UK savers' Icesave accounts frozen

krish

Distinguished Member
I just heard about this situation with Icesave (Landsbanki) UK accounts. Have made withdrawals taking my balance down to the minimum £250 up to 8am this morning. Tried again just now as a test and got this message:
We are not currently processing any deposits or any withdrawal requests through our Icesave internet accounts. We apologise for any inconvenience this may cause our customers. We hope to provide you with more information shortly.
www.thisismoney.co.uk/saving-and-banking/article.html?in_article_id=453483:

UK savers' Icesave accounts frozen as Landsbanki rescued by state
This is Money
7 October 2008, 10:50am


Internet bank Icesave today stopped savers withdrawing their cash after its parent company was nationalised by the Icelandic government.

The Icelandic Financial Supervisory Authority issued a statement saying the country's government had taken control of Landsbanki.

It sought to reassure domestic savers that their money was fully guaranteed by the government, adding that domestic branches, call centres, cash machines and internet operations would be 'open for business as usual'.

But the guarantee does not extent to UK savers and people logging on to Icesave's website were greeted with a message telling them that the group was not currently processing any deposits or any withdrawal requests on its internet accounts.

The nationalisation of Landsbanki is the latest twist in the financial turmoil which is sweeping the world. Fears over the health of Icelandic banks had been growing in recent weeks as the country wrestled to maintain stability in its financial sector.

Iceland's prime minister Geir Haarde warned yesterday that the island faced the 'real possibility' of 'national bankruptcy', as its economy could be sucked into the 'global banking swell'.

His comments came as the country's parliament passed emergency legislation yesterday in an attempt to restore stability to its banking system, while trading in the country's six biggest financial institutions was temporarily halted.

Under the legislation, Iceland's financial regulator will have the power to dictate banks' operations, including forcing them to sell overseas assets or merge with rivals.

The Icelandic Financial Supervisory Authority said in its statement that the nationalisation of Landsbanki was 'a necessary first step in achieving the objectives of the Icelandic government and parliament to ensure the continued orderly operation of domestic banking and the safety of domestic deposits'.

It is not known how many UK consumers hold money with Icesave, but it is thought that as many as 300,000 people in this country have savings with an Icelandic institution. Money is mainly held with Icesave and Kaupthing Edge, the UK retail arm of Iceland's biggest bank Kaupthing.

If an Icelandic bank failed, savers would still have the first £16,170 of their money protected under the Icelandic savers compensation scheme, with the sum topped up to £50,000 for individuals, or £100,000 for joint account customers, by the Financial Services Compensation Scheme (FSCS).
www.thisismoney.co.uk/news/article.html?in_article_id=453467:

Iceland savings guarantee freezes out UK savers
Edward Heathcoat Amory & James Coney, Daily Mail
7 October 2008, 8:14am


More than 200,000 British savers with the internet bank Icesave were last night shut out from a guarantee to protect 100% of their deposits.

In a short statement, the Icelandic government said it would fully guarantee deposits in domestic banks.

But heads of Landsbanki, which runs Icesave, admitted that its UK-based savers would not get the same protection for their £4.5bn investments should it go bust.

Instead, from today their savings are protected to a maximum of £50,000 per head, the same as customers of UK banks.

Of this, they would have to claim the first £16,000 from the Icelandic government, with the UK compensation scheme topping up the rest. Even so, there are concerns that the tiny Icelandic economy would never be able to refund such huge sums.

The move from the Reykjavik government followed a day of frantic activity which saw financial shares in the country suspended and the currency plummet by a third.

Worried British customers of Icesave were unable to access their accounts after its website crashed. Some were informed they faced a wait of 'several hours' before they could access their money. Those ringing its phonelines were told that the bank was receiving ' unprecedented call volumes'.

The internet bank insists it has ample reserves to pay back UK customers. However, it admitted savers had been reducing their balances to the compensation level.

