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Govt protects savers in UK arm of Icelandic Kaupthing

The Government has pledged to protect the retail deposits of savers in the UK subsidiary of Icelandic bank Kaupthing.

The FSA says the UK subsidiary, Kaupthing Singer & Friedlander, no longer meets threshold requirements and is unlikely to be able to meet its obligations to depositors. It is also in default with the Financial Services Compensation Scheme.

The Treasury has used the Banking Special Provisions Act 2008 to ensure a resolution that preserves financial stability and provides protection and continuity of business for depositors.

KSF’s Kaupthing Edge deposit business has been transferred to ING Direct, a wholly-owned subsidiary of ING Group, which operates through its branch in the UK.

The action by the Tripartite Authorities protects savers’ money and the transfer deposits has been backed by cash from HM Treasury and the Financial Services Compensation Scheme.

The remainder of Kaupthing Singer & Friedlander business has been
put into administration.

Any retail depositors eligible to claim under the FSCS whose business has
not been transferred to ING Direct will be paid out in full, with any sums above and beyond the FSCS £50,000 limit covered by the Government.

The FSCS has financed its payout through a loan from the Bank of England.

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