The Icesave Saga continues. The British and Dutch governments have filed a claim of up to £5.3bn against Iceland's deposit insurance fund over money that savers in the UK and the Netherlands were compensated for when the Icesave online saving accounts were bailed out in 2008. The Icelandic bank Landsbankinn was responsible for the saving accounts.
Iceland’s guarantee scheme, the Depositors’ and Investors’ Guarantee Fund, TIF, said on Monday that the UK was seeking ISK 452bn, while the Netherlands wanted ISK 104bn. Both countries are also seeking interest and costs in the five-year-old dispute.
The defaulted Icelandic bank however has enough assets to repay the Icesave claim in full and repayments have already begun. Repaying the full amount will take time because of capital controls. It therefore looks like the Dutch Central Bank (DNB) and the British Financial Services Compensation Scheme (FSCS) want to be payed twice, since they are filing a claim against TIF for the full amount. They want the defaulted bank to pay in full, they want the deposit fund to pay in full, and they want the Icelandic government to guarantee the full amount. The EFTA court has however ruled that there is no government guarantee on the deposit insurance fund.
Bjarni Benediktsson, the minister of finance in Iceland, said that a new deposit insurance fund would be created if the TIF fund looses the case. The claim is for 1000 bn ISK, but the fund only has 35 bn ISK. The fund had around 18 bn ISK when Landsbankinn defaulted, and that money has been put aside.
The managers of the deposit insurance fund, TIF, say that the case has passed the statute of limitations, and that is their main defense. Their secondary defense is that DNB and FSCS can only claim the 18 bn ISK that were in the fund when Landsbankinn defaulted.