October 9, 2008
‘We’Ll Protect Iceland Savings’
By Nicky Burridge
THE Government has taken steps to protect the nearly 500,000 UK consumers who have money saved with Icelandic banks.
Chancellor Alistair Darling announced that no UK saver would lose money as a result of the closure of internet bank Icesave if, as expected, its parent company Landsbanki is declared in default.
The Treasury has also arranged for more than Pounds 3bn of UK savers' money that is held with Icelandic banks to be transferred to ING Direct UK, a subsidiary of Dutch savings bank ING Direct.
ING is to acquire Pounds 2.5bn of deposits and 160,000 customers from Kaupthing Edge, which is thought to represent all of the UK operations of Iceland's biggest bank Kaupthing.
It is also acquiring Pounds 538m of savings held by 22,200 people with Heritable Bank, which is also part of Landsbanki and was placed into administration with Ernst & Young this week.
The Heritable Bank transfer is being backed by money from the Treasury and Financial Services Compensation Scheme (FSCS).
The Chancellor has also frozen the assets that Landsbanki holds in the UK until the future of the bank and the position of UK creditors becomes clearer.
The move will be a relief for savers in both groups following the current turmoil in the Icelandic banking sector.
Around 300,000 UK customers of Icesave found themselves unable to access money in their accounts and the Icelandic government said it would default on its obligations to UK savers.
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