The Economic Secretary to the Treasury, Andrea Leadsom, has today confirmed that the government has recovered a further £1.36 billion from the Landsbanki estate in Iceland, which operated as Icesave in the UK, following its collapse at the height of the financial crisis. The government has now recovered 85% of its total claim from the Landsbanki estate.
Today’s payment marks another significant milestone in the government’s efforts to recover the costs to taxpayers of the financial crisis, and is the product of sustained engagement between the Economic Secretary, Andrea Leadsom, and the Icelandic authorities, including a series of phone calls and meetings over the Autumn of this year.
The Economic Secretary has made this a personal priority, in order to ensure taxpayers get their money back.
The government remains committed to recovering the full outstanding amount of the British taxpayer’s claim from the Landsbanki estate, and will continue to work hard to make this happen as soon as possible.
The payment received today will be used to pay down the national debt.
The Economic Secretary, Andrea Leadsom, said:
A key part of our long term economic plan is getting taxpayers’ money back from the financial crisis, including the collapse of Iceland’s banking system in 2008.
I have been pressing Ministers in Iceland to speed up the return of UK taxpayers’ money. That’s why I am delighted that we have today received a further, and significant, payment from the Landsbanki estate, which operated as Icesave in the UK. This payment means we have now recovered 85% of our total claim from the collapse of Icesave.
The failure of the Icelandic banks cost taxpayers billions of pounds, with no certainty of ever getting the money back. We remain committed to recovering the full outstanding amount of the British taxpayer’s claim from the Landsbanki estate, and will continue to work hard to make this happen as soon as possible.
The Icelandic bank, Landsbanki, operated its UK branch as Icesave. Icesave was a high-interest, internet-only saving scheme launched in Britain and the Netherlands, operating under the EU’s single-market rules (since Iceland is a member of the European Economic Area). This meant that, when Landsbanki went bust in October 2008, Icesave depositors were not fully covered by Dutch and British deposit insurance, relying instead on Iceland’s scheme.
The government at the time, through its deposit guarantee scheme, became the largest creditor to Landsbanki after fully refunding British retail savers with Icesave when the Icelandic deposit insurance failed to meet its obligations. The total payout amounted to £4.5 billion.
The government is on course to recover the full amount of our claim on the Landsbanki estate, which we expect to do by 2017.
Including today’s payment, the government has now recovered £3.82 billion from the Landsbanki estate, with four previous payments received at the following times:
- December 2011
- May/June 2012
- October 2012
- September 2013
The government is committed to protecting taxpayers and depositors from future financial shocks. Since the financial crisis, the government has introduced radical reforms to the banking system by taking forward the recommendations of the Independent Commission on Banking to ring-fence retail banking, and adopting the reforms proposed as part of the Financial Services Bill to ensure taxpayers never again have to bail out ‘too big to fail banks’.