More than 300,000 Britons who have savings with the Icelandic bank Icesave have been told that they may have to wait weeks or even months to get their hands on their money, after the bank's parent, Landsbanki, went into receivership.
Icesave, which has offered some of the most competitive savings rates in the UK over the past year, stopped British savers from withdrawing money from their accounts yesterday while the receivers tried to engineer a rescue of the bank. Its sister bank, Heritable, which is also owned by Landsbanki, was also put into administration.
Although Landsbanki stressed that the bank was not yet insolvent – and could yet be rescued – British regulators were telling savers to prepare for the worst, advising them that they will probably have to reclaim their money via the UK's Financial Services Compensation Scheme (FSCS).
Although £50,000 of customers' savings will be guaranteed, the first €20,887 (£16,170) of this will be paid out by the Icelandic compensation scheme, with the remainder being covered by the FSCS.
However, the FSCS said that it would be handling all claims so all UK depositors would only have to fill out one form.
Unfortunately, there remains no guarantee on how quickly savers would be reunited with their money. The FSCS said it would endeavour to make payments as quickly as possible, but was unable to say how long this might be. Insiders have admitted that without a government loan to the compensation scheme, it could be weeks or months before savers can access their money. Loretta Minghella, the chief executive of the FSCS, said: "We are pulling out all the stops to help those who have deposits with Icesave. We know that they will be feeling anxious and want to reassure them that we will do everything we can to help them get the help they are entitled to as quickly as possible.
"What we have agreed in principle with the Icelandic scheme is that we should try to use a single application form for both schemes that will spare consumers the need to make separate claims to both compensation schemes. We expect to send application forms to all of Icesave's eligible depositors within the next week.
"If possible, this will be a form which will enable people to make claims on either the Icelandic scheme or both schemes according to the size of their claim."