The U.K. government said today that it will take action to protect the retail depositors in two Icelandic owned banks: Icesave, a U.K.-based branch of Landsbanki and Heritable, a U.K.-based banking subsidiary of Landsbanki.
The U.K. authorities said they expect that Landsbanki will soon be declared in default. Should that occur, the Chancellor has put in place arrangements to ensure that no retail depositor will lose any money as a result of the closure of Icesave.
The Treasury and the Financial Services Compensation Scheme are working with the Icelandic authorities and their Deposit Insurance Scheme to ensure that depositors are paid back as quickly as possible. The U.K. Chancellor has also spoken to the Icelandic Finance Minister about the importance of the Icelandic authorities ensuring that U.K. depositors in Icesave are given the same protections as depositors in Iceland and receive their deposits back in full promptly.
Heritables retail deposit business has been transferred to ING Direct, a wholly-owned subsidiary of ING Group. ING Direct is working to rapidly ensure that it is business as normal for all customers. This action will protect savers money and provides certainty for retail depositors. The remainder of Heritables business has been put into administration.
The U.K. government said that this was the right course of action to protect savers, ensure financial stability, and safeguard the interests of the taxpayer.