Depositors in collapsed Isle of Man bank Kaupthing Singer & Friedlander have blocked a government sponsored asset recovery package, a decision that will trigger the island’s bank compensation scheme.
Many of those who voted against the government plan, known as the Scheme of Arrangement (SOA), were from the Kaupthing Singer & Friedlander Isle of Man Depositors’ Action Group (KSFIOMAG), a collection of mostly private depositors with members dotted around the world.
They opposed the plan for various reasons, despite the fact that it would have, on the face of it at least, resulted in them receiving more of their money back.
The other main opposition came from a single “unsecured creditor” who lost £3m when the bank went under last October. The identity of this creditor was unknown at the time of writing.
The depositor compensation scheme that will now kick in gives individual savers up to £50,000 each. Institutions are eligible for up to £20,000.
However, depositors are likely to first receive up to 75 pence in the pound from the liquidation of the bank, according to current estimates, with the bank compensation scheme providing additional funds.
Small savers backed plan
The results of the vote on the SOA showed the majority of small, or class 1 depositors – those with claims under £50,000 – were in favour of the scheme. But classes 2 and 3, larger depositors and unsecured creditors vetoed it. Of 14 unsecured creditors, 13 voted in favour of the plan, but the combined value of their claims against KSF amounted to little more than a tenth of the £3m owed to the remaining class 3 creditor.
The Isle of Man government was understandably disappointed with the outcome.
Treasury Minister Allan Bell said: “In the particular circumstances of KSF IOM there was clearly potential for a tailored solution that would be better for depositors than conventional liquidation. Government had a duty to pursue that option and put in a huge amount of work doing so.
“We continue to believe that developing the Scheme of Arrangement provided the creditors with a viable alternative and was in the best interests of all of the depositors.”
