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Treasury team make 'significant progress' in Iceland

11/10/2008

A British Treasury delegation has held "friendly" talks in Iceland over the country's banking collapse.

The UK delegation landed in Iceland on Friday with the aim of retrieving the £20 billion of assets held by UK savers, councils, charities and businesses.

And in a joint statement, the British officials and the Icelandic authorities have confirmed "significant progress" has been made on recouping private savers' money.

Arrangements have been made "in principle" for a payout to Icesave depositors and the remaining matters at stake will be discussed over the coming day, the statement added.

The delegation arrived as relations between the two nations are strained.

UK efforts to reclaim cash lost as the Icelandic banking system collapsed – including the use of anti-terror legislation to confiscate assets – have raised the ire of Icelandic officials.

The collapse of Landsbanki earlier this week saw 300,000 UK savers unable to access their cash in the bank's UK Icesave branch – while over 100 local authorities and some charities face losing up to £1 billion invested in the nation.

Alistair Darling has pledged to cover all retail depositors at Icesave, but the fate of local authorities and charities remains uncertain.

UK savers at Kaupthing and Heritable Bank should be protected as there savings have been transferred to ING Direct.

A small number of Kaupthing Edge and Heritable Bank customers not switching to ING Direct will receive all their cash back under the Financial Services Compensation Scheme (FSCS).

UK assets of Landsbanki have now been frozen by the UK government, with the Treasury doing so due to "concerns about the detrimental effect on the UK economy".

Saturday's discussions took place "in a friendly atmosphere in Reykjavik to discuss issues of mutual interest", according to the statement.