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Banking: Iceland

Answer

The table below shows the outstanding loan balances the Treasury has provided to the Financial Services Compensation Scheme (FSCS) in order to pay compensation up to £50,000 to retail depositors in Icelandic banks, and the value of compensation paid by the Treasury to cover balances above £50,000. These figures show the net position at 31 March 2010 and are taken from page 162 of the Treasury's Resource Accounts for 2009-10 (HC261).

£'000	HMT Loan to FSCS	HMT Top Up Compensation	Total
Heritable	307,354	58,005	365,359
KSF	1,766,936	291,248	2,058,184
Icesave	1,412,809*	772,983	2,185,792
Total	3,487,099	1,122,236	4,609,335

"*Excludes £2.2 billion compensation paid on behalf of the Icelandic Depositors' and Investors' Guarantee Fund (DIGF)." This table corrects some of the numbers set out in my Written Answer to the noble Lord on 19 October 2010. The numbers in that Answer were in respect of 1 April 2009, rather than 31 March 2010 as stated, and failed to take account of adjustments made during the 2009-10 financial year to reflect further drawdowns, due diligence exercises and repayments arising from dividends received from the administration process. Compensation payments, including those for deposits over £50,000, are administered by the FSCS. According to the FSCS, as at 24 November 2010, 14,652 depositors had been compensated in the three banks for deposits over £50,000, of which 14,618 depositors were UK residents and 34 depositors were non-UK residents. No compensation payments were made to residents of Iceland in respect of deposits over £50,000. The FSCS is not able to disclose the names of depositors receiving compensation for dataprotection purposes. As at 24 November 2010 there were 45 depositors with balances above £50,000 in all three Icelandic banks combined that were yet to submit a claim to the FSCS The current agreement in place between HM Treasury and FSCS sets a final repayment date of 31 March 2012 for repayment of the £3.487 billion loan detailed above. This deadline is extendable at the FSCS's discretion, subject to agreement with HM Treasury. With regard to the HM Treasury top-up element, the Treasury will seek to recover these amounts from the respective administration processes of each bank. On 28 January 2010, Ernst & Young published two forecast rates of recovery for Heritable Bank PLC, a base case recovery of 79 to 85 pence in the pound and a stress scenario recovery of 63 to 73 pence in the pound. http://www.heritable.co.uk/Uploads/Documents/news/Heritable_Bank_Plc_Creditors_Update_ 2010.01.28.pdf. On 3 November 2010, Ernst & Young published an Administrators Progress Report on Kaupthing and Singer and Freidlander (KSF) in which it announced a forecast return of 75 to 84 pence in the pound. http://www.kaupthingsingers.co.uk/Files/CustomerCreditorinformation/Administrators% 20Progress%20Report%20Oct%202010. pdf The Landsbanki Resolution Committee announced in a creditors meeting on 1 December an expected rate of recovery of 86 per cent. http://www.lbi.is/Home/News/News-Item/2010/12/01/News-announcement-from-LBI-Creditors-Meeting/.

Secondary information

Type

Written question

Reference

5030; 723 c182-3WA

Session

2010-12

Related items

Banking: Iceland
Tuesday, 19 October 2010
Written questions
House of Lords

Banking: Iceland
Monday, 14 February 2011
Written questions
House of Lords

Subjects

Compensation Banks Insolvency Loans Iceland Financial Services Compensation Scheme Landsbanki Kaupthing Singer and Friedlander Heritable Bank

Contains statistics

Yes

Link

View this Written question on www.publications.parliament.uk