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Although many
offshore subsidiaries of mostly British-based banks and
building societies in the Isle of Man, Jersey and Guernsey
offer a parental guarantee for all sums deposited with them,
the Crown Dependencies fall outside the jurisdiction of both
the United Kingdom's Financial Services Authority guarantee
to underwrite the first £50,000 per depositor per bank and
the European Economic Area 'passport scheme' that pays a
minimum of £16,000 per depositor per bank in the case of a
default. In 1991, the Isle of Man introduced a bank
depositors' insurance scheme to cover 75 percent of the
first £15,000 per depositor per bank, but it was the October
2008 crisis-stricken Icelandic government's seizure of
Kaupthing Bank hf in Iceland after the United Kingdom
suspended the trading licence of Kaupthing's British
subsidiary that compelled a radical revision of deposit
insurance in the Isle of Man. Unable to secure reserves held
by Kaupthing hf in Iceland or Kaupthing's British subsidiary
to facilitate customer withdrawals, Kaupthing Singer and
Friedlander (Isle of Man) Ltd. saw its Isle of Man banking
licence suspended after operating less than a year,
compelling the firm to request to be wound up. The Isle of
Man government called an emergency session of the Tynwald
parliament which voted unanimously to bring the Isle of Man
depositors' compensation scheme into line with the newly-enlarged
scheme in the United Kingdom, guaranteeing with immediate
effect 100 percent of the first £50,000 per depositor per
bank, and studying amendments for the subsequent inclusion
within the scheme of corporate and charitable accounts. The
Isle of Man government also pressed the Icelandic government
to honour Kaupthing hf's irrevocable and binding guarantee
of all depositors' funds held by Kaupthing, Singer and
Friedlander (Isle of Man) Ltd. In Jersey and Guernsey,
deposit insurance schemes for non-residents have yet to be
enacted |