Belfast Telegraph

Thursday 2 October 2014

Quarter of Icelanders ‘oppose repayment to savers’

Around a quarter of voters in Iceland signed a petition against a bill to repay £3.4bn (€3.8bn) lost by savers in the UK and the Netherlands when the country's banking system collapsed, it has emerged.

The petition urged Icelandic President Olaf Ragnar Grimsson to veto the legislation and demanded a referendum on the issue.

The Treasury would recoup up to £2.3bn from Iceland under the measure, after it stepped in to compensate British depositors with the Icesave scheme.

About 298,000 British savers had their accounts in the bank frozen in October 2008 following the collapse of its parent company Landsbanki.

Earlier this week Iceland's MPs backed the amended Icesave bill to reimburse Britain and the Netherlands by a narrow margin of 33 votes to 30.

There has been strong opposition to the bill in Iceland amid fears that the country can not afford repayments.

More than 56,000 people — around 23% of the country's voters — signed the petition calling on the president not to sign the bill, it was reported.

UK savers — the vast majority of whom have already received their money back in full — had about £4.56bn held in Icesave accounts.

The payment to savers was split between the Icelandic government, the FSCS and the UK.

The British government initially stumped up Iceland's share.

In August, the Icelandic parliament agreed to pay up to £2.35bn to the UK and £1.14bn to the Netherlands, effectively turning the bailout into a loan, which will be repaid over 15 years from 2016.

However, the British government was concerned about uncertainties over the sovereign guarantee on the loan and the new vote earlier this week meant that Iceland's assurance is now unconditional.

Iceland will initially use assets from the collapsed bank to cover the cost of the repayments, with any additional sums covered by the state.

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