Anxious hours for Icesave depositors

by Gill Montia

Story link: Anxious hours for Icesave depositors

As confusion and panic grips the European banking sector, Britons who have savings with Internet bank, Icesave, find themselves excluded from the Icelandic government’s 100% guarantee on deposits.

Over 200,000 UK savers have entrusted their money to Icesave, which is owned by Landsbanki, one of Iceland’s biggest financial institutions.

Sitting late into last night, the Reykjavik government grappled with the collapse of the country’s financial services sector.

Ministers took the decision to guarantee all bank deposits in a bid to reassure local savers but UK-based depositors will not benefit from the move.

Earlier in the day trading in financial shares in Reykjavik was suspended and the value of the krona plunged a further 23% against the euro.

UK savers spent anxious hours waiting for the Icesave website to recover from “technical problems” which meant that withdrawals were suspended.

According to press reports, UK-based Icesave customers are not fully protected by the Financial Services Compensation Scheme, unlike their peers with cash in rival Icelandic bank, Kaupthing.

For Icesave account holders, the first £16,300 of their investment is guaranteed by the Government of Iceland, which according to its Prime Minister, Geir Haarde, could be on the brink of economic collapse.

Icesave owner, Landsbanki, has however assured foreign investors that it has sufficient reserves and borrowing capacity to cover its deposits.

In the UK deposits are now protected up to £50,000 per account provider; the Republic of Ireland last week offered complete protection for retail and commercial deposits across six banks.

A similar guarantee exists in Greece and clarification on the situation in Germany is awaited.