Landsbanki's nationalisation explained

One of Iceland's biggest banks, Landsbanki, was nationalised by the country's government today.









Q: What has happened?



A: The Icelandic Financial Supervisory Authority issued a statement saying the country's government had taken control of Landsbanki. The move follows emergency legislation passed by the Icelandic parliament yesterday, giving the financial regulator the power to dictate banks' operations, including forcing them to sell overseas assets or merge with rivals



Q: What UK brands does Landsbanki have?



A: Landsbanki offers online savings products through Icesave and a range of products including mortgages and savings through Heritable Bank.



Q: What is happening to Icesave?



A: Icesave has a message on its website telling consumers that it is not processing any deposits or any withdrawal requests on its internet accounts. The company is not giving out any information beyond this.



There is speculation that the website may have been shutdown as the Icelandic government is in the process of selling the business, but this is only speculation.



Q: Is my money safe?



A: There is absolutely no reason to think that consumers' money is not safe. Landsbanki has been nationalised, meaning it is now backed by the Icelandic government, it has not collapsed.



In the unlikely event that it does go under, consumers' savings would be protected by up to £50,000 through a combination of the Icelandic deposit compensation scheme and the UK's Financial Services Compensation Scheme (FSCS).



The Icelandic scheme would payout the first €20,887 (£16,170) that people lost. If for some reason it was unable to do this, it has a reciprocal agreement with other Nordic countries who would step in.



The UK scheme would then top-up savers' compensation to the £50,000 limit for sole accounts and £100,000 for joint ones.



Q: How long would it take to get my money back?



A: It is difficult to say, but it is thought the Icelandic scheme would be able to pay out relatively quickly as it is partially pre-funded.



In the UK, the FSCS takes around four months to pay out, although it will pay compensation quicker if possible. A consultation is currently under way looking at getting the scheme to return the bulk of consumers' money to them within a week.



Q: I have money saved with Kaupthing Edge, is it safe?



A: Kaupthing Edge is part of Iceland's biggest bank Kaupthing. The group is reassuring UK consumers that it is financially sound.



Its website contains a message from Kaupthing chairman Sigurdur Einarsson stressing that it had some of the strongest capital ratios in the European banking sector.



Unlike Landsbanki, Kaupthing Edge is registered as a UK bank and regulated by the Financial Services Authority, meaning that in the unlikely event that there was a problem, consumers would receive all of their compensation from the FSCS.



Q: I am really worried about my savings generally, what should I do?



A: These are uncertain times in the banking sector and it is understandable that consumers are worried. However, the recent action taken by the Government suggests it is unlikely to allow a major British bank to fail. In the unlikely event that one does, people's money will be protected up to £50,000 for sole accounts and £100,000 for joint accounts per bank through the FSCS.



The best advice for people who are worried is to make sure they do not hold more than £50,000 with a single banking institution. It is worth noting that this limit applied to banking groups and not individual brands. For example Halifax and Birmingham Midshires are part of the same banking group.



Some savings institutions, such as National Savings and Investments and Northern Rock, are also backed by Government guarantees.



But it is worth remembering that no UK bank has yet failed.

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