Darling's vow to Iceland savers

Published on Wednesday 8 October 2008 23:13

HUNDREDS of thousands of UK savers with cash in beleaguered Icelandic banks were yesterday given a guarantee by Alistair Darling, the Chancellor, that they would not lose their funds.

Dismayed British customers of Icesave, an internet bank, were blocked from withdrawing funds this week after its parent firm, Lansbanki, was nationalised and placed in receivership. The UK Financial Services Authority said it expected the bank to collapse – and the Icelandic government refused to guarantee overseas funds.

Yesterday, however, Mr Darling announced that no UK saver would lose out as a result of the closure of Icelandic banks.

The Treasury and Financial Services Compensation Scheme would normally only cover the first 50,000 that people had lost, rising to 100,000 for joint account holders.

He said: "We are pursuing Iceland and we will pursue it vigorously to make sure that we get the money due to us back.

"But, in the meantime, I am going to be able to help those savers who would otherwise have to look to Iceland to get their money back. I am prepared to stand behind them and to stand behind the depositors."

It emerged yesterday that Perth and Kinross Council has a 1 million short-term investment with Iceland's Glitnir Bank.

The Treasury has also arranged for more than 3 billion of UK savers' money held with the banks to be transferred to ING Direct UK, a subsidiary of Dutch savings bank ING Direct.