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UK loans Iceland £100m to help get our cash back
Nicholas Cecil and Katharine Barney13 Oct 2008
ALISTAIR Darling today announced moves to allow savers in stricken banks in Iceland to get their money back.
The Chancellor told MPs that the Bank of England was making available a £100 million loan to one bank.
He said: “I met the Icelandic finance minister in Washington at the weekend, and I made it very clear that it is imperative we work together to resolve the position of creditors in this country.
“Our authorities have set up an arrangement, agreed in principle, for an accelerated pay-out to depositors.
“We are also working with the Icelandic authorities to facilitate claims by UK charities and local authorities on their deposits held at these Icelandic banks. In addition to this, the Bank of England is today providing a short-term secured loan of up to £100 million to Landsbanki, to help maximise the returns to UK creditors.”
Mr Darling's announcement came as it emerged that the main 2012 Olympics host authority has become the latest London borough to face losing millions of taxpayers' money in the Icelandic bank collapse.
Newham council invested £7 million in deposits which have been frozen as the Nordic state battles to avoid bankruptcy. Other boroughs which may have lost taxpayers' money are Barnet, Brent, Bromley, Haringey, Havering, Hillingdon, Sutton and Westminster. The Metropolitan Police Authority has potentially lost £30 million, Transport for London £40 million, and one of London's biggest NHS trusts, the Central and North West London NHS Foundation Trust, stands to lose more than £2 million.
The Bank of England's loan is to help stop Landsbanki going under and allow it to meet its day-to-day obligations, but does not mean the money of the councils, charities and housing associations is safe.
Staff at Braintree council in Essex were facing the prospect of wages being frozen after bosses invested millions in three collapsed Icelandic banks.
Unison, the trade union representing local government workers, has expressed “grave concern” about the potential consequences for staff wages. Officials and lawyers from all over the world are this week holding crisis talks in the Nordic state in an effort to claw back deposits and debt
A Newham council spokesman said: “The council has £7 million placed with the Landsbanki and Glitnir banks. It is a very small proportion of the council's overall budget so there will be no impact up on our ability to deliver services.”
The NHS trust was unavailable for comment. More than 100 councils, fire and police authorities, transport authorities and universities are among publicly-funded bodies that have invested £1.2 billion in Icelandic banks.
Reader views (2)
Isle of Man's Kaupthing bank was a non-EU bank in a non-UK domicile.
Its has nothing to do with the UK - anybody who deposited there did so to expressly avoid UK regulations.
These regulations are there for a very good purpose as investors are now finding out
- Peter, London, 14/10/2008 10:46
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What about all the depositors with Isle of Man's Kaupthing bank. This has been sucked under by the failure of Iceland's finances and the demise of the UK's Kaupthing bank.
I had all my savings in the now failed IOM bank. I'm British - headed overseas about 15 years ago to work in international development around the world, mostly in voluntary work. I've been saving hard to one day be able to come back and get somewhere to live and set-up a pension. In a flash I may have lost nearly all of it.
Why did I invest my savings there? Its problematic to set-up UK acct if you don't live there - not impossible - but painful. And I am not supposed to pay tax in UK as don't live there so seemed easier to go with offshore sterling account. I did originally put money into Derbyshire IOM, but they were bought up by KSF - based on an assessment that KSF was sound. I guess we were all misled. But its the savers who suffer.
Please don't think of all IOM savers as fat cats avoiding paying UK tax, when many or most of us are in fact small fry who had no requirement to pay tax.
- Wendy Smith, Oz, 14/10/2008 06:41
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