Icesave

Posted on 7 October 2008 in Money (No comments yet - be the first!)

I had hoped that my exposure to the whole credit crunch/banking crisis would be limited at watching my HBOS shares slide and slide before being effectively forced into agreeing to a takeover by Lloyds TSB. Shares I'd got for free - bar the fact that I'd decided things couldn't really get any worse, so why not take up the rights issue and grab a few more, cos in the long term...

Not that anyone seems to care about the long term any more.

But alas that wasn't to be, and today I've been left in the curious situation where almost all my savings are held in an Icelandic bank who's UK subsidiary has had its doors locked and no one is available in.

Yes. My savings are with Icesave - a subsidiary of Landsbanki, Iceland's second largest bank who went into receivership today.

Oh joy.

Thankfully I'm in the fortunate position of not needing the money right away, so the fact I can't get at my cash isn't a huge worry to me. I'm also way below the £50,000 limit for which all your savings are protected under law.

True, Icesave operated under what is known as the passport scheme, which means the first £16,000 or so, has to come from the Icelandic compensation scheme, and whilst many people have been frantically worrying about Iceland not having enough cash to cope, I have taken some comfort from the fact there are apparently agreements between the Scandinavian countries that cover such matters. I'm dammed if I'm panicking about all this. Because lets face it - a substantial number of the problems in the credit crisis have been caused by people - either businesses or people - panicking.

What does concern me (note - concern, not worry) is that there's simply no information at all coming from anyone about this situation. Landsbanki is apparently running as normal in Iceland, as you'd expect. But the walls have come up at Icesave. Their website gives just a terse message saying:

We are not currently processing any deposits or any withdrawal requests through our Icesave internet accounts. We apologise for any inconvenience this may cause our customers. We hope to provide you with more information shortly.

And it's been like that all day. The only message BBC News apparently got out of them is the frankly unbelievable message that ...the website was not operating 'due to technical difficulties'.

I'd always rated Icesave as pretty good on their customer service in my dealings with them, so clearly there's something going on there and it's not technical difficulties.

The obvious answer is that the door has been shut to prevent a run on the bank, thus creating the financial situation worse, whilst people try and work out what the hell to do. Not a nice message, but at least its a message.

But saying nothing doesn't help anyone. It breads more fear, more worry, more panic. And if/when Icesave does finally let people have access to their money, at this rate, it's going to be at hysteria levels.

Kaupthing Edge homepage, 7 October 2008

Whilst all this has been going on, Landsbanki's rival, Kaupthing Edge has been making a few changes to its web homepage, with re-assuring messages and some discrete distancing from Iceland via the addition of a Union Flag to make its intentions clear. Kaupthing's UK operation (it's second largest outside Iceland) has something of a history, with roots being in City of London institution, Singer & Friedlander founded in 1907.

Although in this climate, heritage doesn't mean that much any more...

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