Iceland rebuts European body's Icesave repayment deadline

11th June 2011, Comments 0 comments

Iceland disagrees with a European watchdog's three-month deadline to repay Britain and the Netherlands for compensation they shelled out to their citizens who lost money in the collapse of the Icesave bank.

The island nation's ministry of economic affairs also said it was ready to defend its position in court, in a statement published late Friday following a notice by a European Free Trade Association (EFTA) watchdog.

The EFTA's surveillance authority (ESA) told Iceland it could be taken to the EFTA court if did not repay some 3.9 billion euros ($5.5 billion) to Britain and the Netherlands within three months.

"Iceland's position is that the obligation concerning the deposits does not involve a state guarantee, and there is nothing in ESA's reasoned opinion to alter this position taken by the government," the ministry said.

It added that all the political parties in Iceland's parliament had "expressed their unanimous support for Iceland's defence" if the case did go to court.

"While no one can state with certainty what outcome of the court case can be, clearly Iceland does have an important cause to defend," the ministry added.

Iceland also said recovered estates from the failed Landsbanki bank, Icesave's parent company, would make it possible to repay Britain and the Netherlands.

"The lion's share of claims of all depositors and deposit guarantee funds in the UK and the Netherlands will be paid from the estate of the collapsed bank," the statement said.

All of Iceland's main banks went belly-up in October 2008, causing the near collapse of Iceland's small, overheated economy.

Online bank Icesave went under, and Britain and the Netherlands later dished out a total of 3.9 billion euros ($5.5 billion) to reimburse some 340,000 of their citizens hit by the collapse.

© 2011 AFP

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