October 8th, 2008
12:50 AM GMT
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LONDON, England - If, like me, you are one of the 350,000 British or Dutch nationals who have savings accounts with Internet bank Icesave, you're probably pretty angry right now.

Iceland's second-largest bank, Landsbanki, the parent company of Icesave, says that it has gone into receivership and that the Icelandic Financial Services Authority has appointed a receivership committee. The Icelandic government stepped in to take control of the bank on Tuesday to keep it afloat, just days after Icesave was posting messages on its Web site reassuring savers that the bank was solvent and immune to the worst effects of the credit crisis because it didn't have exposure to the toxic U.S. sub-prime mortgage market.

Today, Icesave's customers were greeted by a message informing them that the bank was unable to process deposits or withdrawal requests. If the company is liquidated thousands of customers like me, with deposits under £50,000, are likely to face a long and stressful wait to retrieve their money.

Lured by attractive Icelandic interest rates I had just under £10,000 of savings deposited with Icesave. We'd worked hard to put it by and intended to use the money for non- budgeted items like home maintenance and improvements, family holidays and car repairs. It's money that I don't need in the short term, unlike other Icesave customers who had pension funds and home purchase deposits invested there.

For many of the bank's customers today will have been their first taste of the effects of the global financial crisis. Let's hope we won't have to experience many more.

If you've been affected by the collapse of Icesave, I can't help you get your money back but I can offer you the opportunity to share your experience with us and vent your frustration. Were we foolish to be lured by the kind of interest rates that simply aren't on offer in the UK or the Netherlands? Who do you think is to blame? Hit the comment button below and tell me your story. Getting it out there just might help you feel a little less sore.

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Filed under: BusinessFinancial marketsIceland


soundoff (31 Responses)
  1. ruud

    Adrian,

    I love to see you host the news although it is very early in our time-zone. Compliment. Still I advice you to have Jenny update what to do with in chilly climate with a deposit between polar bears.
    Still I understand that Icelandic government is guaranteeing all deposits.

    Next time around. Start wondering how come a bank offfering way above market-average interest-rates.

    Ruud

    October 8, 2008 at 2:17 am |
  2. John F. Raffensperger

    Hi, Adrian. Are you by chance an American? Did you think through the consequences of going without FDIC insurance? Surely you must have realized that you were taking on some risk by putting your money in a place with unusually high interest rates!

    October 8, 2008 at 3:43 am |
  3. Geesje de Jong

    I had just last week inquired about a saving account at the IceSave bank but received no reply from them, thankfully not as otherwise I would have been in the same boat.. as of yesterday their website http://www.icesave.nl was still online, advertising their high interest rates.

    October 8, 2008 at 5:25 am |
  4. Anthonie Heus

    Goodmorning Adrian,

    Same story here from the Netherlands. The Dutch National Bank took over the website from icesave and said that they would help the Dutch savers with the claim. More news has to be announced.

    It was a run on the bank yesterday. All the savers were trying to get their money from the bank but it was like banging on a locked door. The website wasn't working due a overload on their server and later on when logging in the credit was 0,00 on my account. So I wasn't able to make a printscreen.

    Now I'm frustrated because it was my money for a next year university. This is the best lesson of economics I had in my life. I'm optimistic that I will get my money back before Christmas.

    October 8, 2008 at 5:28 am |
  5. Bird

    Ah well, it is only EUR 1500. Enough flour and ammo stored to get through the winter. By next spring we'll see what the dutch bank (dnb) can do for us.

    October 8, 2008 at 6:03 am |
  6. Graham

    I was a shareholder of Landsbanki and have lost my money as a result of the nationalisation. I also had a shares in Glitnir which was 75% nationalised last week. I had never expected this. One has to blame the regulators and executives for a business model that was highly risky – mismatching assets and liabilities. I do wonder how honest these bankers have been in the past in telling the whole story. When this can wipe out investors, endanger depositors, harm employees and put into jeorpardy the economy of countries the time has come for a complete overhaul. Personally I would like to see the executives investigated, held accountable and even sent to jail!

