Financial crisis: Alistair Darling suspected Icelandic banks were in trouble weeks before collapse

Posted 26/10/2008 - 19:44 by VikingRaider

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2008-10-25 23

The Treasury has said it acted "swiftly and decisively" in guaranteeing the assets of private UK savers in Iceland following the banks' failure.

But a transcript of a private telephone conversation on October 7 between Mr Darling and an Icelandic minister details his concerns about the country's banks weeks before they collapsed.

In the transcript, published on the website of the Iceland Review magazine, Mr Darling accused Icelandic Trade Minister Bjorgvin Sigurdsson of misleading him "a few months, weeks" earlier about the state of the Landsbanki, Kaupthing and Glitnir banks operating in the UK.

But the full record of the conversation shows that Mr Darling did not believe Mr Sigurdsson's reassurances at the time.

"We doubted what we were being told then and I am afraid we were right," he said.

Last night, Liberal Democrat Treasury spokesman Vince Cable said the revelation was "very disturbing" and called on the Chancellor to make a statement to the Commons.