupthing, which was frozen by the UK Government.

Public inquiry

It is not yet known how much of this money, if any, will be returned.

KSFIOM was placed in provisional liquidation on 9 October following the collapse of the Icelandic banking sector.

The KSFIOM Depositors' Action Group said it was calling for an independent public inquiry into the collapse of the bank.

It said: "During the seven months of protracted pain people have lost homes, been forced to close businesses, suffered immeasurable ill health due to the stress.

There will be a meeting of the Depositors' Compensation Scheme later this week at which it will determine whether a default has occurred, activating payouts for savers.