2008-10-30 :: iomtoday.co.im :: UK treasury faces massive claim over Kaupthing collapse

http://www.iomtoday.co.im/news/UK-treasury-faces-massive-claim.4642369.jp

Thursday, 30th October 2008

UK treasury faces massive claim over Kaupthing collapse

Published Date: 29 October 2008
A MULTIBILLION-pound High Court damages claim could be mounted against the UK Treasury by London-based lawyers acting for Iceland's Kaupthing Bank.
Kaupthing has instructed the international law firm Grundberg Mocatta Rakison LLP to begin a preliminary inquiry into the circumstances surrounding the transfer of the assets of Kaupthing Singer & Friedlander's UK subsidiary.

The law firm is also considering whether it can act for KSF (Isle of Man) depositors.

Michael Tackley and Richard Beresford, both partners at Grundberg Mocatta Rakison LLP, and leading banking counsel John Jarvis QC attended a meeting at the bank in Reykjavik earlier this month.

Their initial review indicated a possible claim that the UK Treasury acted unlawfully when making its order to put the bank into administration on October 8.

There could also be possible claims for damages based on the torts of misfeasance in public office and negligence. The damages claimed would run into billions of pounds.

Iceland's Ministry for Foreign Affairs, meanwhile, has claimed the 'unprecedented application' of anti-terrorism legislation by the UK against the Icelandic bank Landsbanki had 'severely disturbed' currency transactions between the two countries – and had led to innocent Icelandic citizens abroad having to 'endure verbal abuse in the media, in shops and on the street'.

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Deposits with Irish bank protected under guarantee scheme

DEPOSITS in the Isle of Man subsidiaries of five Irish banks are now protected by the Republic of Ireland's government guarantee scheme.

Irish Minister for Finance Brian Lenihan has made an order designating the first group of banks and building societies to participate in the Credit Institutions (Financial Support) Scheme 2008.

The scheme was approved by both Houses of the Irish Parliament on October 17.

Under the scheme covered liabilities, including all retail and corporate deposits, are guaranteed by the State until September 29, 2010.

The minister said: 'The guarantee has as its central objective the removal of any uncertainty on the part of counterparties and customers and gives absolute comfort to depositors and investors that they have the full protection of the state.'

He said that the strict conditions accompanying the guarantee under the scheme would 'ensure that balance sheet growth is measured and in accordance with prudent banking practice, that risk is properly measured and managed and the interest of taxpayers are safeguarded'.

The five banks with Isle of Man subsidiaries that have now joined the scheme are Irish Permanent (IoM) Ltd, AIB Bank (CI) Ltd Isle of Man branch, Irish Nationwide (IoM) Ltd, Anglo Irish Bank Corporation (International) plc and Bank of Ireland (IoM) Ltd.