The Treasury Committee of the UK Parliament released its first report in a series on the banking crisis on Saturday, analyzing the collapse of the Icelandic banks in October 2008. It criticizes the demeanor of Chancellor of the Exchequer Alistair Darling.
The headquarters of Icelandic bank Landsbanki in Reykjavík. Landsbanki’s assets in the UK remain frozen, although Iceland’s Minister of Finance Steingrímur J. Sigfússon is hopeful that the report will help unfreeze them. Copyright: Icelandic Photo Agency.
The report came to the following conclusion:
“During the collapse of the Landsbanki bank in October 2008, the Chancellor of the Exchequer took steps to safeguard the deposits of UK investors. The Report notes that his comments regarding the intentions of the Icelandic Authorities had a serious impact on the confidence held in the remaining solvent Icelandic bank. However, the Committee saw no evidence that Kaupthing would have survived if the Chancellor had not expressed his views.
The use of the Anti-Terrorism, Crime and Security Act 2001 however, clearly had considerable implications for the Icelandic authorities in their efforts to maintain a functioning financial system. The use of this Act inevitably stigmatises those subject to it and a less blunt instrument would be more appropriate. The Report expresses concern that no appropriate legislation is available and calls on the Treasury to address this matter.”
Iceland’s Minister of Finance Steingrímur J. Sigfússon told Morgunbladid that the report might help Iceland’s efforts to have the now state-run bank Landsbanki removed from the HM Treasury’s list of regimes subjected to financial sanction by the British government, which also includes Al-Qaida, the Taliban and North Korea.
Sigfússon believes that the report might support Landsbanki’s cause in its lawsuit against British authorities and possibly also Iceland’s cause in the ongoing discussions on compensation to Icesave account holders, Landsbanki’s online savings unit in the UK and the Netherlands.
“I’m especially hopeful that [the report] will make it easier for us to unfreeze [the assets of Landsbanki in the UK]. It will be difficult for British authorities to maintain it when they are subject to such harsh criticism from its own parliament,” Sigfússon reasoned.
Árni M. Mathiesen, who was minister of finance when the banks collapsed, celebrates the report. According to the British Chancellery, a conversation between Mathiesen and Darling on October 7 is what provoked the latter to invoke the anti-terrorism legislation.
Mathiesen concluded that the report is a heavy judgment on Darling’s work and that if he, as finance minister, had received a similar review from the treasury committee of the Icelandic parliament, he would have taken it under serious consideration. The report is a severe blow to Darling’s political career, Mathiesen argued.
Click here to read more about the Icesave dispute.