Darling guarantees Icesave savers

Wednesday, 08 October 2008 09:58

Alistair Darling has said the 300,000 UK savers with Icelandic bank Landsbanki will not lose their cash.

Landsbanki collapsed yesterday leaving UK savers with cash in its Icesave brand at risk of having now cash.

However, the chancellor has stated none of the savers will lose out.

"The chancellor will stand behind these depositors," Gordon Brown said in a press conference.

Mr Darling will start legal action against Icelandic authorities to ensure UK savers' cash will be protected, after he revealed Iceland would not honour its protection to UK savers.

"The Icelandic government, believe it or not, have told me yesterday they have no intention of honouring their obligations here," he said.

The chancellor told GMTV: "I am very aware of the fact that Iceland has, sadly, chosen to default on its obligations here. 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 demonstrates my commitment to help people who have put money into banks in these exceptional circumstances."

Savers at Heritable bank, also owned by Landsbanki, are also to be covered, after a deal with ING was set. The Dutch giant will take on £538 million worth of savings held by 22,000 UK savers with savers accounts transferred to ING Direct.

Any retail depositors not transferred to ING will be paid out in full through the Financial Services Compensation Scheme (FSCS).

The Treasury has also confirmed arrangements are being put in place to ensure that all ISA customers of Icesave will continue to benefit from the tax-free status of their accounts.

FSCS chief executive Loretta Minghella said: "We know that many savers with Icesave are anxious about their savings. Following the Chancellor's announcement today people can be confident they will be repaid in full.

"We are working closely with all concerned on the practical arrangements to get people their money back as quickly as possible. We hope to be in a position to say more about the arrangements by the close of business on Friday, and we will publish updates on our website. "

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