Landsbanki Guernsey Crisis & Gordon Brown

Lansabanki Guernsey went into administration while Heritable Bank in the UK was holding £36m of Landsbanki Guernsey cash. Heritable also went into administration. The FSA determined that Heritable no longer met its threshold conditions, and was likely to be unable to continue to meet its obligations to depositors. The FSA concluded that it was in default for the purposes of the Financial Services Compensation Scheme. The Treasury used the Banking (Special Provisions) Act 2008 to ensure a resolution that preserves financial stability and provides protection and continuity of business for depositors they claim.

Heritable’s retail deposit business has been transferred to ING Direct, a wholly-owned subsidiary of ING Group. ING Direct is working to rapidly ensure that it is business as normal for all it's customers. Very nice for them; are they sitting on £36m of Landsbanki Guernsey depositor's cash?

The treasury and Gordon Brown claim this action by the Tripartite Authorities protects savers’ money and provides certainty for retail depositors. The transfer of the retail deposit book has been backed by cash from HM Treasury and the Financial Services Compensation Scheme. So what happened to the £36m of Landsbanki depositors' cash Gordon that was languishing in Heritable Bank?

It seems that the LG funds may well have been transferred to ING Direct or frozen for the purposes of paying off UK clients of Icesave. We know that £36,344,000 of funds was "upstreamed" from LG to Heritable. The administrator makes a distinction between these funds and the £52,449,000 tied up in commercial loans and property. The £36 odd million was presumably "liquid" when it left Guernsey. What Heritable subsequently did with the funds remains unclear but, according to the administrators, a large portion is tied up in loans and property.

The fact remains that there must be a trail of paper/electronic evidence that establishes LG ownership of the £36,344,000. We now need the administrators and the GFSC to pressurise the UK Government and Gordon Brown to formally acknowledge that these funds belong to LG depositors and should be returned. What remains in the Heritable "cash drawer" after all the smoke and mirrors shenanigans of transfers to ING and loans secured on frozen assets is largely irrelevant. What must not be allowed to happen is that Heritable assets are sold off to bail out UK based Icesave customers at the expense of LG depositors.

Gordon Brown must not be allowed to use Landsbanki Guernsey funds - money that belongs to offshore savers legitimately banking in a Crown dependancy - to bolster his ailing political reputation in the UK while hooting about Icelandic banks and depositor protection for mainland residents. Landsbanki money that was in Heritable should be returned to the administrators of Landsbanki Guernsey. Channel Island banks should not be a soft target for Gordon. Where is the cash Gordon?

We ask Gordon this: Contrary to your claim that no British saver will lose their savings because of the collapse of the Icelandic banking system, many thousands of British citizens in the Crown Dependancies of Guernsey and Isle of Man stand to lose their entire life savings - due in large part to your government's actions in freezing Icelandic assets in the UK.

When you said on 20 October 2008 that "people must have confidence when they go to their banks that their savings are safe and secure" - was it your intention that British citizens with bank accounts in Guernsey and Isle of Man be excluded from this scenario ...... or was that just an unfortunate oversight?

Do you acknowledge that British expatriates have been forced to bank offshore because your anti money laundering legislation effectively precludes them from opening a bank account on the mainland? You have then ensured that they get doubly shafted by using anti terrorism legislation to freeze Icelandic assets in the UK. Well done Gordon! - I always knew that legislation would come in handy for something!

Media: Please contact Gordon Brown and ask him about the Landsbanki Guernsey savers' cash that was in Heritable.
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