    October 8, 2008 at 6:06 am |
  7. Darren Hall

    Whilst I feel sorry for all who may have lost their funds or at least may suffer some loss, I would like to point out an economic fundamental.

    1: Iceland is 300,000 people, seriously – how strong and robust could the banking system be in such a small place.... and simply by location is directly connected to all that happens in Europe....
    2: You will notice that banks in New Zealand and Australia have suffered little if at all with this mess – ask yourself why?
    3: Interest rates in New Zealand have been some of the highest in the deleloped world – why would you not consider such a place given the low risk, favourable exchange rates and proven democratic economies, afterall – the Japanese have been depositing funds in NZ/Australia for years....

    I have prevously been a business banking manager in both New Zealand and Australia, The best part of the world is quitely hidden away in the south pacific....

    Sorry Im an biased – Im a Kiwi based in Taiwan.

    I pray goes well with your recovery of funds.

    Kind regards

    Darren Hall
    Tel: 886922075076
    http://www.brightengroup.asia

    October 8, 2008 at 6:33 am |
  8. Rebpakk

    I have EUR 8000 in icesave and I do need that money, I live from it. It is very frustrating and makes you really angry.

    October 8, 2008 at 6:56 am |
  9. John the Dutch

    It's like betting on a horse with shiny manes before the race, just to see it struggle over the finish line coming in last because of bad hooving.

    A nation that guarantees all out standing bank accounts that total a few times its GDP is way over its head. Add the poor regulation of interest rates allowing the luring in of foreign capital and you have a time bomb more explosive then the geysers. And seriously, how many financial experts want to work in Iceland instead of in the Bahamas?

    Currently socks seem the best investment, because scared savers will want a whole lot of them to store their money in, if the can get a grasp of it.

    October 8, 2008 at 8:10 am |
  10. Peter Vandebovenkamp

    The executive officers of this company should be thrown in jail and be forced to pay retribution to the poor slugs who have lost their money.

    October 8, 2008 at 8:34 am |
  11. Dan Tango

    Greed....Your own...that's what to blame. Placing deposits in high interest earning vehicles may seem oh so business savvy. Simply, it's trying to make an easy buck for the lazy.
    Try this the next time, work a little harder, save a little harder, spend a little less.

    October 8, 2008 at 8:34 am |
  12. Gareth Cerddor

    Nothing to do with greed or laziness if, like me, you have retired and are seeking a market-leading account in which to place your savings. I HAVE worked hard. I HAVE saved hard. And I spend very little. The IceSave accounts were not particularly high-interest – several others were higher, but with short-term bonuses. There is no morality in a nation that protects its own depositors but does not honour its legal obligations to others. Nor in a politician who gives an assurance on Tuesday which is clearly proven unreliable, if not downright false, on Wednesday

    October 8, 2008 at 8:48 am |
  13. gord

    Dont worry, it will turn out all right in the end. I went through it with northern rock last year [substancial sum] . Could be a long wait for all of you though.

    October 8, 2008 at 10:05 am |
  14. Erwin van Wijk, Netherlands

    Though it would certainly be understandable to panic on this occasion, I think Landesbanki has shown rapid decline ánd response to the financial crisis situation. After ample discussion the government has taken precautionary measures and an offer from Russia has taken in consideration.
    Russia takes on a new sense of 'responsability' as a new financial superpower. This may soon result in a normalisation.
    It shows however how extremely vulnerable financials are at the moment, be it in the US, or even Iceland.
    This may all sehelp to curb the potential downfall and restoore trust.

    October 8, 2008 at 11:15 am |
  15. yvboey

    Greedy..high interest.. even told my mum in Malaysia about this (luckily she didnt transfer money to me). I put my saving for the past 6 months and last salary while working in Amsterdam in this Icesave. Thought it is a cool product to bank my money but only to know it is a hard lesson to learn from this financial crisis.

