This article in City Wire of 12 Jan by Iain Martin reopens the question of whether Britain is seeking money from Iceland for more than just the first Euro21k, saying:

“The UK government is demanding Iceland pay back a £2.3 billion loan used to bail out almost 290,000 Icesave customers. The Treasury is also pushing for a further £1.1 billion to cover the difference between UK and Icelandic compensation limits, the former being £50,000 and the later €20,000. Controversially, the UK government also wants Iceland to pay £500 million to cover the cost of extending the Financial Services Compensation Scheme (FSCS) to 100% for Icesave deposits – a decision taken by the Treasury in October 2008. The Treasury expects to recoup the £500 million it paid out in excess of the £50,000 compensation limit from the sale of Landsbanki, Icesave’s parent company’s UK assets. ‘The £500 million for the top up of the FSCS we will take from the wind up of Landsbanki,’ said a Treasury spokesman.”

However, in the comments section, this accuracy of the article is immediately questioned by someone called Pez:

“It is some mistunderstanding in the article. The UK Government does not want Iceland to pay more than 20.000 euro. However, it is expected that the wind-up of Landsbanki will cover about 90% of the debts. And the assets will go equally to the first 20.000 euros (Icelands part), the UK compensation (up to £50,000) and the £500 million it paid out in excess of the £50,000. Now, the interesting part in the article is that the Treasury expects to recover 100% from the wind-up of Landsbanki.”

The word from Iceland is that it is just the first Euro21k from each Icesave account that Britain & Holland are seeking recompense for. Whatever sum this amounts to may not necessarily equal the full value of the £2.2bn inter-governmental loan from UK to Iceland.

So Lee Griffin, you appear to be right, and I’m happy to concede the matter. The Times article linked to @19 has miraculously reappeared, and is fairly straightforward. However, I don’t regret having pressed this issue, given that the numbers looked fishy, and I think it was worth checking things out.

Tories are traitors.

Dam ,I wish I lived next door to you. I could then laugh at your misfortune every week. And you could not say zip about it,

Actually Olafur Ragnar Grimsson, (the President) is very much a socialist and has nothing to do with the Independence Party. Considering he received a petition from 25% of the population to oppose the current IceSave bill, he had little option but to reject it given that in Iceland the people are sovereign unlike in the UK where parliament is. This does not mean that the money will not be paid back, it most certainly will. What most people in Iceland are unhappy about is the current terms of the deal that has been forced upon Iceland by the UK and Netherlands which means 4 billion pounds has to be paid within an 11 year period and a 5.5% interest rate. The would amount to a total of 40,000 pounds per Iceland household. Given the sheer size of the debt, it would be highly unlikely that Iceland would be able to mount a sustained economic recovery while paying such vast sums of money in such a short space of time (they already have a large amount of debt on top of this).

Given the relatively tiny sums involved for a large country like the UK, why do they insist on such unfair terms of repayment. If the terms were more reasonable, it would be far more likely that Iceland would actually be able to repay the full amount they are responsible to pay without a sovereign default which would be increasingly likely under the current terms.

The UK has handled the situation as if it is negotiating the surrender terms of a hostile nation it has been at war with rather than a small peaceful democratic society on a frozen north Atlantic island. I think there has been a lot of misunderstanding in the UK with people actually believing Iceland doesn’t want to pay the money, we do but on fair, reasonable and respectful terms.

My information may be wrong, but having read through the debate, I can’t say that I’m convinced of yours yet.

Interest of 5%? Far larger compensation than EEA laws actually require? Yeah, right.

Where? Where? I see nothing definitive. The only thing that looked like a breakdown of the numbers was from the Times article, and this was the opposite of what you are asserting.

It doesn’t take a conspiracy theorist to be careful with what’s hiding between the lines of a Treasury press release, it takes someone who wasn’t born yesterday – and any Labour Party supporter worth his salt would tell you that. So I’ll thank you to be less free with your cheap shots, “mate”.

But I agree that this argument is going nowhere till somebody comes in with some new and more definitive information.

The figures are right there mate, the statements are right there. If you’re going to chose to continue to ignore them in search of a great Labour scandal then fine.

I’ll go away with historical accounts and reports that state the money was given for the purpose of fulfilling their obligations to depositors, and that the money was handled through the IMF explicitly to save the Iceland economy, and the figure of repayment that correlates exactly with that amount…and you can go away with your conspiracy theory, and we’ll both agree to disagree.

You say on the one hand “I’m very certain we only gave money to cover these initial £18k payments.” and then immediately “This link *seems* to confirm it…however even if that wasn’t the case…”

The fact is that it is far from clear on the evidence anyone has presented on this site so far. All I’m doing is asking to look at the figures for the cost of the bailout.

Your clincher that Iceland had the obligation under EEA law only works if you are right that the £2.2bn only covers the first £18k’s. If that is not the case – something entirely possible as you have acknowledged a few times – then your argument no longer works.

