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UK News

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Commons report supports Landsbanki savers

Savers with Landsbanki Guernsey who lost money during the Icelandic banking crisis have welcomed a report from a Commons committee which criticised the UK government's handling of the situation.

The Justice Committees report on the relationship between the UK, Guernsey and the Isle of Man highlighted the role played by the UK Treasury in representing the interests of the crown dependencies during its negotiations with Icelandic authorities during the crisis, and concluded that the UK had failed to look after the interests of Guernsey adequately.

Landsbanki Guernseys parent company went into administration in 2008, and Guernseys savers were amongst the worst hit of the crisis.  23-Apr-10.


Icelandic bank crisis report shows how slow FSA was to react

The Financial Services Authority (FSA) was blanked and bluffed by Icelandic bankers for months over the ticking Icesave time bomb.

2000-page Icelandic report into the 2008 banking crisis which almost bankrupted the tiny island country reveals the behind-the-scenes talks between the FSA, the Icelandic government and Landsbanki. It shows the FSA waited seven months before pulling the plug on Landsbanki, of which Icesave was the online savings arm, despite being faced with mounting evidence that the bank was not strong enough to survive. 21-Apr-10.

Letters to the Head of Business: FSA shamed by inaction over Iceland

Sir - In 2005 as chief executive of Singer & Friedlander I explained to the Financial Services Authority why the Icelandic bank, Kaupthing, should not be allowed to take over Singer & Friedlander as its management was not "fit and proper", and so did the rest of the board. We were all ignored.

On Tuesday after the Icelandic parliament published its Truth Report into the collapse of the Icelandic banks, including Kaupthing, I wrote to the chairman of the FSA pointing out the report makes it clear that the whole Icelandic banking and regulatory system had failed massively. The honesty of the report is in stark contrast to the attitude of the FSA and the Treasury, which have refused to explain how they could have done so little, while letting these banks operate in the UK.

Did the FSA and the Treasury realise how badly run and regulated the Icelandic banks had been? And if they did, why didn't they do anything? If only they had done something many UK depositors and taxpayers would have been spared a great deal of pain, as would the whole of the Icelandic community.  [Signed] Tony ShearerFinance Comment pages, Telegraph website 18-Apr-10.

Let down by the watchdogs

The doorstopping official report into the collapse of Iceland's banking system may not make for entirely comfortable reading for the Governor of the Bank of England, Mervyn King, or the Financial Services Authority.

In the Spring of 2008 the Icelandic central bank - the Sedlabanki - made a request to the Bank of England for a currency swap agreement after Iceland had failed to renew a credit line with the Basle-based Bank for International Settlements (BIS).

Mervyn King sensibly refused - after all, Icelandic bank liabilities were five times the size of the nation's economy - and offered some help in reducing the size of Iceland's banking sector.

What happened next is unclear. But we know that between the spring and autumn of 2008, when the Icelandic banks collapsed like dominos, savers' money continued to pour into Icesave and other Icelandic deposit accounts.

The missing piece in this puzzle is what the Bank of England decided to do with its assessment of the Icelandic banks when it refused help. One trusts it informed the other tripartite members - the Treasury and the FSA - which should have been far stronger in warning depositors of the risk.  12-Apr-10.

BREAKING NEWS! Icesave Dispute Resolved

Just now the governments of Iceland, the UK and the Netherlands signed an agreement on the repayment scheme of Landsbanki’s Icesave deposits. Negotiations were believed to be at standstill and therefore this sudden solution came as a surprise.

However, negotiations had actually been taken place under a veil of secrecy for weeks—given that this solution is extremely radical they had to be secret, explained Icelandic Finance Minister Steingrímur J. Sigfússon.  01-Apr-10.

Landsbanki depositors 'vindicated by report'

A group representing Landsbanki Guernsey depositors said it feels vindicated by a report looking at the island's relationship with the UK.

The Justice Committee's review included evidence of how the collapse of Landsbanki was handled.

A States of Guernsey submission stated the UK government prioritised its own interests over those of Guernsey when dealing with Icelandic authorities.

The depositors agreed their interests were not considered throughout.

Since October 2008 the Landsbanki Guernsey Depositors Action Group has lobbied the States to do more to help them.

Depositors have previously been told by the administrator to expect up to 91% of their money back.  01-Apr-10.

Iceland president urges Gordon Brown to step into Icesave row

Voters in Iceland are expected to have opted not to repay £3.5 billon lost in a bank collapse to Britain and the Netherlands, with the country's leader calling on Gordon Brown to settle the dispute.

Polls have suggested today's referendum, on whether or not taxpayer's will fund the repayments, could see up to three-quarters of Icelanders voting 'No'.. .

Grimsson said his country would accept a "fair deal" over the repayments and urged Gordon Brown to show "statesmanship" as he did on the global financial crisis, to avoid a second referendum, by putting forward a more "balanced agreement".

He told BBC Radio 4’s Today programme: “What is important following this referendum and in the light of the outcome is that the leadership of Britain and the Netherlands, especially Gordon Brown, will now take the matter into his own hands, which he has not done. 06-Mar-10.

Bailout Mutiny Looms With Iceland’s Taxpayer Vote: Matthew Lynn

March 2 (Bloomberg) -- A referendum in Iceland isn’t the kind of event that would usually attract much world attention. This time will be different.

The country will vote this week on how to pay back the money it owes the U.K. and Dutch governments for bailing out the Icelandic banks that crashed during the credit crunch.

On March 6, Icelandic taxpayers should send a message to the rest of the world: Can’t pay, won’t pay, so go take a hike. . .

Third, the depositors were just as much at fault as anyone. They put money into Icelandic banks, which paid higher rates of interests than almost all their competitors. And yet you need an IQ of only about 10 to know that higher rewards involve higher risks. It was a stupid decision to deposit their money in those banks, and there is no reason to protect them from the consequences of their poor judgment.

Also, let’s bear in mind that the depositors were probably a lot wealthier than the ordinary Icelanders who will end up paying the bill. Why should prudent poor people pick up the tab for greedy rich ones?  BusinessWeek website - 01-Mar-10.

Iceland returns to negotiating table on debt repayment dispute

Icelandic officials have restarted negotiations with their counterparts from Holland and the UK over $5.3 billion owed to investors from the two countries following the collapse of Landsbanki in 2008.

fortnight of talks ended in deadlock last week, but the sides have returned to the negotiating table to thrash out a deal.

Time is running out before a referendum takes place in Iceland on Saturday (March 6th 2010) on whether the state should foot the bill for repaying foreign investors. bobsguide website - 01-Mar-10.

UK, Iceland in Contact on Icesave, No New Meetings

REYKJAVIK (Reuters) - Icelandic negotiators may return home on Monday from London if no new meetings are called with British officials over the Icesave debt crisis, Icelandic Radio quoted a finance ministry spokesman as saying.

Officials from the two countries met in London on Saturday but the radio station said no formal meetings took place on Sunday, although the negotiating teams had been in contact. . .

Iceland wants a new deal to avoid a referendum on March 6 on a previous agreement which the island's voters are almost certain to reject, undermining the government's credibility and delaying access to vital economic aid.  abcNEWS/Money website - 28-Feb-10.

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