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article imageIceland Agrees to Repay British and Dutch Savers $5.4 Billion

By Chris Dade     Dec 31, 2009 in Business
The parliament in Iceland has voted to pay back savers in the U.K. and the Netherlands the $5.4 billion (€3.8 billion, £3.4 billion) they lost when the Icelandic banking system collapsed in October 2008.
Over 320,000 savers were affected when the Icelandic bank Landsbanki collapsed at the height of the financial crisis. The savers had deposited their money with Icesave, an online subsidiary of Landsbanki that offered particularly competitive interest rates.
After its collapse control of Landsbanki was assumed by the Financial Supervisory Authority of Iceland and a new bank known as Landsbankinn was created by the Icelandic government, which fully owns the new institution.
As the London Times reports partial compensation for the British and Dutch savers affected by the demise of Icesave had already been agreed but on Wednesday the Icelandic parliament voted 33-30 to apparently repay in full the money lost by those savers.
Which4U confirms that the British and Dutch governments will between them receive the $5.4 billion (€3.8 billion, £3.4 billion) being repaid by Iceland as they have already reimbursed their citizens, albeit in part, for the money that was lost when Icesave went under.
The situation involving Icesave has soured relations between Iceland and both the U.K. and the Netherlands and has threatened to jeopardize Iceland's entry in to the European Union. According to France 24 the release of IMF funds to Iceland has also been delayed by the hitherto unresolved dispute over compensation.
However the actions of the Icelandic parliament are not likely to prove popular with Iceland's 320,000 citizens, a poll conducted in August having revealed that 70 percent of the country's population oppose the bill sponsored by the ruling left-wing coalition.
The amount being repaid to British and Dutch savers over a 14-year period represents 40 percent of Iceland's gross domestic product and equates to €12,000 for each member of the island nation's population.
One member of Iceland's opposition shouted out "treason" when the bill was approved by the country's parliament, a member of the ruling coalition shouting "Congratulations Iceland!"in response to or prior to that cry.
Steingrimur Sigfusson is the Finance Minster in Iceland, a country which has previously been ruled by both Norway and Denmark, and he said of the bill passed by the Icelandic parliament:Approving the Bill is the better option and will avoid even more economic damage. History will show that we are doing the right thing
Failure to approve the bill would, says Which4U, quite possibly have resulted in the Icelandic government resigning.
Speaking for the opposition Progressive Party its deputy leader Birkir Jon Jonsson stated:How this government has handled this issue has been shameful from the beginning
Olafur Ragnar Grimsson, President of Iceland since 1996, still has to sign the bill into law and approaching 40,000 Icelandic citizens have signed a petition asking him not to do so.
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