Icelandic president vetoes Icesave bill

Tuesday, 05 January 2010 01:58

By myfinances.co.uk staff

Iceland will not repay £2.3 billion to Britain in compensation for the collapse of Lansbanki, president Olafur Ragnar Grimsson has announced.

Around 320,000 British and Dutch savers lost everything when Landsbanki, which operated three online banks including Icesave, collapsed 15 months ago leaving governments in both countries to step in to compensate victims.

Last week the Icelandic parliament passed a bill which would have seen the both British and Dutch governments compensated for coming to the rescue of savers in their ountries. The bill would have seen Iceland repay Britain £2.3 billion over 14 years, but Mr Grimsson today refused to sign off the bill after pressure from the country's opposition party.

A Treasury spokesman said the British government expected Iceland to "live up to its obligations".

"The Treasury will consult with colleagues in Iceland to understand why this bill has not been passed and will work with them, the Netherlands and within the EU to resolve this issue as soon as possible," he said.

The Dutch government said it was "extremely disappointed" by the decision.

The repayment is deeply unpopular with the Icelandic population, with 70 per cent opposed to it.

A recent petition against the bill collected 60,000 signatures - almost a quarter of the electorate.

"Public opinion polls indicate that the overwhelming majority of the nation is of the same opinion," the president said today.

Under Iceland's constitution, the issue must now go to a referendum.

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