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Legal action to protect Icesave deposits: Brown
Prime Minister Gordon Brown has said the government will take legal action to recover UK savers' deposits held with troubled Icelandic online savings bank Icesave.
Brown told a news conference this morning (Wednesday): "We are taking legal action against the Icelandic authorities, to recover the money lost to people who deposited in UK branches of its banks.
"We are showing by our action that we stand by people who save."
It is understood that about 300,000 customers had £4bn deposited in Icesave accounts.
Yesterday (7 October) the Icelandic authorities nationalised Icesave's parent bank Landsbanki, prompting Icesave to stop processing new deposits or withdrawal requests from customers.
Under existing protection arrangements, the Icelandic government is liable to pay the first £16,317 from its own deposit guarantee scheme, with the with the rest, up to £50,000, covered by the Financial Services Compensation Scheme (FSCS) in the UK.
However, Iceland's Prime Minister Geir Haarde warned yesterday that the country was facing a risk of "national bankruptcy".