Depositors to vote on bank scheme

Protesters gathered outside the courthouse on Thursday morning

Depositors in the collapsed Kaupthing, Singer and Friedlander Isle of Man (KSFIOM) bank will decide its future, the High Court has ruled.

Deputy Deemster Andrew Corlett said the treasury's scheme of arrangement would be put to a vote of KSFIOM creditors.

The government estimates its scheme would fully refund 71% of depositors within two years.

But some depositors protested outside the courthouse on Thursday, claiming KSFIOM should go into liquidation.

During the hearing, the treasury presented its finalised scheme of arrangement to give guaranteed, scheduled payments to depositors who lost money.

Officials believe the scheme would offer a better outcome for the 10,000 depositors, delivering "speedier and potentially higher returns".

Liquidation hearing

It estimates 54% of depositors would get back all of their funds within three months, while 76% would be fully refunded within two years.

However, payouts for the 24% with high balances would be less certain, with the level of returned money depending on the level of bank assets recovered.

The court has previously heard that tens of millions of pounds was held in the UK and frozen by the UK government during the crisis that engulfed its Icelandic parent bank, Kaupthing.

It is not yet known how much of this money, if any, will be returned to the provisional liquidator.

Depositor action groups say that KSFIOM should be placed into liquidation, which would trigger payouts from the Isle of Man depositor protection scheme.

Savers would be eligible to receive up to £50,000 of what they have lost, plus any other money the liquidator is able to recover.

The government scheme will be put to a vote of creditors on 19 May and the petition to wind-up the bank has been adjourned until 27 May.