Icelandic news for UKIP

Telling the EU to fuck off works.

Iceland\’s centre-right opposition has returned back to power, marking a spectacular comeback for a coalition ousted in 2009 after presiding over the country\’s near bankruptcy.

OK. I wonder why?

The centrist party was punished at the polls in 2009 for its role in the financial deregulation that preceded the collapse of Iceland\’s banking system.

But support soared after a European court ruling this year vindicated the party\’s refusal to reimburse British and Dutch savers at failed online bank Icesave.

An interesting political lesson, don\’t you think?

9 thoughts on “Icelandic news for UKIP”

  1. Surreptitious Evil

    I never quite got this. Okay Bruin and (certainly not my) Darling decided to compensate affected UK savers over and above the legal guarantee. For their own political reasons.

    Why should they than assume that the Icelanders would or even should fork out for their bribery?

    Tim adds: Quite. As in Cyprus: the guarantee was up to a certain limit. Above that you’re not covered.

  2. Why did we bail out those rate tarts in the first place? Bad precedent.

    And if we must, would not a lower limit than €100K encourage the growth of those new small nimble banks everyone says they want?

  3. Further to bif’s note in respect of the precedent set concerning UK depositors in the Icelandic banks, why did the government choose to bail out UK depositors in Laiki Bank’s UK branches when it was quite clear to such depositors – at the time they deposited and subsequently – that such deposits were not covered by the FSCS?

  4. More than just being clear to depositors at the time, there were those of us who looked very carefully at the FSCS cover issue before making decisions.

    I was ‘rate tarting’ at the time (still do, let’s be honest) and looked into Icesave. Didn’t like the fact that I was covered by a foreign scheme, for pretty much exactly the worries that came about. I discovered that Heritable and Kaupthing Edge were Icelandic-owned but UK-covered, and went with them, *precisely because* the coverage was in the UK not overseas. In the event, my accounts were all moved over to the UK arm of ING. But I was never worried, because I knew that the coverage was in the UK and say what you like about governments of either colour — they are very good at keeping that sort of promise. (This is a separate question, by the way, from whether such promises should have been made in the first place. I think not.)

    So I got a bit annoyed when HMG decided to bail out people who’d been less careful, given that I’d specifically opted for a slightly lower interest rate in order to obtain the better ‘insurance policy’.

  5. SE, Tim: The case was about whether the Icelandic state is obliged to cover overseas depositors up to the guarantee.

    As Landsbanki and other banks were failing, and with the Guarantee fund obviously insufficient, Iceland passed a law to compensate domestic depositors ahead of overseas depositors, with a state guarantee for domestic depositors only. This seems to me to be pretty sharp practice, since overseas depositors would have made their deposits on the basis of equal treatment (in so far as they’d thought about it at all).

    The British government responded to Iceland’s refusal to pay by using anti-terrorism legislation to freeze bank assets – that was also sharp practice.

    The receivers of Landsbanki reckon they’ll eventually realise enough money to cover the minimum guarantee, so ho hum.

  6. I had money in Icesave as a retail depositor when it went under.

    When I originally funded the account, my interpretation (and I seem to recall that moneysavingexpert.com originally promoted this interpretation, too) of the cover was that it was actually /safer/ than a regular UK account, as the first (

  7. I had money in Icesave as a retail depositor when it went under.

    When I originally funded the account, my interpretation (and I seem to recall that moneysavingexpert.com originally promoted this interpretation, too) of the cover was that it was actually /safer/ than a regular UK account, as the first (16K GBP?) portion was covered not only by the FSCS, but also by the Icelandic scheme. Of course, I later learned that I’d got that exactly wrong, to my dismay.

    So when they went under, I was fully expecting to lose the first portion of my savings, or have a long fight on my hands at least. I didn’t expect the UK government to bail me out, and I didn’t ask for it to do so. But when they did, I said “thanks very much”, took the money, and put it in NS&I (which as well as being as safe as it seems to get, also struck me as the patriotic and grateful thing to do!)

    Fundamentally, though, Icesave was attracting business in the UK on the basis of the guarantee offered by the Icelandic state on the first 16K GBP of deposits. That guarantee should have been honoured when it became necessary, and not doing so is fraudulent in my opinion.

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