FSCS to borrow more from BoE for Icelandic crisis - Iceland to use loan from UK

Seajays

Some news on deal coming in now:

From citywire: FSCS to borrow more from Bank of England for Icelandic crisis

The Treasury will this week unveil the terms of a fresh loan by the Bank to the FSCS in order to protect UK depositors who hold £4.8 billion in the Icesave account of Landsbanki, Iceland’s second biggest bank which last week was nationalised before going into receivership.

The new loan will mirror the arrangement put in place two weeks ago when Bradford & Bingley was partly nationalised and its savings business sold to Banco Santander.

http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=317408

also

From Icelandreview: Iceland, the Netherlands and UK Reach Agreement

According to agreements between Icelandic, Dutch and British authorities, Iceland will take responsibility for repayment of EUR 4 billion (USD 5 billion) to owners of Landsbanki Bank’s Icesave online deposits accounts.

According to Morgunbladid’s sources, the British state will grant a loan to the Icelandic state of up to EUR 3 billion (USD 4 billion) so that Iceland can honor its obligations to Icesave account holders in the UK. An agreement between the two nations is expected to be signed in the next few days.
...
Iceland’s Minister of Commerce Björgvin G. Sigurdsson said this solution is unavoidable. It is a matter of obligation of national rights which Iceland was required to agree on.

Sigurdsson is hopeful that the sale of Landsbanki’s assets will cover almost the entire amount. “Our economists believe that the bank’s assets will mostly cover it,” he said, adding, “The deposits are preferential claims.”

http://www.icelandreview.com/icelandreview/daily_news/?cat_id=40764&ew_0_a_id=313569

Reaper

It doesn't surprise me as that is the same arrangement the Dutch have already come to with Iceland. Announced here.

The_Dangerman

Maybe I'm being naive here, but didn't Landsbankinn only fail due to a lack of liquidity, like Northern Rock, rather than any inherent bad debts? They claim they weren't involved in sub-prime lending so the value of their mortgage and loan book should cover the cost of their liabilities quite easily?

ebyard

Excellent news.

The UK lends Iceland £4bn, secured on their assets (which we froze) and so Iceland will have to sell it's newly unfrozen assets to repay the loan (which they will spend refunding us Icesave savers!).

Good work, HM Treasury!

LGG_2

just wish they would hurry up one way or the other and get the fscs to send forms out so the process can begin while they are still talking.

altocumulus

Useful progress report, but would be better when confirmed by the FSCS site....

(just put the dosh into the Icesave system, then we can withdraw without the need for any forms etc - too simple - eh!)


Edit 16:26 : BBC website says the amount is £100m loan to Landsbanki

LGG_2

just put the dosh into the Icesave system, then we can withdraw without the need for any forms etc - too simple - eh!)

yeap way to obvious lol

innovate

BBC News 24 reports that UK will lend Landesbanki £100m, not "up to 3bn euros"

Somehow trust the BBC News a bit more, but we need to wait and see what government officials say.

mjmal51

BBC link
http://news.bbc.co.uk/1/hi/business/7664007.stm
seems a drop in the ocean to £4 billion!

TehJumpingJawa

altocumulus wrote: »

(just put the dosh into the Icesave system, then we can withdraw without the need for any forms etc - too simple - eh!)

Only problem with them doing that, is that transfering ISA's takes so bloody long at the moment.
Meaning ISA savers will be stuck with deciding between leaving the cash in Icesave for ~1 month while the transfer goes through, or withdrawing it immediately and forfitting the tax free wrapper.

f_@_w_y

LGG wrote: »

just wish they would hurry up one way or the other and get the fscs to send forms out so the process can begin while they are still talking.

hahaha... interesting... I have the same feeling!!! :j