Help the UK savers of Icelandic banks

The fate of Iceland, which has extensive interests in the UK, is seen as a warning for the rest of the world, after a long boom fuelled by debt, a dependence on its banking industry and a buoyant housing market.

In order to help UK savers who lost money in collapsed Icelandic banks to get compensation, members of the Government and Bank of England are set to travel to Iceland.

The visit by officials from the Treasury and the Bank follow talks between the UK and Icelandic governments about securing compensation for UK savers.

Around 300,000 UK customers had their accounts with Icesave, the internet arm of Iceland’s second largest bank Landsbanki, frozen when the bank was nationalised, although the Government has said it will ensure consumers receive their money back in full.

In order to retrieve savers’ money, it has since frozen all of the UK assets of Icelandic banks.

The Treasury also arranged for GBP2.5 billion of deposits and 160,000 customers from Kaupthing Edge, part of Iceland’s largest bank Kaupthing, and GBP538 million of savings held by 22,200 people with Heritable Bank, also part of Landsbanki, to be transferred to Dutch savings bank ING Direct.