View more on these topics

Iceland strikes deal with UK and Netherlands over banking dispute

Iceland has struck a deal with the UK and the Netherlands aimed at solving the Icesave banking dispute.

The Icelandic government has agreed to pay back a total of £3.4bn which was spent by the UK and Dutch governments to cover their respective citizens who lost money in the Icesave collapse.

The repayments will take place over a 30-year span between 2016 and 2046. The terms of the deal are yet to be approved by Iceland’s parliament and president.

Representatives of all three nations had been in London this week to thrash out the deal, with negotiation between all parties wrangling on for the past two years, since Icesave’s parent company, Landsbanki, collapsed in 2008.

Iceland will pay a 3 per cent interest rate on its outstanding debt to the Dutch, and 3.3 per cent to the UK. The original deal was for a 5.5 per cent interest rate, however this was voted against by Icelandic voters in a referendum.

The difference in interest rates reflects the difference in amounts the two countries had to pay. The UK is thought to have put over £2bn into the Financial Services Compensation Scheme to cover Icesave account holders.

Speaking prior to the agreement, Chancellor George Osborne said that the UK’s decision to no longer oppose Iceland’s wish to join the European Union would have a big influence on the deal.

He said: “I think this has led to a much more constructive relationship between the Icelandic government and the British Government, which was pretty glacial, frankly.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com