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Icesave faces online run as Icelandic owner is nationalised

07/10/2008

Icesave is stopping savers withdrawing cash as the firm is nationalised.

The Icelandic bank – owned by Landsbanki – which has topped best buy tables in recent months now faces customers desperate to get their cash out of the bank.

A statement on the website reads: "We are not currently processing any deposits or any withdrawal requests through our Icesave internet accounts.

"We apologise for any inconvenience this may cause our customers. We hope to provide you with more information shortly."

Over the weekend, the website also faced problems due to the large number of customers visiting, but this outage coincides with a rescue deal for the parent Landsbanki in Iceland.

Iceland's second biggest bank has now been taken over by regulators. The Icelandic Landsbanki website is also down.

A statement from the Icelandic Financial Services Authority (IFSA) said: "Based on new legislation, the IFSA proceeds to take control of Landsbanki to ensure continued commercial bank operations in Iceland.

"Domestic deposits are fully guaranteed, as declared by the government. Landsbanki's domestic branches, call centres, cash machines and internet operations will be open for business as usual. The objective of the IFSA's action is to guarantee a functioning domestic banking system."

Landsbanki has been taken into a receivership and its board of directors has been replaced.

"Landsbanki would like to stress that the bank has not been put into
liquidation but is in receivership which gives it a temporary
protection from payment of debts and obligations as they fall due," the bank said in a statement.

UK savers are being told the firm is not going bust and their savings are safe.

A spokesperson for Icesave said: "It is fair to say people's savings are safe."

The first €20,877 (£16,262) of saving are protected under Iceland's saver guarantees, then under the UK Financial Services Compensation Scheme (FSCS) up to £50,00 of savings and £100,000 for joint accounts are covered in the event of a bank going bust.

Fellow Icelandic bank Kaupthing – which runs the Kaupthing Edge brand in the UK – has maintained its situation is strong.

"Kaupthing has not been approached by the IFSA regarding any intervention in Kaupthing's operations," a spokesman for the bank said.

"Furthermore, the Central Bank of Iceland has provided Kaupthing with a €500 million loan to facilitate operations, and Kaupthing is committed to working with the government to ensure regular workings of the Icelandic financial system."