British savers with money in Icelandic banks will be compensated, Iceland's prime minister has said.
The Icelandic prime minister has said he is confident that British savers with money tied up in Icelandic bank accounts will get their money back. In an interview with Channel 4 News, Geir Haarde said the loan provided to Landsbanki by the UK government will help to ensure the bank can meet its obligations to British customers.
Landsbanki was nationalised by the Icelandic government earlier this month, along with the country's largest lender, Kaupthing. Mr Haarde said both banks had been hit hard by the collapse of Lehman Brothers and subsequent market turmoil.
On Tuesday it was announced that the Bank of England would provide a short term secured loan of £100 million to Landsbanki to help it repay its creditors in the UK, many of whom had savings accounts with the bank's online banking subsidiary Icesave.
Mr Haarde said this loan was "very helpful" and would enable Landsbanki to keep up the value of its assets. "I do think to a large extent that the deposits, the assets rather, of both Kaupthing and Landsbanki, will be sufficient to take care of those claims," he added.
It is believed that many local councils had savings with Icesave. While the UK government has guaranteed the deposits of ordinary British consumers, there is some doubt over whether it will do the same for local councils.
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