Guernsey regulator starts Iceland probe

The Guernsey Financial Services Commission has launched an inquiry into its handling of the Icelandic banking crisis. 

Guernsey’s financial watchdog has appointed US consulting firm Promontory Financial Group to look into its handling of the collapse of Landsbanki Guernsey, which has left 2,000 savers out of pocket. The review will run from early November until mid-December and will also examine how the commission handled Northern Rock Guernsey, the nationalised bank’s offshore branch. 

Offshore savers who deposited £117 million with Landsbanki Guernsey cannot claim compensation because the island does not have a depositors’ protection scheme. The Icelandic bank’s administrator has offered savers just 30p in the pound for their deposits but hopes to recover more by selling its assets. The island's government now has plans for a compensation scheme but it will not be open to Landsbanki Guernsey savers.  

The commission put Landsbanki Guernsey into administration after the UK government froze its parent’s UK operations leading to the Icelandic government nationalising, Landsbanki. Savers have questioned the appointment of Promontory and called for their own consultants to conduct the inquiry.