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Kaupthing Singer & Friedlander Limited (KSF), a UK subsidiary of Iceland’s largest bank, faced significant challenges during the 2008 financial crisis, which threatened its operations and the confidence of its depositors. As banks globally were failing, KSF was on the brink of collapse, prompting the Financial Authority (FSA) to appoint EY-Parthenon as administrators. The primary objective was to ensure a smooth transfer of KSF’s retail internet-based deposits to ING Bank while managing the bank’s other operations and maximizing returns for creditors, who had claims totaling over £4 billion (US$6 billion). The administration process was complex, requiring EY-Parthenon to migrate 170,000 internet depositors to ING Bank within six months, alongside addressing 3,000 additional depositor balances and managing loan books worth approximately £3 billion (US$4.5 billion). To stabilize operations and maintain depositor confidence, EY-Parthenon implemented a strategy that focused on operational efficiency and effective communication. They quickly addressed immediate IT, legal, and operational challenges, stabilizing the bank’s accounting systems and banking platforms, which were in transition at the time of administration. Collaboration with the Financial Compensation Scheme (FSCS) was crucial in ensuring that depositors were protected and informed throughout the process. Within four months, the internet depositors were successfully transferred to ING Bank, and the remaining deposits were validated and protected, demonstrating the effectiveness of EY-Parthenon’s strategy in maintaining public confidence during a crisis. To create long-term value, EY-Parthenon developed a loan run-off strategy and restructured KSF’s asset finance businesses, which were later sold for a premium three years into the administration. Throughout this period, they maintained regular communication with creditors, ensuring transparency and reassurance regarding the progress of the administration. As a result of these efforts, EY-Parthenon was able to pay back 86.8 pence in the pound to creditors, showcasing the successful management of KSF’s complex insolvency and the long-term benefits derived from their strategic approach. The experience gained from the KSF administration also contributed to shaping regulatory reforms in the UK banking sector, leading to the establishment of more robust frameworks that enhance the resilience of banks against future crises.
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Successfully completed $6B transaction
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