Despite its tiny size - population only 315,000, less than Leeds - Iceland's difficulties have a huge significance here in Britain. If it suffers a catastrophic financial collapse then it will send shock waves through the British high street.

Ten of thousands of UK jobs, and numerous British businesses, could become innocent victims of this Nordic disaster. Iceland is in trouble because its banks have borrowed too much money and invested it abroad, and the principal destination for that money was Britain.

One group, Baugur, controls a substantial chunk of the British high street, backing firms which employ 55,000 people and have £5bn of sales. It owns or has stakes in companies as diverse as the food retailer Iceland, jeweller Goldsmiths, House of Fraser department stores and Hamleys the toy shop.

Their future today is uncertain as, despite protestations to the contrary, it is hard to see their present owners being able to hang on to them if there is a complete collapse at home. Iceland's current problems have their roots more than ten years ago when a conservative government privatised and deregulated the banking industry at the same time when huge amounts of foreign money began to flood into Iceland.

No one is quite certain where it all came from - most of it was via anonymous tax havens such as the Cayman Islands - but in part it was driven by investors hungry for high interest rates. Banks took the money and went on a spending spree. Either directly, or by loaning the cash to Icelandic entrepreneurs, they rushed around Europe buying up companies.
 

eric pisch

Novice Member
there was a financial guru on LBC radio this morning who said the Icelandic government had tracked this issue down to 30 traders, he also warned on paper the country faces bankruptcy and the 4bill Russia is loaning them is a drop in the ocean to the real problems Iceland are now facing.
 

Steven

Senior Moderator
Any truth in claims that the BBC's Robert Preston is overstepping his journalism remit with his "breaking stories" having an apparent effect upon the markets?

*ducks*
 

krish

Distinguished Member
Any truth in claims that the BBC's Robert Preston is overstepping his journalism remit with his "breaking stories" having an apparent effect upon the markets?
well its certainly true that any "bank in trouble" story will knock customer confidence ... but what can you do, hide the facts? More and more reporting of govt guarantees is preventing a Northern Rock type run though. But in the case of Icesave I wasn't taking any chances as an overseas customer, and not too fussed about taking 6 months to get back £250 rather than the much larger balance I had there until today.
 

Ian J

Banned
Unless you had over £50,000 invested there your savings would have been fully secured anyway.
 

krish

Distinguished Member
Unless you had over £50,000 invested there your savings would have been fully secured anyway.
the first 16K by the Icelandic compensation scheme, which reportedly can take significantly longer than a straightforward UK bank FSCS claim (months rather than days as I understand it) ... and with an unstable Icelandic economy they might postpone/cancel compensation for overseas customers.
 

gavan

Novice Member
Any truth in claims that the BBC's Robert Preston is overstepping his journalism remit with his "breaking stories" having an apparent effect upon the markets?

*ducks*
Peston appears to be being used as a conduit by the powers that be in order to introduce the news into the wider media in a 'soft' way. As such, someone else will have decided what he can and can't say.
 

OldAndSenile

Novice Member
Any truth in claims that the BBC's Robert Preston is overstepping his journalism remit with his "breaking stories" having an apparent effect upon the markets?

*ducks*
My brother works for one on the major banks dealing directly with stuff to do with shares and Robert Peston is the most unpopular person on the planet to pretty much everyone in the financial industry at the moment.

He's making a LOT of problems for people, and a lot of the stories he's breaking would lead to jail terms if they were broken by people in the industry itself (like the Halifax and Lloyds meeting before the takeover).
 

Toasty

Distinguished Member
I don't normally advocate panic reactions but Krish, in this case I think you did the right thing and kudos for reacting before the fallout :smashin: With the Icelandic government financial state looking as unstable as its 2nd biggest bank, it looks like a big mess.

I nearly ploughed money into an Icesave account earlier this year, almost seduced by the cool adverts and table topping rates on the same sites that are ironically breaking the bad news. There were some rumblings at that time that the Icelandic banks weren't as stable as they should be and I shied away.

