Icelandic bank savers await help

By Bob Howard BBC Radio 4's Money Box

Kaupthing Edge was taken over by the Dutch bank ING

Savers caught up in the collapse of two Icelandic banks, Kaupthing Edge and Landsbanki are still facing uncertainty.

Depositors with Icesave are not likely to receive compensation for at least several weeks.

Some savers with Kaupthing Edge are still waiting for transactions to go through after their accounts were transferred to the Dutch bank ING.

ING said it is working to process the payments as quickly as possible.

Compensation in principle

The Financial Services Compensation Scheme (FSCS) said the government had agreed in principle with the Icelandic authorities, an approach to paying compensation to 230,000 savers with the UK branch of Icesave.

The Chancellor Alistair Darling promised these depositors would get all their money back after the Financial Services Authority (FSA) declared it in default on 8 October.

Jonathan Clark, the FSCS's director of claims, told BBC Radio 4's Money Box he expected a pay-out in weeks rather than months.

Under EU law, financial services compensation schemes must pay out within three months unless there are wholly exceptional circumstances.

I'm extremely frustrated as I can't actually see what's happening to my money Jackie, Money Box listener from Manchester

Negotiations continue with the Icelandic authorities as to what financial contribution they will make to the scheme.

Delay worries

Vanda from Milton Keynes is a full time student who depends on interest from an Icesave account as income to support her husband and four children.

She is very concerned about any delay in the scheme paying out:

"I'm going to be relying entirely on an overdraft.

"It will leave me very vulnerable as I now have nothing to fall back on."

The vast majority of these payments are through Martin Rutland, ING

ING had said it expected all outstanding transactions to be completed by the end of business on Friday 17 October.

Martin Rutland from ING said good progress had been made:

"We've got staff working overtime - they're getting through this as quickly as possible.

"The vast majority of these payments are through."

However a number of Kaupthing Edge customers have contacted Money Box since the close of business on 17 October to say their transactions had still not gone through.

Jackie from Manchester closed her account on 4 October and had tried to transfer her funds to her Lloyds TSB account:

"I'm extremely frustrated as I can't actually see what's happening to my money."

Offshore

About 200 Customers of Landsbanki in Guernsey have been told by the administrator Deloitte they will receive an initial payment of 30p in the pound.

Guernsey's treasury minister, Charles Parkinson, said they could receive a lot more:

"There are assets which exceed the bank's liabilities.

"The crucial issue is what recovery rate is achieved on these assets."

Savers with Kaupthing Isle of Man have to wait to hear about any possible compensation until a high court hearing on 24 October, which will decide if the bank should be declared in default.

If it is, the Isle of Man's Financial Supervision Commission said that would trigger compensation payments for sums up to �50,000.

It is not yet known when or how that money would be paid out, or what assets a liquidator would have to distribute.

BBC Radio 4's Money Box was broadcast on Saturday,
18 October 2008 at 1204 BST.

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