    I hope the Dutch goverment has done a thorough "health" check of this bank before allowing them to open to Dutch depositors. This is quite a bullshit especially for us who have to pay 42-52% of taxes for such services. Show us you are worth the taxes we paid.

    I want my hard earned money back please. It is my saving to go back to Malaysia and to pay off my mortgage.

    October 8, 2008 at 11:23 am |
  16. Johan Barneveld

    First off all I am not an accountholder of ICESAVE but I do have
    an opinion of this kind of amateur banking
    Luring people in GB and NL with higher interrest rates as usual
    Then let not only the banking system go bust but default the whole
    country LATEST NEWS : Icelands government cannot or willnot
    commit to its legal obligations towards accountholders

    I feel very confident and take some cautious pride that
    ING_Direct has taken over some of their activities
    I advise all betrayed accountholders to unite, exclude Iceland
    from EU-trading/banking and put the island on Ebay

    October 8, 2008 at 6:03 pm |
  17. Russell John

    Having just pointed out to one disgruntled investor I am sorry to have to point this out to you all, but you ARE all gamblers and now sore losers as well. All investors are gamblers as gambling involves taking a risk with no certainty or guarantee. That's what investing is. You cannot expect all the highs without the lows. It's sad to see you lost all you money, but had it been different and you had gained 100% of your money, I somehow doubt that you'd be here writing to boast of your fine luck and great gains and offer to give half your good fortune to those less lucky than you in their own gambling. Wake up, smell the roses and please realise that this is the real world, not a game. You lost, now take your bat and ball and go home, quietly like good little boys do. Sniff.

    October 8, 2008 at 10:29 pm |
  18. George Yap

    Be careful folks with institutions offering high interest rates! They may offer you 10% for instance and use your money to park on high risk high return business module, probably giving the institution 20% return? So these institutions still make 10% and able to sustain their business as usual .But come a day when the borrowers can't pay up........ and here you are, your nightmare begins...This is what happens globally. Be careful and earn your money through the proper way.

    October 9, 2008 at 5:19 pm |
  19. Dutch

    Russel, until VERY recently anyone would tell you putting money in stocks was gambling, putting money in (bank-)savings accounts was stupid but safe.

    You put money in an account that is guaranteed by the State (Iceland in this case). Then the shit hits the fan and the State – inside of 24 hours – changes its tune: all domestic accounts are guaranteed, DOMESTIC being the key word! In plain language "f*ck the World, we only look after number one!"

    I'm not a victim, or I would seek an immediate remedy: the sale of the nearest Icelandic Embassy... I'm sure that will pay of a few hundred depositors' guarantees.... and I don't think Iceland will need many Embassys in the foreseeable future. As an embassy is supposed to be a part of the Land it represents abroad, it would be entirely fitting to make the Icelandic government pay the price for reneging on a guarantee.

    October 9, 2008 at 7:57 pm |
  20. Dutch

    Russel, until VERY recently anyone would tell you putting money in stocks was gambling, putting money in (bank-)savings accounts was stupid but safe.

    You put money in an account that is guaranteed by the State (Iceland in this case). Then the shit hits the fan and the State – inside of 24 hours – changes its tune: all domestic accounts are guaranteed, DOMESTIC being the key word! In plain language “f*ck the World, we only look after number one!”

    I’m not a victim, or I would seek an immediate remedy: the sale of the nearest Icelandic Embassy… I’m sure that will pay of a few hundred depositors’ guarantees…. and I don’t think Iceland will need many Embassys in the foreseeable future. As an embassy is supposed to be a part of the Land it represents abroad, it would be entirely fitting to make the Icelandic government pay the price for reneging on a guarantee.

    October 9, 2008 at 8:56 pm |
  21. Johannes Peterson

    Can't someone take over iceland? warm it up and make it a great holiday destination? free for icesave account holders who wil have a stake in the country.

