HM Treasury

Newsroom & speeches

103/08

09 October 2008

Landsbanki, Heritable, and Kaupthing Singer and Friedlander

The Treasury has taken decisive action to ensure the stability of the UK financial system and to protect the interests of depositors and taxpayers.

The Treasury is now taking steps to ensure the interests of individual depositors are safeguarded and UK creditors of Landsbanki are treated fairly.

The Chancellor has put in place arrangements to ensure that all retail depositors in the Icelandic banks of Landsbanki (including their “Icesave” products), Heritable, and Kaupthing Singer and Friedlander (including their “Edge products”) will receive their money in full.

Retail Depositors (including individuals)

For Heritable, deposits in Heritable’s retail deposit products have been transferred to ING Direct. These products include the 2,3,4, and 5 year fixed rate bonds, easy access, online saver, direct saver, 50 plus saver, and the 60, 90 and 120 day notice accounts. You can continue to access your account in the same way as you did previously.

For Kaupthing, all retail deposits under the “Edge” brand have been transferred to ING Direct. You can continue to access your account in the same way as you did previously.

Further detail can be found on the ING Direct website at http://www.ingdirect.co.uk/general/faqs/keandhb.asp

A small number of retail depositors have accounts with Kaupthing that are not part of the “Edge” brand or accounts with Heritable which have not been transferred to ING Direct. These depositors will receive their money in full. They will need to apply to the Financial Services Compensation Scheme to receive their deposit. Further detail can be found on the FSCS website (http://www.fscs.org.uk/consumer/) or by phoning 0207 892 7300.

All retail depositors in Icesave will receive their money in full. We are working urgently with the Icelandic Authorities to clarify the position of Icesave and the Financial Services Compensation Scheme are putting in place practical arrangements to allow depositors to receive their money as quickly as possible.

Arrangements are being put in place to ensure that all ISA customers of Icesave will continue to benefit from the tax-free status of their accounts.

Wholesale Depositors (including Local Authorities)

Landsbanki is in receivership in Iceland. The Government is urgently trying to establish what this means for UK wholesale creditors (including local authorities). The Government also took action yesterday, by freezing the UK assets of Landsbanki, to help ensure that UK wholesale creditors of Landsbanki are treated fairly.

Heritable, the UK subsidiary of Landsbanki is in administration in the UK.  Any creditor should contact Heritable on 020 7493 6621
The same situation applies for Kaupthing Singer & Friedlander, the UK subsidiary of Kaupthing also in administration in the UK and creditors should contact the call centre there on 02032056800.

For Glitner Bank, the parent company is in "receivership" in Iceland.  We are urgently trying to establish with the Icelandic Govt what this means for creditors.

Asset freezing

The Treasury made an Order to freeze funds owned, held or controlled by Landsbanki.  This was due to concerns about the detrimental effect on the UK economy of the current situation.  In order to ensure that the asset freeze on Landsbanki does not adversely affect third parties, the Treasury has this afternoon issued a licence exempting certain activities from the terms of the Landsbanki Order. The licence allows funds to flow into Landsbanki's frozen accounts in the UK and businesses will be able to access their accounts and other facilities with Landsbanki London Branch.  The Treasury is monitoring the situation and will issue further licences if necessary.  The Treasury has also issued a notice confirming that the Order does not freeze the assets of subsidiaries of Landsbanki Island hf.

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Notes For Editors

1. By orders made under the Banking (Special Provisions) Act 2008, all retail deposits with Hertiable have been transferred to ING Direct. By orders made under the Banking (Special Provisions) Act 2008, all deposits with KSF that relate to Edge accounts have been transferred to ING Direct.

Deposits with KSF other than Edge Accounts

2. The government will ensure that all retail deposits with KSF, which do not relate to Edge accounts (non-Edge retail deposits), will be repaid to depositors who are eligible to claim under the Financial Services Compensation Scheme, including in respect of deposits in excess of the £50,000 limit under the Scheme, with the government covering deposits in excess of the FSCS limit.

3. The Financial Services Compensation Scheme working with the administrator of KSF will endeavour to contact these individuals and make payments to them as soon as possible.

4. All non-Edge retail depositors will receive payments of the gross amounts of the balances on their accounts.

5. Retail deposits for these purposes means the credit balances on Kaupthing Edge Savings Accounts and Kaupthing fixed term deposit accounts held by persons who are eligible to claim under the FSCS (such persons include most private individuals and some small businesses and charities; for further details, please see Chapter 4 of the FSA’s Compensation Sourcebook or the website of the FSCS (http://www.fscs.org.uk

6. It will be a condition of payment under these arrangements that a non-Edge retail depositor must assign his claims against KSF to FSCS or to such other person as HM Treasury may require, which will account to HM Treasury for recoveries, which it makes as a result. No further sums will be paid to such non-Edge retail depositor.

7. These arrangements supplement, but do not replace, the FSCS (which covers in full the first £50,000 of financial loss in respect of retail deposits). 

ING Direct

8. ING Direct N.V. is a wholly-owned subsidiary of ING Group N.V., the Dutch holding company of an international banking and insurance group, with branches in London and elsewhere. The group has over 85 million customers worldwide, and is one of the 20 largest financial institutions in the world.

9. ING Direct already has over 1 million customers in the UK using its online banking services.

FSCS

10. The FSCS has financed its payout through a loan from the Bank of England.

11. The Chancellor of the Exchequer today restates that the Government stands behind the FSCS, so that it can be relied upon to be able to play its role in meeting future claims that arise.


 

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