Iceland, the Netherlands and UK Reach Agreement Skip to content

Iceland, the Netherlands and UK Reach Agreement

According to agreements between Icelandic, Dutch and British authorities, Iceland will take responsibility for repayment of EUR 4 billion (USD 5 billion) to owners of Landsbanki Bank’s Icesave online deposits accounts.

According to Morgunbladid’s sources, the British state will grant a loan to the Icelandic state of up to EUR 3 billion (USD 4 billion) so that Iceland can honor its obligations to Icesave account holders in the UK. An agreement between the two nations is expected to be signed in the next few days.

Iceland’s Minister of Finance Árni M. Mathiesen signed a similar agreement with Dutch authorities on Saturday, according to which the Dutch state will grant a loan of up to EUR 1.1 billion (USD 1.5 billion) to Iceland so that Dutch Icesave account holders can be repaid.

The maximum amount which the Icelandic state can be held responsible for because of the Icesave deposits is EUR 20,887 (USD 28,341) for each savings account. That amount drops in consistency with how much is acquired for the sale of Landsbanki’s assets.

Iceland’s Minister of Commerce Björgvin G. Sigurdsson said this solution is unavoidable. It is a matter of obligation of national rights which Iceland was required to agree on.

Sigurdsson is hopeful that the sale of Landsbanki’s assets will cover almost the entire amount. “Our economists believe that the bank’s assets will mostly cover it,” he said, adding, “The deposits are preferential claims.”

Both British and Dutch authorities have been dissatisfied with how Icelandic authorities have reacted to the Icesave affair, even threatening to sue the Icelandic state.

Last week British authorities seized the assets of Kaupthing Singer & Friedlander, a UK subsidiary of Iceland’s Kaupthing Bank, following the Icesave row. Iceland’s Prime Minister Geir H. Haarde told Morgunbladid that these actions had “brought [Kaupthing] to its knees” and does not rule out that Iceland will sue British authorities because of it.

According to Morgunbladid, the assets of Icelandic banks in the UK, worth GBP 4 billion (USD 7 billion, EUR 5 billion), which were seized by invoking anti-terrorism legislation as insurance for the Icesave deposits last week, remain frozen.

Click here to read more about the Icesave debate.

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