Kaupthing Singer and Friedlander
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Released 08 October 2008
Kaupthing Singer & Friedlander
1. Acting on the advice of the Bank and FSA, and in light of announcements
made by the Icelandic authorities in recent days, the Chancellor has taken
action today to protect the retail depositors in Kaupthing Singer & Friedlander,
a UK-based banking subsidiary of Kaupthing Bank. He has taken this action to
ensure the stability of the UK financial system. Savers’ money is safe and
2. Kaupthing Singer & Friedlander (KSF) is regulated by the FSA. The FSA has
determined that Kaupthing Singer & Friedlander no longer meets its threshold
conditions, and is likely to be unable to continue to meet its obligations to
depositors. The FSA concluded that KSF is in default for the purposes of the
Financial Services Compensation Scheme. The Treasury has used the Banking
(Special Provisions) Act 2008 to ensure a resolution that preserves financial
stability and provides protection and continuity of business for depositors.
3. KSF’s Kaupthing Edge deposit business has been transferred to ING Direct,
a wholly-owned subsidiary of ING Group, which operates through its branch in the
UK. ING Direct is working to rapidly ensure that it is business as normal for
4. This action by the Tripartite Authorities protects savers’ money and
provides certainty for retail depositors. The transfer of the retail deposit
books has been backed by cash from HM Treasury and the Financial Services
5. The remainder of Kaupthing Singer & Friedlander business has been put into
administration. Any retail depositors eligible to claim under the Financial
Services Compensation Scheme whose business has not been transferred to ING
Direct will be paid out in full through the Financial Services Compensation
6. This is the right course of action to protect savers, ensure financial
stability, and safeguard the interests of the taxpayer.
1. These notes set out in further detail the arrangements announced today by
HM Treasury to safeguard deposits with Kaupthing Singer & Friedlander (KSF).
2. By orders made under the Banking (Special Provisions) Act 2008, all
deposits with KSF that relate to Edge accounts have been transferred to ING
Deposits with KSF other than Edge Accounts
3. The government will ensure that all retail deposits with KSF, which do not
relate to Edge accounts (non-Edge retail deposits), will be repaid to depositors
who are eligible to claim under the Financial Services Compensation Scheme,
including in respect of deposits in excess of the £50,000 limit under the
Scheme, with the government covering deposits in excess of the FSCS limit.
4. The Financial Services Compensation Scheme working with the administrator
of KSF will endeavour to contact these individuals and make payments to them as
soon as possible.
5. All non-Edge retail depositors will receive payments of the gross amounts
of the balances on their accounts.
6. Retail deposits for these purposes means the credit balances on Kaupthing
Edge Savings Accounts and Kaupthing fixed term deposit accounts held by persons
who are eligible to claim under the FSCS (such persons include most private
individuals and some small businesses and charities; for further details, please
see Chapter 4 of the FSA’s Compensation Sourcebook or the website of the FSCS (www.fscs.org.uk
7. It will be a condition of payment under these arrangements that a non-Edge
retail depositor must assign his claims against KSF to FSCS or to such other
person as HM Treasury may require, which will account to HM Treasury for
recoveries, which it makes as a result. No further sums will be paid to such
non-Edge retail depositor.
8. These arrangements supplement, but do not replace, the FSCS (which covers
in full the first £50,000 of financial loss in respect of retail deposits).
9. ING Direct N.V. is a wholly-owned subsidiary of ING Group N.V., the Dutch
holding company of an international banking and insurance group, with branches
in London and elsewhere. The group has over 85 million customers worldwide, and
is one of the 20 largest financial institutions in the world. 10. ING Direct
already has over 1 million customers in the UK using its online banking
11. The FSCS has financed its payout through a loan from the Bank of England.
12. The Chancellor of the Exchequer today restates that the Government stands
behind the FSCS, so that it can be relied upon to be able to play its role in
meeting future claims that arise.
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Article Published/Sorted/Amended on Scopulus 2008-10-09 11:22:02 in Business Articles