Reuters: Bankruptcy News: Kaupthing UK directors agree to forego top UK jobs

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Kaupthing UK directors agree to forego top UK jobs Jun 26th 2012, 12:14 LONDON, June 26 | Tue Jun 26, 2012 8:14am EDT LONDON, June 26 (Reuters) - Three directors of the British arm of collapsed Icelandic bank Kaupthing have agreed not to hold senior British bank positions and have escaped a fine at the end of a three-and-a-half year regulatory investigation into the high profile banking failure. The Financial Services Authority said on Tuesday it would have imposed a "significant" penalty on Kaupthing Singer & Friedlander (KSFL) for having failed to ensure it could meet its liquidity needs at the height of the 2008 financial crisis -- were KSFL not already in administration. Instead, it said the bank's former chief executive Armann Thorvaldsson, former non-executive chairman Sigurdur Einarsson and former non-executive director Hreidar Mar Sigurdsson would not hold senior roles at authorised British institutions for five years - albeit mainly retrospectively - from Oct. 8, 2008. "The FSA considers KSFL's failings to be serious as they occurred at a critical period for the financial markets and at a time when the FSA was particularly concerned to ensure it was fully informed about all banks' liquidity," it stated. The failure of Wall Street giant Lehman Brothers on Sept. 15 2008 caused a crisis of confidence worldwide. In Iceland, where banks had been expanding fast, the government was forced to bail out third-ranked bank Glitnir just two weeks later -- the first of the three to buckle. KSFL, which provided a range of services including a high interest internet-based savings account called Edge that held over 2.5 billion pounds ($3.9 billion) of deposits at the time, promptly moved its liquidity status to "code red". But the FSA stated that during four critical days between Sept. 29 and Oct. 2, the UK subsidiary failed to consider or properly monitor a special financing arrangement with its parent company in Iceland under which it could draw up to 1.0 billion pounds at short notice if it needed to. The FSA said it did not believe KSFL had deliberately or recklessly breached regulatory rules, that KSFL had cooperated with the probe and had not previously been subject to disciplinary action. Therefore it had decided on a public censure. Other British and international overseas agencies are continuing investigations of parent Kaupthing Bank. ($1 = 0.6427 British pounds) (Reporting by Kirstin Ridley; Editing by Jon Loades-Carter) Link this Share this Digg this Email Reprints

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