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Talks in Britain and Iceland begin over frozen assets

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by Kay Mitchell
”Talks

Talks between Britain and Iceland have begun with regard to the British deposits frozen in Iceland’s banks.

The talks commenced after Treasury officials headed to Reykjavik late last week to discuss its banking crisis and the affect on UK savers and councils with money in its banks.

Britain’s Local Government Association estimated 108 British local authorities have £750 million invested in Icelandic banks. London’s police force, its transport network and charities across Britain also have investments with them.

It was revealed last week that the two countries were battling over who should compensate British savers. Prime Minister Gordon Brown said that the responsibility lies with the Icelandic authorities and he is demanding the money is paid back to the local authorities.

Gordon Brown branded Iceland’s failure to guarantee British savings in its collapsed banks as ’unacceptable and illegal‘. However, it is now believed the two countries are working amicably together.

Iceland has had a disastrous week after the nationalisation of the country’s three largest banks. It has suspended trading on the OMX Nordic Exchange in a bid to prevent further crises.

However, over the weekend, arrangements have been agreed in principle for a swift payout to savers in Landsbanki’s closed internet bank Icesave, according to sources.

The discussions continue as the G7 nations (US, Japan, Britain, Germany, France, Italy and Canada) have met in Washington, and issued a five-point plan to unfreeze credit markets.

Meanwhile, Prime Minister Gordon Brown is heading to Paris for talks today with French president, Nicolas Sarkozy, before taking part in a meeting with other leaders from European countries.

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News posted: October 12, 2008

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