HM TREASURY News
Release (101/08) issued by COI News Distribution Service. 8 October 2008
1. Acting on the
advice of the Bank and Financial Services Authority (FSA), and in
light of announcements made by the Icelandic authorities in recent
days, the Chancellor has taken action today to protect the retail
depositors in two Icelandic owned banks: Icesave, a UK-based
branch of Landsbanki and Heritable, a UK-based banking subsidiary
of Landsbanki. He has taken this action to ensure the stability of
the UK financial system. Savers' money is safe and secure.
Landsbanki/Icesave
2. The UK authorities expect that Landsbanki will soon be
declared in default. Should that occur, the Chancellor has put in
place arrangements to ensure that no retail depositor will lose
any money as a result of the closure of Icesave. The Treasury and
the Financial Services Compensation Scheme are working with the
Icelandic authorities and their Deposit Insurance Scheme to ensure
that depositors are paid back as quickly as possible. The
Chancellor has also spoken to the Icelandic Finance Minister about
the importance of the Icelandic authorities ensuring that UK
depositors in Icesave are given the same protections as depositors
in Iceland and receive their deposits back in full promptly.
3. 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.
4. The Chancellor has also today taken steps to freeze assets of
Landsbanki in the UK until the position with respect to the future
of the firm and UK creditors becomes clearer.
Heritable
5. Heritable is regulated by the FSA. The FSA has determined that
Heritable no longer meets its threshold conditions, and is likely
to be unable to continue to meet its obligations to depositors.
The FSA concluded that it is in default for the purposes of the
Financial Services Compensation Scheme. The Treasury has used the
Banking (Special Provisions) Act 2008 to ensure a resolution that
preserves financial stability and provides protection and
continuity of business for depositors.
6. Heritable's retail deposit business has been transferred
to ING Direct, a wholly-owned subsidiary of ING Group. ING Direct
is working to rapidly ensure that it is business as normal for all customers.
7. This action by the Tripartite Authorities protects
savers' money and provides certainty for retail depositors.
The transfer of the retail deposit book has been backed by cash
from HM Treasury and the Financial Services Compensation Scheme.
8. The remainder of Heritable's business has been put into
administration. Any retail depositors eligible to claim under the
Financial Services Compensation Scheme whose business has not been
transferred to ING will be paid out in full through the Financial
Services Compensation Scheme.
9. This is the right course of action to protect savers, ensure
financial stability, and safeguard the interests of the taxpayer.
Notes to Editors
1. These notes set out in further detail the
arrangements announced today by HM Treasury to safeguard deposits
with Heritable.
2. By orders made under the Banking (Special Provisions) Act
2008, all retail deposits with Heritable have been transferred to
ING Direct.
3. Retail deposits with Heritable means the credit balances on
the following deposit accounts and retail bonds: retail Fixed Rate
Bonds; 50+ Saver; 60 Day Notice; 90 Day Notice; 120 Day Notice,
Online Saver; Direct Saver and Easy Access.
4. 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.
5. ING Direct already has over 1 million customers in the UK
using its online banking services.
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