    October 9, 2008 at 9:51 pm |
  22. icelander

    As I understood it the foreign branches of the icelandic banks and their assets are going to be sold and the money used to pay back the people who have accounts in icesave! As it stands the icelandic government dosnt have the money to pay back everyone. But the banks have assets, and the people who ran it have some too.
    The scary thing is if you think about it is that we the people of iceland and all over the world really just looked at bankers and investors playing around with out money, eating dinners for 1000 of dollars three times a week, driving and racing killer cars and we still said .. they must be alright... lets put our money there!!!

    October 10, 2008 at 1:00 am |
  23. cathy

    i have an ideal, when any public appointed "employee" uses any negative or otherwise degrating lanuage to describe any other public appointed "employee" said "employee" should be fined $1,000,000.00 "U.S."dollars payable to the medicare and social socurity department! at the end of each year the greatest offender should receive an award for the most "UN-AMERICAN person on the planet. maybe if they put their money where there mouth is they might think before they speak!

    October 10, 2008 at 1:29 am |
  24. C. West

    As bad as this is – the system is underdoing a correction created by a "credit crisis fault" which effected everything through the "prime/sub-prime mortgage" instruments which were acquired worldwide – 2008's version of "junk bonds".
    I'd expect to see everything start to stablize when the DOW reaches 6400 – 7400+, and the Nasdaq reaches 1300 – 1400+.

    October 10, 2008 at 6:25 am |
  25. Victor Dumont

    Let all the markets in the world crash its the decision of the people who invested with confidence then and cry now because they made a mistake. They believed in the companies that they invested in.

    Those of us who have stayed o the sidelines and been prudent have now a chance to make our money in long term investments.

    The tables are turning for those who had not, and who now have a chance to have.

    October 10, 2008 at 8:44 am |
  26. Philip

    I would like to draw your attention to a fact that has not been reported in the press – UK citizens have lost millions in deposits as a result of the Kaupthing Singer & Friedlander situation.

    Kaupthing Singer & Friedlander (Isle of Man) Limited is being wound down (http://www.fsc.gov.im/ViewNews.gov?page=lib/news/fsc/kaupthingsingerf2.xml). The UK government has given no indication that it guarantees deposits held by UK citizens in the Isle of Man accounts of http://www.kaupthingsingers.co.im/ or http://www.kaupthingedge.co.im

    British citizens living overseas make up the bulk of depositors. With ISAs and other mainland savings options unavailable to UK citizens working or retired overseas they save their money in places such as Isle of Man and Jersey, which have an important role in Great Britain’s position as a financial center.

    However, UK mainland residents also legitimately bank in the Isle of Man to defer the timing of tax payments.

    I have my life savings with Kaupthing Singer & Friedlander (Isle of Man) Limited and the Depositor’s Compensation Scheme is limited to GBP15,000. New compensation regulations were been approved on 10 October re £50,000 per individual, but it is to be clarified whether these will apply to Kaupthing.

    My comments on the situation are: “Under British law, the United Kingdom retains paramount power to legislate for the Isle of Man, yet Gordon Brown is ignoring thousand of honest hard-working Britains living overseas, and Britains in the UK that legitimately bank in IoM.”

    “UK ministers state that retail depositors in Kaupthing will be paid out in full, but the UK citizens who are account holders in Kaupthing’s Isle of Man branch are being ignored.”

    “It is the UK government’s actions towards Kauphthing’s mainland UK business that contributed to this situation. The government should afford its overseas citizens the same protection as those in the UK.”

    "My Isle of Man The Derbyshire Building Society was taken over by Kaupthing. I didn't chose this bank, but the FSC authorized it as legitimate."

    October 10, 2008 at 2:26 pm |
  27. Philip

    There is hope:

    Chief Minister of Isle of Man, Tony Brown MHK, has today confirmed that a parental guarantee was given in September 2007 by Kaupthing Bank hf, registered in Iceland, to discharge the liabilities, including
    client deposits, of its Isle of Man subsidiary Kaupthing Singer & Friedlander (Isle of Man) Limited.

