IoM proposes £10,000 payout for Kaupthing savers

The Isle of Man government has proposed a payout to Kaupthing Singer & Friedlander's (KSF) depositors of £10,000 each.

The Manx High Court has accepted the government’s proposals for a scheme of arrangement which could return around half of the £873 million locked in the collapsed Icelandic-owned bank over the next year.

‘I am pleased to confirm that the Treasury will be going to the February sitting of Tynwald [the IoM parliament] to recommend increased early payment for depositors of up to £10,000 each,’ said Treasury minister Allan Bell.

The IoM government will fund the scheme and it is estimated to repay in full 54% of all depositors within three months. A further payment would repay 65% of depositors in the next year while a third payment within the next two years would repay 71% of the savers.

The remaining 29% of depositors could recover between 65% and 100% of their savings depending on what KSF IoM assets can be recovered. The scheme would be funded with £150 million from the Isle of Man government, the bank's assets and contributions from the island's banking sector.

The Manx government will try to recoup the cost by selling the bank’s assets and free the £566 million locked in sister bank KSF UK.

The Manx High Court adjourned the liquidation of the bank until 19 February while the details of the plan are worked on. The court expressed concerns there were ‘fundamental issues’ to be resolved with the scheme.