• Iceland's former central banker claims King gave assurances UK would not press for guarantee on £5bn of Britons' savings
• Spokesman for King issues denial and says he had been urging country 'for months' to shrink its banking system
A bitter war of words between Bank of England governor Mervyn King and his former counterpart in Iceland is threatening to reopen old wounds from the Icesave scandal, in which billions of pounds of British deposits were ensnared in the north Atlantic island's financial meltdown just over two years ago.
The row comes at a sensitive time in the Icesave saga as Icelandic MPs are scrutinising a controversial bill outlining terms under which Iceland would repay foreign governments that picked up the tab for retail deposit guarantees. 23-Jan-10.