Funds in flight - payment
requests made by customers prior to the date of my
appointment
At the date of my appointment as Liquidator Provisionally of
Kaupthing Singer & Friedlander (Isle of Man) Limited ("the
Bank") on 9 October 2008, there were a large number of payment
transactions which had been requested by customers but which had
not reached their payment destination. Over the last couple of
weeks we have sought to clarify the precise position in respect of
these transactions. This has involved an extensive reconciliation
exercise and liaison with other Banks and with the Administrators
of Kaupthing Singer & Friedlander Ltd (in administration)
("Kaupthing UK").
This identified the following different scenarios:-
a) In respect of certain of the
transactions, no instructions had been issued to any of the Bank's
clearing facilities to effect an actual payment of the amount
concerned.
b) In respect of some transactions,
whilst instructions had been issued to the clearing facilities
these had not been processed due to lack of funds in the Bank's
accounts with these facilities. This was in turn due to funds not
being remitted from the Bank's accounts with Kaupthing UK which
entered into Administration on 8th October 2008.
c) In respect of the majority of
sterling transactions, the Bank used its own account with its
sister company, Kaupthing UK to process payment requests from its
customers. We understand that although the Bank included a number
of transactions in batches of entries sent to Kaupthing UK for
processing by them out of the Bank's account with them, these had
in turn:-
i) either not been processed by
Kaupthing UK through its own clearing facilities with RBS at the
time that company entered into administration,
ii) or had been processed but not
cleared before the administration appointment had the impact of
freezing the Bank's account with Kaupthing UK
d) In respect of a handful of
transactions an error had been made in the information provided to
the clearing bank concerned and the transaction had been "bounced"
back to the Bank's account.
We have sought legal advice in respect of how all such
transactions should be treated, including obtaining an opinion from
leading Counsel in the UK. This advice has confirmed that following
the presentation of a petition to wind up the Bank and the
suspension of the Bank's banking licence on 8 October, I (or any
Liquidator if one is appointed in due course) am unfortunately not
in a position to now effect the transfers requested by customers
prior to the date of petition.
There have been suggestions that some kind of trust claim or
proprietary interest arises in favour of a customer in
circumstances where (i) instructions were given by the customer,
prior to the appointment of the Liquidator Provisionally, for a
funds transfer to an account of the customer at another bank, and
(ii) the inter-bank transactions required to effect such
instructions were not completed (by the appropriate credit being
made to the customer's account at the recipient bank) prior to my
appointment. Whilst customers may wish to seek their own advice
upon these points, I have sought legal advice in this regard and am
advised that such suggestions are incorrect and that instructions
for a funds transfer give rise to no trust claim or propriety
interest.
I shall accordingly be making arrangements for letters to be
sent to the customers concerned and for their accounts with the
Bank to be re-credited, as at the date of the initial debit entry,
with the relevant amount, including any accompanying transaction
charges. Following the hearing of the petition for the formal
winding up of the Bank, on 27 November 2008, if a Liquidator is
appointed, customers will be contacted with regard to the process
for claiming monies owed to them.
Contacts
As previously, the best way to make contact is to write to the
bank or to email branch@singers.co.im. If you need to
telephone the bank, please use the main switchboard number +44 1624
699222 but we would advise that we are continuing to experience a
high level of calls and as a result there may be delays in
answering the phones.
Mike Simpson
Liquidator Provisionally