Banks: Iceland

House of Lords written question – answered at on 8 January 2013.

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Photo of Lord Laird Lord Laird UUP

To ask Her Majesty's Government how much has been repaid to the United Kingdom by or in respect of each of the failed Icelandic banks; how much is still owed by each bank; and what steps they are taking to ensure repayment.

Photo of Lord Sassoon Lord Sassoon Conservative

The Government expect full recovery of the amount that Iceland is liable for, regarding failed banks. Information on payments in respect of Icelandic banks can be found in Sections 30, 31 and 33 of the Treasury annual reports and accounts 2011-121.

During 2011-12, the administrator for Icesave paid out dividends to HM Treasury and the FSCS of £1.3 billion. Of this, £0.4 billion was used by the Financial Service Compensation Scheme to repay part of the loan with HM Treasury, £0.7 billion was allocated to the Depositors' and Investors' Guarantee Fund share of the loan and the remaining £0.2 billion was used to reimburse HM Treasury for its statutory debt payments for deposit balances in excess of £50,000.

Negotiations with Iceland over the terms of a loan agreement in respect of the compensation paid to UK depositors of Icesave, the UK branch of Landsbanki hf, are ongoing. Progress is currently suspended pending the outcome of proceedings by the European Free Trade Association (EFTA) Surveillance Authority against Iceland in the EFTA Court in respect of Iceland's alleged failure to meet its legal obligations to UK and Dutch depositors under the EU deposit guarantee directive.

1 www.hm-treasury.gov.uk/d/hmt_annual_report_2012.pdf

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