||Isle of Man
Depositor Compensation Scheme
The Isle of Man has a depositor
compensation scheme which protects deposits up
However, the contributions to the DCS are capped at £350,000 per participating bank per year.
There is no long term cap on total payouts, but there is a temporary cap of £200 million for bank collapses occurring before
So while, unlike Guernsey, the amount of compensation would not be limited by an overall cap, long term, the annual
per-bank funding cap means that, even if your money is in a smaller bank,
it's likely to take many years to receive your due compensation. BCCI collapsed in 1991 and it took ten
years for depositors to get back 60%.
Total deposits held with the 38 Isle of Man banks at the end of December 2008 stood at £57.29 billion, an average of
£1,508 million per bank. Isle
of Man Financial Supervision Commission
|Kaupthing Singer & Friedlander IoM
|Took over Derbyshire Building Society,
|Went into Administration
||9 Oct 2008
|Number of depositors
|Total depositors savings
|Returned to depositors so far
||£50,000 / 91%
|Expected final return
||97.2 - 99%
|Expected final payout date
The Isle of Man increased their depositor
compensation scheme from 75% of £15,000 to 100% of £50,000 in an emergency session of the Tynwald (the
IoM government) on the same day as the collapse of Kaupthing Singer & Friedlander Isle of Man, and made the
change retrospective so that the KSF IoM depositors would be covered to the increased amount.
The Tynwald then committed to putting in £150 million of taxpayers money, from government
reserves, to top up the normally only bank-funded scheme in order to facilitate recompensing the KSF IoM depositors.
Meanwhile, the Chief Minister and Treasury Minister were quick to publicly take the side of KSF IoM depositors, engaging in a
diplomatic war with the UK, which they blamed for the bank's collapse.
In December 2008 the Tynwald agreed an early payment scheme offering a £1,000 "emergency" payment to
all depositors at a cost of £11m from government reserves, as an interim measure while a fuller solution was
being worked out. This was increased to £10,000, at a cost of £94m, in January 2009.
The government then put together a Scheme of Arrangement (SOA), as an alternative to liquidation and
activation of the island's Depositors Compensation Scheme. Under the SOA just over half of the depositors
would be repaid in full within three months, and almost three quarters would receive all their money back within
two years, although the remaining quarter, those with deposits of more than £50,000, would be dependent on
realisations by the liquidator and were (then) anticipated to probably receive only 70% of their savings, spread in payments over 6
However, the depositors rejected the SOA
arguing that the scheme gave them little more than they would receive
under liquidation, would force them to give up too many rights, and would be disadvantageous to larger depositors
as the probabilities of higher returns from liquidation increase.
Consequently, KSF IoM was placed into liquidation, activating the island's Depositors Compensation
Scheme, with the result that savers with up to £50,000 deposited have, after almost a year, had their savings compensated in full.
Those with more than £50,000 deposited may, eventually, get back an anticipated 97.2 - 99%, although it is expected that it
will take until at least 2014 for this to be achieved.
State of Government Finances
While it is clear that the government of the Isle of Man does believe in trying to help savers in failed banks in their
jurisdiction (albeit not to the satisfaction of all depositors), as the £150 million pumped in for the KSF IoM
failure represented fully half of the Isle of Man's reserves, it is equally clear that they won't be able to do
the same again for any further bank failures for the foreseeable future.
Please see www.SafeOffshoreAccounts.com for further