    “The Isle of Man Government is determined to protect depositors with the local subsidiary by pressing the Government of Iceland, which has nationalised Kaupthing Bank, to honour the commitment given to its Isle of Man based affiliate.

    “Accordingly, we have made representation to the United Kingdom Government – which is responsible for defending the Isle of Man’s interests internationally – requesting them to press the Government of Iceland to honour Kaupthing’s guarantee,” the Chief Minster said.

    October 10, 2008 at 3:14 pm |
  28. Andrés

    I don't have an icesave account, but I am an Icelandic citizen.

    And for my part, I'd like to stress that our government has not reneged on any guarantees.

    I don't want debts of private companies put on my shoulders as a tax payer. Would you?

    The assets of these banks will be used to pay depositors, who have been made a number one priority when it comes to selling off assets as part of bankruptcy procedures. These assets of Landsbanki should cover most of the deposits. If it's not enough, then there is a minimum guarantee, that the government actually is responsible for. If there are still remaining deposits unpaid, that would be solved diplomatically between the UK and Icelandic governments. Our government has said as much.

    I, as a taxpayer, don't intent to take on billions of pounds of debt that belongs to a private company, just because it happens to be from my country. Our government never made any promise to guarantee foreign deposits 100%. That promise was made for domestic deposits.

    Nevertheless, they intend to do their best to make sure everyone gets theirs back, but for foreign deposits, they don't have any legal obligation to guarantee it.

    October 10, 2008 at 5:47 pm |
  29. Johan,Netherlands

    TO all icelandics who still do no understand what the implications
    of your government statement shall mean for you in the future :

    Except for Iceland shall the rest of EU stand side by side
    When the turnaround in economy comes, it comes to EU
    and not for Iceland, because nobody can trust you as a
    reliable partner in the whole wide wold

    After all the money of foreign accountholders does NOT belong to you
    or your government ,while the rest of our banks do the payback

    October 12, 2008 at 7:29 pm |
  30. Andrés

    Johan, with all due respect, you don't know what you're talking about.

    First of all, we're not even part of the EU, so that whole part was just weird.

    Secondly, I didn't take your money, neither did my Government.

    That money was deposited into an account with a private company. Now this company has failed, and it's assets are being sold off to cover it's debts.

    Deposits get first priority in those proceedings. So they should be mostly covered.

    If not, the Icelandic state has a legal obligation to guarantee a minimum amount on each account, I think that amount is around 20.000 pounds, but I'm not entire sure.

    The government will not default on those payments, though the exact mechanics of how they get paid, and how much will be left to pay after assets have been sold have still to be worked out.

    I don't see how you can act like we, as a country, are somehow robbing you. Everything is being done according to the laws that apply, and our government is doing it's best so that nobody gets shafted. The government is standing by every obligation it has.

    If you want to get angry that it's not going beyond the legal requirement, which might put us as a nation into obscene debt for generations, then you probably just had an unrealistic idea of what governments are responsible for in a situation like this.

    October 13, 2008 at 1:13 pm |
  31. Julia

    Dear Adrian, In response to your article on October 8, 2008 in your article "Icesave’s collapse: What do you think?" admittedly rather late, I am writing to ask if you could research and highlight the experience those of us who HAD savings in the Isle of Man branch of Kaupthing banks are now facing. Our savings have been frozen by the UK Government in the shape of Gordon Brown and Alistair Darling. Our money has been taken to pay off savers in this and other Icelandic banks, on the UK mainland. Thus we have been deprived of our money – possibly forever. Needless to say, people are not taking this action lightly and a website http://www.ksfiomdepositors.org/ set up to share stories, help those who now have nothing and in some cases, no hope, action groups, etc. Do you know about this and the effects it has had on the lives of real people – not tax dodgers as Alistair Darling seems to consider us.

    The mission of the KSFIOM Depositors Action Group is to do everything in our power to ensure the 100% return of depositors’ money.

    November 10, 2008 at 6:59 pm |

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