Treasury Minister Eddie Teare has hailed the depositors’ compensation scheme as a success after reporting to Keys that investors had now received full refunds.
He said the payments were subject to unresolved disputes and cases where contact had been lost with depositors but, those issues aside, people had been paid out in full from the depositors’ compensation scheme of liquidators.
He told Keys members at this week’s sitting: ‘I do appreciate they may have lost the time (investment) value of the money and some of the interest whichthey were originally contracted to receive.
‘The liquidation process is not yet complete and there may be further funds due to some depositors.’
He praised the handling of the matter by the Financial Supervision Commission and said specific actions they had taken before the Kaupthing, Singer and Friedlander (Isle of Man) bank collapsed had been beneficial.
‘These steps, including removing the bank’s direct exposure to its Icelandic parent, undoubtedly helped in the very high levels of recovery achieved by the liquidators for a bank failure. I believe that the outcome so far is a credit to the arrangements which we have on the island,’ he said.
He said dividends had been paid in stages to the bank’s creditors, including the depositors’ compensation scheme, in stages since the bank’s collapse in October, 2008.
The bank’s failure left more than 11,000 depositors more than £840 million out of pocket and many attended an emergency meeting held at the Gaiety Theatre in Douglas shortly after the collapse was announced. Some elderly investors voiced concerns that they would never receive the money in their remaining lifetime.
In the High Court in May 2009, Deputy Deemster Andrew Corlett awarded a winding up order for the bank after a scheme of arrangement proposed by the government as an alternative to liquidation failed to win support from creditors and was opposed by the Depositors’ Action Group.
In Keys this week Mr Teare said lessons had been learned from the episode: ‘We need to continue to be careful about upstream deposits, where deposits are transferred up to a parent company,’ he said.
‘The Financial Supervision Commission always looks at the financial stability of a local subsidiary and the robustness of the parent company and any action needed to protect the Isle of Man will be taken.’
He added the Achilles’ Heel in the case of Kaupthing was its exposure to the Icelandic parent company.
He added the Isle of Man had fared well in comparison with UK investors who were expected to receive 84 to 86 pence in the pound in compensation because their risk exposure had been much higher.
In July 2009 the government approved a £193 million package to help compensate investors up to the first £50,000 lost.