EFTA Iceland ruling - UK depositor protection impact ....

EFTA Iceland ruling - UK depositor protection...

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After the European Free Trade Association recent court ruling - Icelandic taxpayers won't be forced to bail out UK depositors' losses in IceSave bank

EFTA’s ruling was that the deposit guarantee directive in place in 2008 did not envisage the obligation to repay savers in Britain and the Netherlands "in a systemic crisis of the magnitude experienced in Iceland"

What is the impact (if any) on savers - if the Government Depositor Guarantees are potentially voidable?

Also, in the light of this EFTA ruling, should Gordon Brown have bailed out IceSave Bank depositors in the first place with taxpayers money? Presumably at around that time, the UK also had a '.. systemic crisis of magnitude ..' so all Guarantee promises / obligations were waived (all bets off)

And what is the impact for any future depositor guarantees - are they worth the paper they are written on?

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By andrew.hyde
31st Jan 2013 11:24

Jenga

My relatively untutored impression is that in 2008 the banking system was like a huge Jenga game.  Not supporting depositors was the equivalent of yanking out one of the pieces, and no-one could accurately predict the outcome.

In the end it's about retaining triple-A status.  UK is still regarded as a safe place to invest (but for how much longer?).  Iceland probably isn't.

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By thomas34
31st Jan 2013 11:49

Greed

I believe there's always been a list of U.K. banks that come under the depositors guarantee scheme. If people didn't wonder why these foreign banks were offering silly returns compared to the equivalent U.K. banks, they know the answer now.

Gordon Brown merely encouraged the "reward without risk" culture by reimbursing U.K. savers in Icesave and I recall used anti-terrorist legislation to freeze Icelandic assets. I don't necessarily disagree with the actions - it was good to see a British prime minister putting Britain first for once.

One of the safest places in the world to save money is the U.K. subject to the limits (£80K per person I think). This is because we can always print our own money in an emergency, unfettered by the disparate views of other countries like in the Eurozone.

 

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