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UK, Netherlands to Sue After Iceland Rejects Repayment Plan

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This is the second time Iceland says 'no' to repayment, having rejected a previous plan in March 2010. (Photo: Peter Lammers)
This is the second time Iceland says 'no' to repayment, having rejected a previous plan in March 2010. (Photo: Peter Lammers)

WORLD

  • Iceland votes against repaying €4 billion ($5 billion) after 2008 banking collapse
  • Icesave crisis wiped deposits from 340,000 UK and Dutch citizens
  • Rejected plan involved repayment from 2016-2046 with 3.3% interest to the UK and 3% to the Netherlands

The United Kingdom and the Netherlands are preparing a lawsuit against Iceland over the repayment of €4 billion ($5 billion) lost in the country's 2008 banking collapse. The money was lost when Icesave bank collapsed, wiping out the deposits of some 340,000 UK and Dutch citizens.

In a referendum held on April 9, Iceland voted against a repayment plan put forward by the UK and Dutch governments. Earlier in the week, the deal had been approved by Iceland's parliament, who also narrowly voted against putting the issue to a referendum.

President Goes Against Parliament

But by refusing to sign the deal, President Olafur Grimsson went against parliament and decided to proceed with the referendum, a move that Prime Minister Johanna Sigurdardottir described as "disappointing."

Ms Sigurdardottir said that after a bill gets a majority in parliament, it is not common that the president rejects it. She added that she does not believe that the Netherlands and Britain would be open to a further round of negotiations.

Iceland had rejected a previous repayment proposition in a March 2010 referendum. The conditions of the new deal were considerably more lenient than its predecessor, requiring repayment over 30 years from 2016 to 2046, at a rate of 3.3% interest to the UK and 3% to the Netherlands. The previous deal was for total repayment between 2016 and 2024 with 5.5% interest.

Analysts say that finding a resolution to the dispute is vital to Iceland's financial recovery, as well as a key issue for its entry into the European Union.

Key Players – Iceland Financial Services

  • Major financial service operators still present in Iceland: Central Bank of Iceland, Exista, Islandsbanki, Arion Bank and Saga Investment Bank, NBI and MP Bank

By James Mulholland for
James Mulholland is a Paris-based internet and broadcast journalist specializing in sports, current affairs and technology news, while also freelancing as a photographer.

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