Iceland Has Millions of Pounds in Bank of England Skip to content

Iceland Has Millions of Pounds in Bank of England

Up to GBP 300 million (USD 618 million, EUR 419 million) are kept in a special account at the Bank of England in the name of Landsbanki, which is now in the ownership of the Icelandic state. The account is interest-free and will remain untouched until the Icesave dispute is solved.

The headquarters of Landsbanki in Reykjavík. Copyright: Icelandic Photo Agency.

“I was informed as part of discussions on the Icesave deposits that the Bank of England is receiving all loan payments that belonged to the old Landsbanki and that the money is being kept there without accruing interest,” Iceland’s Minister of Finance Steingrímur J. Sigfússon told Fréttabladid.

Icesave was Landsbanki’s online savings unit in the UK and the Netherlands. When Landsbanki was nationalized its assets in the UK were frozen by local authorities.

Páll Benediktsson, the information officer of the resolution committee of the old Landsbanki, said that although the money is frozen it remains in Landsbanki’s ownership and will be used to honor the bank’s obligations in the UK, although, according to Sigfússon, the amount is insignificant compared to how extensive those obligations are.

Sigfússon said Landsbanki’s account at the Bank of England must be one of the things brought up by Iceland’s negotiation committee on Icesave in the coming weeks and months.

“If I understand it correctly, the account remains the way it is while the bank’s assets are frozen. That has to be discussed, the freezing itself and the treatment of the funds in question,” Sigfússon said.

A large part of Landsbanki’s frozen assets in the UK are loans that the bank granted and the repayment of these loans keep being deposited to the bank’s account at the Bank of England.

According to Fréttabladid’s sources, although the exact amount in Landsbanki’s Bank of England account has not been confirmed, it could yield at least ISK 500 million (USD 8.1 million, EUR 5.5 million) per year in returns if it weren’t interest-free.

Click here to read more about the Icesave dispute.

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