Iceland bank failure may cost UK Treasury $1.3 bn

Posted 06/11/2008 - 16:13 by steveejeb

2008-11-06 (All day)

The British government has set aside 800 million pounds ($1.3 billion) for British savers who lost their money when Icelandic-owned Internet bank Icesave collapsed last month, the Treasury announced Thursday.
The approximately 230,000 British depositors whose money vanished when Icesave's parent bank, Landsbanki, went into receivership in October will receive compensation to replace all of their lost savings, Treasury chief Alistair Darling said in a statement.
He also reiterated a pledge he made last month that "no depositor in Icesave" would lose any money as a result of the bank's collapse.
Normally, the government only guarantees up to 50,000 pounds ($80,000) of savings, but it has made an exception in this case to reimburse British savers for the full amount of their losses.
The government is expected to begin paying compensation to savers next week, and it hopes to pay the majority of claims this month.
The Treasury is in discussions with Iceland to recover some of the money, claiming that the first 20,887 euros ($26,791) of each British saver's deposits should be covered by the Icelandic government.

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Kaupthing's staff, mainly management, had personal debts to the bank worth 292 million dollars

Posted 05/11/2008 - 22:43 by steveejeb

2008-11-05 (All day)

Iceland's biggest bank, Kaupthing, gave its staff loans to buy shares in the bank but took over their personal liability just days before the bank was nationalised in October, the new management said Wednesday 5/11/08. Kaupthing's staff, mainly management, had personal debts to the bank worth 36.8 billion kronur (292 million dollars, 224 million euros).
The new management of the bank, which has since the nationalisation been renamed New Kaupthing, said in a statement late Tuesday the loans had not been cancelled, but staff members' personal liability "was completely abandoned in September 2008."
Kaupthing said that at the time the decision was taken in September, the value of the shares was higher than the debts on the shares.

But because the share price was falling and the cost of financing was rising, the bank's board saw two options: staff could either sell their shares to pay back their loans, or the bank could relieve them of their personal liability.
The board decided on the second option, judging that, in light of the delicate situation on the financial markets, it might have damaged the bank if key staff began selling their shares in large numbers.

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PM says paying back British savers would cripple Iceland

Posted 30/10/2008 - 12:53 by steveejeb

2008-10-29 (All day)

Icelandic Prime Minister Geir Haarde said in an interview published Thursday that his country cannot afford to fully compensate British savers who lost money in its stricken banks, as it would be crippled. Haarde said: "We clearly have some obligations in the matter, but the question is to what extent."

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Iceland seeks aid from ECB, Fed in addition to IMF, Nordic countries and Russia

Posted 28/10/2008 - 18:00 by steveejeb

2008-10-28 (All day)

"Iceland's central bank sent a request to the ECB, the Fed and the Nordic banks on Friday," Icelandic Prime Minister Geir Haarde told reporters in Helsinki where Nordic leaders were meeting.
The country has so far approached its four Nordic neighbours Denmark, Finland, Norway and Sweden, the ECB and the Federal Reserve, and is negotiating a loan from Russia in addition to the IMF aid.

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British dispute delays Iceland deal with IMF

Posted 23/10/2008 - 19:09 by steveejeb

2008-10-23 (All day)

REYKJAVIK (AFP) – Iceland's decision to seek a rescue loan from the International Monetary Fund has been delayed by failure to reach a deal with London over British savings frozen in an Icelandic bank, media reports said Thursday.
The IMF wants Iceland to resolve the dispute with Britain first in order to determine what Reykjavik's needs are, but talks with a British delegation currently in Iceland have advanced slowly.
"We have not accepted their legal arguments," Icelandic Prime Minister Geir Haarde told daily Frettabladid on Thursday.

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