Iceland parliament to OK Dutch compensation deal

16th August 2009, Comments 0 comments

Iceland's parliament will give its backing next week to a controversial deal to pay back billions of euros lost by British and Dutch investors in the collapse of Icesave bank, a lawmaker said Saturday

Reykjavik - Iceland's parliament will give its backing next week to a controversial deal to pay back billions of euros lost by British and Dutch investors in the collapse of Icesave bank, a lawmaker said Saturday.

After weeks of negotiations, the government of Social Democratic Prime Minister Johanna Sigurdardottir won the support of a majority of lawmakers overnight for the deal, said budget committee chairman Gudbjartur Hannesson.

Except for the Progressive Party, the lawmakers agreed to back the deal to pay EUR 3.8 billion to the British and Dutch governments after receiving assurances that will limit the payments, Hannesson said.

"By this we are never paying more than we can, if there is little growth in GDP," Hannesson told AFP.

The lawmaker said the deal will be debated in parliament on Tuesday and that a vote would take place later.

The Icelandic government said in June it would hand over EUR 3.8 billion (USD 5.4 billion) by 2023 to the British and Dutch governments -- the total amount the two countries forked out to compensate disgruntled savers.

According to an Icelandic central bank report published in July, the deal will cost the country 1.2 percent of its GDP over 15 years, or about EUR 12,000 for each citizen in this island of 320,000 people.

Icesave, an online subsidiary of the Landsbanki bank which was nationalised in October 2008, attracted over 320,000 British and Dutch savers due to its high interest rates.

But they lost their savings when accounts were frozen during last year's credit crunch.

The British and Dutch savers were part-compensated by their own governments, who then turned to Reykjavik looking for money.

AFP/Expatica

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