Amidst the general furor over Icesave in the last few weeks and months, there is a related matter that has gone almost unnoticed: that of Kaupthing Edge.
Buoyed by the runaway success of Landsbanki’s Icesave accounts, which collected a whopping 4.4 billion pounds in its first 12 months of operations in the UK [and a further 1 billion euros or so in Holland in its five months of operations there], Kaupthing bank set up a similar online bank called Kaupthing Edge in October 2007. It was initially rolled out in Finland, and by the time mother ship Kaupthing sank in October 2008 it was operating in 11 European countries. In some of those countries Edge operated as a subsidiary of Kaupthing, in others as a branch. And as you will surely know if you’ve been paying attention, there is a vast difference – namely that branches are covered by the Icelandic deposit insurance scheme [and therefore the Icelandic taxpayer if all else fails], whereas subsidiaries operate effectively as other national banks in those countries where they are based, and are covered by the deposit insurance schemes there.
Kaupthing Edge hasn’t got nearly the same amount of press as Icesave, mainly because a] it wasn’t as big b] in many of those countries it operated as a subsidiary and therefore didn’t have the same disastrous effects on the Icelandic state as Icesave, and c] Kaupthing announced fairly soon after its collapse that its assets would be sufficient to compensate depositors.
However, the plight of the Edge depositors, at least in Germany, was in many ways worse than those of Icesave depositors. The German Kaupthing Edge website was closed the day Kaupthing was taken over by the state last October, and from that day onwards those depositors were not able to access their money. Kaupthing Edge was a branch in Germany, not a subsidiary, so those deposits were not covered by the German deposit insurance scheme. This meant those German depositors had to obtain their money from the Kaupthing liquidation committee in Iceland – and that has been a colossal task.
Two weeks ago when I was in Berlin, I met with one of the Kaupthing Edge depositors – a young law student named Jan. He had, in good faith, deposited a sum that was below the amount he was assured would be guaranteed by the deposit insurance scheme. When he decided to put money into Kaupthing Edge he didn’t deliberate over whether or not it was a subsidiary or a branch – to him, for all intents and purposes, it operated like any other German bank. It was registered with the German Chamber of Commerce, it had a German bank reference number [Bankleitzahl], a German-language website, and it conformed to all the known standards employed by other German banks. And in any case, he was assured that if the bank were to fail [which at that time was a possibility located somewhere in the outer stratosphere and not considered seriously] his money was safe if it was below the maximum guaranteed amount.
In contrast to British and Dutch authorities, who in the case of Icesave compensated their citizens immediately for their deposits with the intention of collecting from the Icelandic state later [that much-debated agreement everyone is up in arms about], the German authorities basically told their citizens to stuff it. The message was clear: it was their problem, they’d been stupid enough to put their money into that particular bank [which note bene had an AAA credit rating at the time] and, well, they were on their own.
Those depositors responded by joining forces, setting up an excellent website [which will be closed down in a few days’ time] and even travelling to Iceland at their own expense to meet with the Kaupthing liquidation committee in an effort to get some answers. For almost nine months their money remained frozen and they in limbo – until last week when Kaupthing finally started repaying them.
Happily, Jan and his compatriots were compensated in full last week – at least for their initial deposits [I’m not clear on the situation with the interest payments, but judging by their website it looks as though the interest will not be repaid – and few people seem to have the energy to contest that]. What’s more, Kaupthing is able to pay them their money back without having to saddle us, the citizens of Iceland, with the debt. I can just imagine the relief those people must be feeling – and even though I don’t feel personally responsible for the actions of any Icelandic bank, I am relieved that their matter has been brought to a happy resolution, for them – and for us.
A small bout of sunshine amidst all the gloom and doom that currently permeates this nation – which incidentally, as before, is being completly obliterated by the big, dark Icesave cloud.
IT’S HOT IN EUROPE, AND IT’S HOT HERE
Although I daresay a lot more bearable than what my British friends are reportedly having to contend with. Today we had highs of around 20°C, which was just delightful, particularly as there were no chilly breezes to obliterate those balmy temps. It was very misty, though, which seems to be a byproduct of these new high temps we’re seeing more and more of every summer [we don’t like global warming, but, sad to say, we DO like this]. At the moment we have 14°C [57F], sunrise at 3.03 and sunset at 11.58 pm.
[Incidentally, I’ve focused on German Edge depositors in this post simply because I don’t have much info about the other European countries [except the UK – I have a pretty good picture of what it was like there]. If you can provide input, I’d be grateful, either in the comments or by contacting me directly.]