Banks: Iceland

Treasury written question – answered on 26th February 2009.

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Photo of Austin Mitchell Austin Mitchell Labour, Great Grimsby

To ask the Chancellor of the Exchequer what compensation has been provided by the Government to (a) individuals, (b) local authorities and (c) charities who had deposits with (i) Kaupthing Singer and Friedlander, (ii) Heritable and (iii) IceSave.

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury

Heritable and Kaupthing Singer and Friedlander (KSF) are UK-based banking subsidiaries of the two Icelandic banks Landsbanki and Kaupthing. On 7 and 8 October 2008 respectively, the FSA concluded that Heritable and KSF no longer met their threshold conditions, and were in default for the purposes of the Financial Services Compensation Scheme (FSCS). The Treasury, using powers under the Banking (Special Provisions) Act 2008, transferred certain accounts of Heritable primarily used by retail depositors and KSF's Edge retail deposit business to ING Direct. The Government also committed to paying out in full FSCS eligible depositors whose accounts were not transferred. The remainders of Heritable's and KSF's businesses were subsequently placed into administration following due legal process.

On 8 October, the FSA announced that the UK-based branch of Landsbanki was in default for the purposes of the Financial Services Compensation Scheme (FSCS). To maintain financial stability and protect retail depositors, the Chancellor announced that all retail depositors with the Icesave brand of the branch would receive their money in full.

The Government have put in place arrangements to ensure that all FSCS-eligible depositors with the UK branch of Landsbanki, Heritable or Kaupthing Singer and Friedlander will receive their money in full. If a charity is eligible to claim compensation from the Financial Services Compensation Scheme, it will be entitled to benefit from these arrangements.

For local authorities, I refer the hon. Gentleman to the statement made by the Secretary of State for Communities and Local Government on 14 October 2008, Official Repor t, column 35WS.

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James Blake
Posted on 5 Mar 2009 4:18 am (Report this annotation)

1. UK Citizens without a UK address (IE. Working overseas, retired overseas, fighting for our Country overseas, doing charity overseas) cannot get UK bank accounts.

2. The UK treasury triggered this mess by ignoring the fact that the FSC had advised KSF IoM (via the IoM FSA) to put a very large deposit with KSF (UK).

3. The UK Government is now, and has been for five months, standing by and simply watching as British Citizens lives are destroyed. We have pensioners, with no other income, living in poverty. We have families who were in the process of moving who are now homeless. We have British Citizens abroad who are living of the streets.

Almost every superlative that can be used to describe this has been. When WILL this Labour Government realise that what they have done has destroyed thousands of British lives. A bad day for British politics. A dreadful five months.