I guess it doesn't come as a big shock that Iceland has been hit hard by the global economy problems, but blimey, banks are falling left right and centre, who's next? :rolleyes:
 

booyaka

Moderator
well - i have my and the wife's cash ISA with Icesave so guess it's starting a claim time soon to get the cash back.

Annoying thing will probably be that i will lose my cash ISA status for this year so when i get the cash back from them i will probably have issue trying to get it into Cash ISA's this year!:mad::mad:

This coming from myself as an IFA!!!! I did loads of research for myself and still things can go wrong!

Who would have thought that HBOS/RBS etc would have been in dire straights this time even 6 months ago!!:rolleyes::rolleyes:
 

booyaka

Moderator
edited out
 
Last edited:

IronGiant

Moderator
He's simply stating a fact IMHO :cool:
 

BandWidthJunkie

Active Member
In the same boat, have a Cash ISA (with several years allowance that was transferred into it from another institution) and a Instant Saver Account with them.

Haven't been able get any information about the ISA Allowances, I assume I will eventually get a cheque and that will be that.

Just wondering how much the cheque will be for :rolleyes:

You live and learn :(



well - i have my and the wife's cash ISA with Icesave so guess it's starting a claim time soon to get the cash back.

Annoying thing will probably be that i will lose my cash ISA status for this year so when i get the cash back from them i will probably have issue trying to get it into Cash ISA's this year!:mad::mad:

This coming from myself as an IFA!!!! I did loads of research for myself and still things can go wrong!

Who would have thought that HBOS/RBS etc would have been in dire straights this time even 6 months ago!!:rolleyes::rolleyes:
 

EricHitchmo

Novice Member
There have been savers appearing on various news shows today who have £100k plus in icesave :rolleyes:

I'm just glad I only had 22k in there. Another couple of years and I would have had at least 50k.

I really feel sad for those who may (will?) lose money. I'm hoping that the government will have the ******** (for once) to save all British Icesave customers' deposits.
 
C

cnni

Guest
Hey,

My name is Mark Thompson and I am a journalist working for CNN International.
We're interested in speaking to someone tomorrow who has been affected by the Ice Serve collapse.
If you would be interested in expressing your opinion on the matter and explaining how you have been hit I would greatly appreciate hearing from you as soon as possible.
My email address is [email protected] or you can reach me on 02076931646.
I look forward to hearing from you.

Many Regards

Mark.
 

EricHitchmo

Novice Member
Hey,

My name is Mark Thompson and I am a journalist working for CNN International.
We're interested in speaking to someone tomorrow who has been affected by the Ice Serve collapse.
If you would be interested in expressing your opinion on the matter and explaining how you have been hit I would greatly appreciate hearing from you as soon as possible.
My email address is [email protected] or you can reach me on 02076931646.
I look forward to hearing from you.

Many Regards

Mark.
meh
 

booyaka

Moderator
FSCS - Consumer home page    

FSCS gears up to assist Icesave's UK branch customers

In the light of the current uncertainties, the Financial Services Compensation Scheme (FSCS) is today gearing up in case it needs to assist approximately 300,000 savers at Icesave.

Icesave is the UK branch of Landsbanki Islands hf (trading here under the registered name Icesave). It is an EEA bank that is authorised by the Fjármálaeftirlitið (FME), the financial services regulator in Iceland. The Financial Services Authority in the UK has reported that Icesave is now expected to go into insolvency proceedings in Iceland and this would trigger an FSCS default.

Eligible savers with Icesave are protected by the Icelandic Depositors' and Investors' Guarantee Fund (IDIGF), up to a limit of the first 20,887 euros of their deposits. As an Icelandic bank Icesave is not automatically a member of the FSCS, but it opted to become a 'top-up' member. This means that eligible retail savers with Icesave's UK branch whose savings exceed the Icelandic limit would benefit from top-up compensation from the FSCS covering the amount over the Icelandic limit up to the new FSCS compensation limit for deposits of £50,000.

