The Isle of Man’s parliament Tynwald has approved a GBP193m Government funding package which will bring forward full repayment for more than three-quarters of depositors with Kaupthing Singer & Friedlander IOM.
The money from Isle of Man Government reserves will expedite payments of up to GBP50,000 per individual depositor under the island’s Depositors’ Compensation Scheme (DCS). The move follows the failure of the proposed Scheme of Arrangement to gain the necessary levels of support when creditors voted on it in May.
The bank was subsequently placed into liquidation and the DCS activated. Treasury Minister Allan Bell MHK told Tynwald this week that GBP85m had already been paid out to depositors under Government’s Early Payments Scheme, providing advance payments of up to GBP10,000 per depositor.
The new funding package now agreed will allow for full DCS entitlement to be paid out to claimants by early September this year, bringing a 100% return of deposits to more than three-quarters of KSF IOM depositors. Mr Bell explained that the GBP193m package comprised GBP73m in direct support required from government under the DCS regulations, plus an interest-free loan of GBP120m (GBP21m in advance of levies due from banks, and GBP99m against future dividends payable by the liquidator).
The current Depositors Compensation Scheme is subject to a ‘sunset clause’ which means that its provisions are due to expire on October 23 this year. Mr Bell gave an assurance in Tynwald that the level of compensation for individual depositors will be maintained at GBP50,000, at least, in the new amended Scheme that will replace the existing legislation. If the new Scheme is not in place for October 23, he stated, the current arrangements will be extended.
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