Iceland draws line under Icesave scandal

GMT 19:52 2015 Friday ,18 September

Arab Today, arab today Iceland draws line under Icesave scandal

Officials count votes in a referendum
Reykjavik - AFP

Icelandic authorities on Friday said they had reached a final amicable agreement with Britain and the Netherlands over the Icesave banking scandal, allowing for a reduced repayment of lost deposits.

Hundreds of thousands of British and Dutch savers lured by high interest rates lost deposits worth billions of dollars after the privately-owned Landsbanki bank, parent company of Icesave, and other financial institutions went bust when Iceland's financial system collapsed in 2008.

The Icelandic state refused to underwrite the losses as London and the Hague called for at least repayment of minimum deposit guarantees of around 20,000 euros ($24,000) for each account holder, or some four billion euros for the two countries combined.

A long-drawn out dispute saw the matter referred to the International Monetary Fund and two referendums held in Iceland on the issue.

Then Iceland won a European Free Trade Association court case -- having first criticised Britain for moving to have assets of Lansbanki frozen as the financial crisis took hold amid a run on saver deposits.

Reykjavik was particularly galled by the British government invoking anti-terrorism legislation as a means of trying to recoup deposits, souring relations between the countries.

Iceland, population just 320,000, eventually had to seek an IMF bailout to extricate itself from its financial hole.

After a further legal attempt last year to resolve the standoff by Britain and the Netherlands, on Friday Iceland's Depositors and Investors Guarantee Fund (TIF) said agreement had finally been reached to close the affair.

"TIF is delighted to have managed to reach a final settlement of the Icesave claims at costs which is manageable for TIF and fair to all parties concerned," the body said.

Having initially sought repayment of a combined 1.100 billion kronor (7.7 billion euros/$8.8 bilion) the TIF said agreement had been struck for less than two percent of that sum at 20 billion kronor (140 million euros/$160 million).

The body added Iceland had to date reimbursed 85 percent of sums due to creditors in light of the Landsbanki collapse.

Having endured the worst financial crisis in its history, Iceland finally returned to growth in 2011 boosted by tourism and exports.


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