Darling hits back against Iceland over debt pledge

Chancellor Alistair Darling has repeated his comments that Iceland would not compensate UK savers, while the Manx High Court has put a case to wind up Kaupthing Singer & Friedlander on hold for a month. 

Darling said he was in ‘no doubt’ the Icelandic government would not be able to meet its £4.8 billion commitment to pay back Icesave customers. Darling was responding to the transcript of a telephone call he had with Iceland finance minister Arni Mathiesen, which called into doubt his claim Iceland had no intention of honouring its debt. 

‘I was in no doubt from my conversation with the finance minster, the whole conversation not just one part of it, that the Icelandic government was not going to be able to help British depositors. That is why I had to announce we would step in and safeguard their position,’ Darling told Channel Four News today. 

Mathiesen said in the transcript from 7 October, published by Icelandic TV station RUV, he was working on repaying the debt. ‘Well, I hope that will be the case. I cannot visibly state that or guarantee that now but we are certainly working to solve this issue. This is something we really don’t want to have hanging over us,’ said Mathiesen. 

Talks between the UK and Icelandic governments over Icesave have broken down but are expected to resume at a later date. ‘We are ready to work with the Icelandic government. We would like to see that to happen but I’m afraid we are reaching the end of October and we still don’t have an agreement with them,’ said Darling.  

A court case on the Isle of Man to wind up Icelandic bank Kaupthing Singer & Friedlander, which is under administration, has been postponed until 27 November. AXA, Clerical Medical, Norwich Union and Royal Skandia called for the case to be adjourned until talks between the Manx and UK governments concluded.  

The Manx government has called for £557 million of the Isle of Man bank's money frozen in the UK operation to be released to pay back savers and bond holders who had £821 million on deposit.

The delay means the Isle of Man depositors’ compensation scheme, which guarantees the first £50,000 savings, will not take effect yet. A number of Kaupthing savers face being made homeless because of this delay and by having more than the £50,000 limit on deposit.