Icelandic Taxpayers to Repay Icesave despite Assets? Skip to content

Icelandic Taxpayers to Repay Icesave despite Assets?

Icelandic taxpayers may be responsible for repaying up to ISK 100 billion (USD 870 million, EUR 680 million) of the deposits in Landsbanki Bank’s Icesave, even if the bank’s assets in the UK and the Netherlands will cover the deposit insurance.

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

According to Fréttabladid, the cost comes from interest rates of a more than ISK 600 billion (USD 5.5 billion, EUR 4.1 billion) loan granted to the Icelandic state so that the deposit insurance can be repaid. It is not expected that the assets of Landsbanki will be sold until after three years.

Fréttabladid reports that Icelandic authorities seem to have expected that the Icelandic state would be held responsible for the Icesave deposits straight from the beginning of the bank collapse.

On October 11, a few days after the emergency law took effect, the government announced an agreement with Dutch authorities in regards to Icesave, and in a letter to the International Monetary Fund (IMF) sent on November 3, the Icelandic state seems to expect to take responsibility for Icesave.

In light of the IMF postponing its decision on a loan to Iceland, Prime Minister Geir H. Haarde stated Iceland would not accept being forced to agree to such commitments. However, as it turned out, Iceland had no choice but to reach an agreement with British and Dutch authorities on Icesave.

Click here to read more about Icesave.

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