Meanwhile, put all this stuff about “they accepted the money” in bold all you like, this doesn’t alter that you’re basically taking a classic loanshark’s stance about having signed on the dotted line.

Look at the case of the complete prick from the Christie Hospital NHS Trust who put £7.5m (including £6.5m charitable donations!) into a fucking Icesave internet account. That individual should have had his bollocks mounted on a spike at the gates of the City of Manchester. Instead Darling gave him his money straight back.

What I want to know is whether Darling has passed on a bill for £18k or for £7.5m on to Iceland for that particular debacle.

And how many less tear-jerkingly wonderful good causes are hiding behind Christies Hospital in the dirty business of getting their stake refunded on a bet that they lost fair & square.

http://news.bbc.co.uk/1/hi/business/8435662.stm

If you have other information let me know, but the reported contents of the bill, which is only an amended version of the earlier bill that was asking for the same amount of money but without the guarantee of the entire loan being repaid (and perhaps different interest rate agreements, I’m not sure), don’t suggest what you’re suggesting.

We’re sending them the bill for repaying every penny of the loan that we gave them There is nothing else! As I said above I’m very certain we only gave money to cover these initial £18k payments. This link seems to confirm it, http://news.bbc.co.uk/1/hi/7664853.stm, however even if that wasn’t the case Iceland accepted the money

If they were so worried about the level of money people were “forcing” on them why didn’t they call a democratic referendum then and stop accepting our cash? Oh…right…

“Remember the Icelandic government that foolishly – or crookedly – agreed to take on the obligations of those failed banks in a panicked & confused meltdown situation was literally thrown out of office by an angry mob of Icelanders who had no part in the excesses of their banking sector.”

You are a little confused if you think that the government agreed to take on that obligation as if they had a choice. EEA law states that the member state is responsible for repaying the first 20k Eur of retail despositor accounts.

Hmmm. You’d make a good loan shark, Mr Shylock Griffin…

One response to this would be to say, yes, and “agreement to the framework” from the Icelandic perspective is dependent on a referendum of all the people. As President Grimsson claimed on BBC Newsnight, under the Icelandic constitution the people are sovereign.

Another would be to say that it’s not the only thing that matters as far as I am concerned. I think there is a big difference between sending Iceland the bill for bailing out the first £18k of every account, and sending them the bill for every penny of every account, even those of big City casino gamblers in millions – a high roller’s dream deposit guarantee that was unilaterally dreamt up by Darling and which I suspect may have prevented a lot of rich men in red braces from losing their shirts, which they deserved to do.

Remember the Icelandic government that foolishly – or crookedly – agreed to take on the obligations of those failed banks in a panicked & confused meltdown situation was literally thrown out of office by an angry mob of Icelanders who had no part in the excesses of their banking sector.

I’m definitively saying that they’re irrelevant to the reason the $5bn figure has been reached between Iceland, UK and Dutch governments.

“I’m just trying to establish the facts. Is the £2.2bn the entire cost of the bailout or the cost of the sum of the first £18k in each account?”

The UK loan was purely to allow Iceland to pay the guarantee immediately rather than wait for potentially years before paying savers back their money. In that sense it can only have been a loan to cover the amount of the first 20k Eur (which is the official amount, and in money at the time was around £16.5k rather than £18k now)

However if I am misguided, as I don’t know the finer details of how that figure was reached and loaned; regardless of what the loan amount covered it was the amount the Iceland agreed upon and took from the UK. That is the amount being paid back.

It could, for all intents and purposes, have covered none of the cost of the bailout and all of the cost of Icelandic vegetable consumption…the only thing that matters is that the UK loaned $X and now they want an agreed framework put in place to pay $X back.

“The FSCS will repay any further savings up to the usual threshold of £50,000 at a cost of £1.4 billion, with the Government stepping in to cover any amounts above this threshold. The total cost to the Treasury of compensating the first £18,000 of savings, and any sums above £50,000 is £800 million…”

“I don’t quite see the scandal”

I’m just trying to establish the facts. Is the £2.2bn the entire cost of the bailout or the cost of the sum of the first £18k in each account?

The UK government loaned Iceland 2.6bn Eur. The Netherlands loaned 1.1bn Eur. Together these two amounts roughly add up to the 3.8bn Eur.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3491442/UK-Treasury-lends-Iceland-2.2bn-to-compensate-Icesave-customers.html

I don’t quite see the scandal as both these amounts are documented as having been loaned, and they add up to the amount the UK and Dutch governments wish to be repaid before interest.

Quite simply the amount that was guaranteed or not by the UK is irrelevant as what the UK *did* loan was £2.2bn.

“I’m still wondering if the bailout of a handful of people with hundreds of thousands or millions held in a gamble on Icesave’s impausibly high interest rates are hiding behind people like you.”

I don’t know where the implausibility comes from. Icesave weren’t the only account offering a high interest ISA, though they were offering it at such a rate for the longest. But I guess that’s a separate issue.