If the default is triggered as expected, FSCS will contact all UK savers directly with details of how to apply for compensation. Further announcements will follow and we will keep this page updated.
 

booyaka

Moderator
A message posted on Tryggingarsjóður.is - Um sjóðinn (the Icelandic Guarantee Fund) reads :-
From the Prime Minister of Iceland

In a press conference today Iceland's Prime Minister, Mr. Geir H. Haarde, said that if needed the Icelandic Government will support the Depositors' and Investors' Guarantee Fund in raising the necessary funds, so that the Fund would be able to meet the minimum compensation limits in the event of a failure of an Icelandic bank.

The Icelandic banks have top up agreements in the following countries:

* United Kingdom
* The Netherlands
* Norway
* Finland
* Sweden
 

booyaka

Moderator
taken from here

Are your savings safe?: Full guide to protect your cash. UPDATED...


* STOP PRESS. Updated 17.30 Tue 7 Oct. Icesave temporarily stops withdrawals.

Icesave is reported to have gone into technical receivership, meaning its assets have been taken over by the Icelandic government and it has effectively been nationalised (like Northern Rock was), see this FT article.

We’re constantly speaking to Icesave, the Treasury and the FSCS to monitor the situation. All updates will appear here and be included in the free weekly email.

While the bank has stopped withdrawals, that doesn’t mean it is now bust, though at best it's probably a 50-50 likelihood. Here are the crucial points.

o The bank is still operational.

o No compensation arrangements have been triggered (this only happens if the bank isn’t still operational).

o If compensation arrangements are triggered it will therefore be after the new £50,000 level introduced today.

o All UK savers are thus protected up to £50,000 per person in Icesave (£100,000 for joint accounts).

o The first €20,000 (this may’ve been upped to €50,000 on some reports of a European meeting today) will come from the Icelandic compensation scheme.

o If a claim is needed, it will probably involve filling out just one form to the FSCS, you would not have to write to Iceland. If that does happen, full details and any necessary template letters will of course be included here.

o If you have money in a cash ISA, whether you would be able to keep the ISA status isn’t yet clear. However after Northern Rock, the government ensured all ISA savers kept their status, even those who’d withdrawn money, so it is very likely.


As for the strength of the Icelandic compensation scheme, there are reports, yet to be 100% confirmed, that the Icelandic government is promising to ensure all necessary compensation will be met and it will fund the scheme.

We spoke to the Treasury this morning about whether, in the very unlikely event of the Icelandic scheme not being able to cover its obligation, would it step in and make sure UK savers were covered for the whole £50,000?

Late this afternoon it finally called to say "The UK government is working with the Icelandic government to protect UK savings up to £50,000", and we're hoping for more soon. We interpret this to mean that over and above that level, it's up to the Icelandic government.

However, there is no FINAL answer, discussions are ongoing and this article will be updated as soon as anything further is decided. For more info, read my full blog.

Ultimately it should be remembered, there are two levels of protection for any bank. The first hope is the government will bail it out, with the compensation scheme to back it up. It’s unclear whether the Chancellor's promise to defend any UK bank would apply to a UK bank owned by a ‘foreign’ bank. So here be even more cautious about putting over £50,000 in.
 

alnwrd

Novice Member
Heritable Bank (part of the same group) is also refusing withdrawal requests but it is separately authorised by the Financial Services Authority up to £50,000. A week ago I had an account with Kaupthing Edge, another Iclandic bank. As I was changing my personal current account bankers I asked them to change my nominated account to my new bankers, The Coop Bank. To prove I was who I said I was (even though I had logged in with passwords etc), they wanted a photo driving licence or passport or some social security benefit book. As I could not provide any of these I had to close the account and withdraw £37,000. How pleased I am now that they would not change my nominated account "Phew"
 

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