Someone requires sacking for this.

Transport for London (TfL) never, ever miss imposing an annual fare hike far above the rate of inflation. Yet they happily left £40m in a bank during a credit crisis. Not any bank. Kaupthing, an Icelandic bank. Have there really been no warning signs over the last 5 years sufficient to suggest to TfL's treasury department that maybe - just maybe - a better home might have been found for taxpayers money? Look forward, Londoners, to a special season ticket price gouge next year.

Pre-Kaupthing the bank was Singer & Friedlander and founded 101 years ago. From the moment Kaupthing began stake building in 2003 (up to 19% by 2005) one client became nervous. And when Kaupthing swallowed the lot in 2005, thus removing one of the last independent UK merchant banks, that client had had enough and began packing his bags. Shareholders got a good deal but it was clearly time for nervous clients to be considering Funds Out.

Perhaps, as someone the Financial Services Authority refer to as an "informed investor" (thereby indicating you won't get deposit insurance), this was expected of me. But if Gordon "F Word" Ramsay also has time to look up from preparing his seared tuna with vegetable couscous to safeguard (allegedly) his cash via a transfer to the Royal Bank of Scotland I do believe the case for dereliction of duty can be made against someone, somewhere at TfL.

Sadly, the credit crisis will provide cover enough for a great amount of such incompetence. Nonetheless, this fact is clear: any enterprise - and especially a bank - that manages to double in size every year between 1996 and 2005 needs special scrutiny.

Even an effing cook knows that.


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2 comments

  1. Living in Barbados // 10/10/2008 03:56:00 PM

    Will you be looking at Kaupthing's relations with Bajan real estate investors?

  2. RJH Adams // 10/10/2008 04:30:00 PM

    Dennis,

    afraid you're telling me something I don't know other - than the blurb on the KS&F site covering the Sandy Cove development in St James. Can't imagine it will be that easy to get another banker in on an incomplete project in today's conditions.

    Separately, I can say that CIBC and RBC both, contrary it seems to local press coverage of the banking sector, have significant exposure to subprime or near subprime in the US ($2.8bn and nearly $4bn respectively). They'll both be likely to make further writedowns against these in coming quarters.

    Reduced shareholder equity means reduced rappeitie for risk. Doubt it will be they who step into the Paynes Bay breach.

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