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Banks are special and can't behave in any old way, yes. Which is why we have bankning regulation. Like Jerome said, if the Brit and Dutch authorities didn't think ICEsave was sound, they should never have let them operate in their respective countries. But they did. The fault is theirs, or if the savers indeed knew that they weren't covered and they felt the risk was worth it, it's their own fault. Jerome put it very succintly in his first comment in the thread.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Aug 18th, 2009 at 08:04:00 AM EST
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This single market thing seems to be difficult to understand. Or, I wonder what the legal possibilities for British and Dutch regulators would have been to forbid Icesave from operating in their territories or to force it to establish a local subsidiary. I suspect, none.
by nanne (zwaerdenmaecker@gmail.com) on Tue Aug 18th, 2009 at 08:39:47 AM EST
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Is it against EU rules to demand that banks operating in the country takes part in the deposit insurance system used in the country? Parex bank (since nationalised) had a presence in Sweden and its local deposits were specifically guaranteed by the Swedish FSA, and I find it hard to believe they got that service for free.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Aug 18th, 2009 at 08:46:09 AM EST
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There is a difference between foreign subsidiaries and branches in foreign countries.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Tue Aug 18th, 2009 at 08:51:20 AM EST
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Is there any reason why this should be the case? It seems the rules are made to create loop-holes: don't like the local regulations? Just create a branch instead of a subsidiary and use the lax rules of London (or Cyprus, or...).

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Aug 18th, 2009 at 09:10:24 AM EST
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Indeed. This is why we need better financial regulation at the European level.
by nanne (zwaerdenmaecker@gmail.com) on Tue Aug 18th, 2009 at 09:28:04 AM EST
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Isn't this sufficient?

Icesave dispute - Wikipedia, the free encyclopedia

The Directive imposes a minimum guarantee of €20,000 per depositor: moves to increase this minimum to €50,000 or even higher had been agreed politically before the Icelandic crisis, but had not been incorporated into EU law, much less into EEA law. The Tryggingarsjóður guarantees 1.7 million krónur on the basis of a fixed euro-króna exchange rate, equivalent to €20,887.[61] The Netherlands and the UK have higher guarantee levels, €100,000 and £50,000 (approx. €60,000) respectively: Landsbanki was a member of the Dutch and British compensation schemes for the purposes of guaranteeing this difference in cover, an arrangement known in Britain as the "passport system",[64] and commonly used by banks throughout the EEA. In addition, the UK Treasury has exceptionally guaranteed retail deposits in excess of £50,000 which were held in Icelandic-owned banks in the UK at the time of the crisis, at a cost of some £1.4 billion (€1.7bn).
Icesave depositors would have been covered up to €20,000 by the Icelandic deposit insurance, and had become a member of the Dutch and British compensation schemes for the remaining covered amounts. So, for Dutch deposits, the Dutch compensation scheme would have been liable for an additional €80,000 and the British compensation scheme for €40,000.

What am I missing?

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma

by Migeru (migeru at eurotrib dot com) on Tue Aug 18th, 2009 at 09:33:57 AM EST
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As I stated upthread, I think the regulation with regard to deposit insurance is arranged well enough (especially if the amount is raised to € 50,000). The issue is general regulation of banks.
by nanne (zwaerdenmaecker@gmail.com) on Tue Aug 18th, 2009 at 09:45:36 AM EST
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But the raise to €50,000 took place after the collapse of the Icelandic banks. What we're discussing is who is liable for how much in the Icesave case.

En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
by Migeru (migeru at eurotrib dot com) on Tue Aug 18th, 2009 at 09:54:28 AM EST
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Yes, I don't disagree with you, I was talking more generally.

In the Icesave case the government of Iceland is liable for the € 20,887 for private deposits that it has settled for with the British and Dutch.

It could legally have been liable for more (the equal amount that it guaranteed for its own citizens and organisations), but since there is a settlement, that is no longer relevant.

by nanne (zwaerdenmaecker@gmail.com) on Tue Aug 18th, 2009 at 10:44:45 AM EST
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