All UK savers with accounts in Icesave, the closed Icelandic internet bank, will get all their money back, ensured Chancellor Alistair Darling in an interview to BBC.
The internet bank has about 300,000 customers in the UK. Icesave’s parent bank, Landsbanki was taken over by the Icelandic government on Tuesday and declared insolvent. Read the full update here.
“We guarantee that no depositor will lose any money as a result of the closure of Icesave,” said a Treasury spokesman.
As part of its plan, the UK government has frozen all the British assets of Landsbanki until the position of savers in the UK becomes clear.
Over 22,000 people with savings in the Heritable bank, also owned by Landsbanki, are also being rescued. The accounts, amounting to £538m, are being transferred to the control of the giant Dutch bank ING.
The collapse of Landsbanki, its Icesave subsidiary, and its UK bank Heritable, had left UK savers in limbo.
They first heard of its problem on Tuesday when they saw a statement on the Icesave website saying that it was not allowing customers to move money in or out of their accounts.
Shortly afterwards Landsbanki was taken over by the Icelandic authorities to stop it collapsing as part of the international credit crunch.
Darling said that “The Icelandic government, believe it or not, have told me yesterday they have no intention of honouring their obligations here”.
“Because this is a branch of a foreign bank the first call would be on the Icelandic compensation scheme which, as far as I can see, hasn’t got any money in it.
“The British scheme would top that up to £50,000, but people over and above that would lose out,” he added.
“But I have decided in these exceptional circumstances that we will stand behind those depositors so they get their money back.”
The Icelandic Prime Minister Geir H. Haarde is to clarify this matter in his speech at a press conference postponed to 4pm Icelandic time.
I think Iceland, UK, USA and nearly everybody else have forgotten the first principle of good housekeeping: in the long term you can’t spend more than you have got. Borrow money to invest not just to consume, and then the extra return on the investment will pay the interest. For the last 20 years we in the UK have had a lifestyle based on paying each other to hold doors open. This has been funded by borrowing, asset sales to foreigners and what’s left of North Sea oil. Iceland’s problem is it is too small. The old adage “If you owe the bank a pound it’s your problem, if you owe a billion pounds it is the bank’s problem” surely applies. Iceland’s future surely lies in diversification and valuing the krona realistically
1000 Years ago, Holland was plundered by Vikings. Now, it looks like the Iceland population picks up their old habits. If you don’t give our money back, I will considered your island a robbers nest, a hiding place for liars and thiefs!
So many people quick to take an unfeasibly high interest rate and so sleepy they couldn’t see what was coming (and include the UK FSA, many local councils and TFL in that). Frankly, no matter what the intention of the Icelandic Government, there simply is not the cash to offer. Their financial cupboard is bare and whilst the international implications of default are collossal, I can understand their primary concern is to save the country from bankruptcy – which must be a very possible scenario.
What a shame on how the Icelandic Goverment dealt with this sham, worst than a banana republic!
No accountability on their part whatsoever.
It will be a shame if they ever make it to join the EU.
Funny how they wanted me to constantly change my password for security reasons, I shoulda known it was them I shoulds been worried about. THIEVES!
Next time I’d put my money in Haiti rather than ICELAND.
And by the way its not the ordinary people of Iceland whom I blame I totaly sympathise with their situation
Its the Icelandic goverment
I do hope for the sake of the Icelandic preople that they come out of this
However this should never have happened !!!
Well Bob quote
“I and many others put money into ICESAVE (Landsbankii) because of the high interest rate by choice” ( and a guarantee from icelandic goverment )
well which goverment is guaranteeing your money now !!!!!!!!
which goverment is not and broke thier promise
only for the uk goverment you wouldn’t be getting your money back think about that.
I and many others put money into ICESAVE (Landsbankii) because of the high interest rate by choice.Unlike many whingers I accept responsibilty for my actions I made a choice. We have a statement from UK government that we are all protected so I get my money back. I will be coming to Iceland as a tourist to visit family and I intend to spend to help the economy.
I admire the Icelandic government for acting decisively and rapidly to protect their people’s interests unlike the UK government which tinkers a bit and tinklers some more. I am surprised that more people do not take the hint from your PM’s speech about freinds and new freinds.
I don’t believe a word the Icelandic Prime Minister Geir H. Haarde says. One minute he says all UK Icesave savers will be compensated, next he’s not sure, then he goes quiet & then he won’t honour any claims ! I suppose the next comment will be “the cheque is in the post…” As far as I can tell, there isn’t ‘any’ funds at all to help out. Thank you Iceland – your reputation on the world’s stage has just gone down the hole, much like your banks. No further business from me.
Just a thought- Will Russia want the right to set up a military base on iceland as a pre-condition of any loan.
If I was a Russian negotiator , that would be my condition.
From Holland:
Nice to hear that we lost all our savings and that Iceland has not intention to respect their given guarantees.
Do you have no self respect and honour at all?
Well thank you Iceland for stitching all us savers from the U.K up! I for one am disgusted by your Government attitude to this crisis and will only do harm to the People of Iceland and its future economy. Do you think for one minute that we will forget what has happened? I think not and as for your tourism industry you can wave good by to that as well no one will give you a second look from now onwards.Last one to leave please turn off the lights!!
The disgraceful handling of ICESAVE customers by the Icelandic government is a national embarassment.
Removing access to normal peoples money is nothing more than theft with no communication on what is going on.
Punishing retail customers who have invested a lot of money into your economy is not the way to react to problems (unless of course you are a child).
Honesty, integrity, trust and openness are oblivously words that do not appear in the icelandic language.
As a nation you could do worse than remember we will all get through this but people/countries/companies have long memory and will be unlikely to investin Iceland in the future.
With your countrys ( Goverment ) actions of the last few days in uk ( UK IECSAVE INVESTORS )I belive you havn’t a friend in the world. When you make a guarantee ( Promise ) and do not keep that promise who will ever trust you again. The people of uk Trusted your Country ( Goverment ) with thier investments which in return helped your ecomony and country it will be a long long time if ever that trust will return to iceland and remember how many tourists visit your country each year.It truely is a sad time for icelandic people who I belive are not all to blame for this terrible time Your Goverment has a lot to answer for.
The U.S pull out money for all Nordic countries except Iceland this past few weeks. I guess a redefinition of friendship has to occur.
This is what P.M. Haarde meant when he said that we need new friends; the old friends (E.U, U.S, U.K) didn’t come through. Turns out that since the U.S. government has no need for Iceland after the end of the Cold War, they actually “don’t give a sh*t”
WHY look to Russia for loans??? America’s markets don’t close when their share prices drop, as they do in Russia. A combination of private and government loans from American sources could provide at least 2.3 times the amount offered by the Russians. It is the Russians foothold into the Icelandic gateway to the West for them.
Iceland is a great friend of America and has always treated us as such. We want to help Iceland. It would be a huge pity if the Russians got involved with Icelandic operations.