RegulationDec 19 2014

Government recovers a total £3.8bn from Icesave

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The government has now recovered a recovered a further £1.36bn from the Landsbanki estate in Iceland, which operated as Icesave in the UK, following its collapse in October 2008.

Andrea Leadsom, economic secretary to the Treasury, today (19 December) confirmed that the government has recovered a total of £3.82bn from the Landsbanki estate, following on from four previous payments.

In total, the government has now recovered 85 per cent of its total claim for the Landsbanki estate. The payment received will be used to pay down the national debt.

The Icelandic bank operated its UK branch as Icesave. The government said Icesave was a high-interest, internet-only saving scheme launched in Britain and the Netherlands, operating under the EU’s single-market rules.

This meant that, when Landsbanki went bust in October 2008, Icesave depositors were not fully covered by Dutch and British deposit insurance, relying instead on Iceland’s scheme.

The government at the time, through its deposit guarantee scheme, became the largest creditor to Landsbanki, after fully refunding British retail savers with Icesave when the Icelandic deposit insurance failed to meet its obligations. The total payout amounted to £4.5bn.

The government added that it is on course to recover the full amount of its claim on the Landsbanki estate, which it expects to do by 2017.

Ms Leadsom said: “A key part of our long term economic plan is getting taxpayers’ money back from the financial crisis, including the collapse of Iceland’s banking system in 2008.

“The failure of the Icelandic banks cost taxpayers billions of pounds, with no certainty of ever getting the money back.

She added that the government remains committed to recovering the full outstanding amount of the British taxpayer’s claim from the Landsbanki estate as soon as possible.

ruth.gillbe@ft.com