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| Version 0 | Version 1 |
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| Icelandic banks reassure savers | Icelandic banks reassure savers |
| (2 days later) | |
| Savers in the UK who have put their money into Icelandic banks have been told their deposits are safe. | Savers in the UK who have put their money into Icelandic banks have been told their deposits are safe. |
| That message was given today by the Icelandic government and the two Icelandic banks that operate in the UK. | That message was given today by the Icelandic government and the two Icelandic banks that operate in the UK. |
| Hundreds of thousands of UK savers have put their money into Icelandic banks which pay high interest rates. | Hundreds of thousands of UK savers have put their money into Icelandic banks which pay high interest rates. |
| But concerns about their safety rose after a week of reports that the Icelandic economy itself was in difficulties. | But concerns about their safety rose after a week of reports that the Icelandic economy itself was in difficulties. |
| Bank's response | Bank's response |
| Mark Sismey-Durrant, chief executive of Icesave in the UK told Radio 4's Money Box programme, | Mark Sismey-Durrant, chief executive of Icesave in the UK told Radio 4's Money Box programme, |
| "They shouldn't be nervous about the state of the bank. | "They shouldn't be nervous about the state of the bank. |
| "We have a strong capital base and 63% of our balance sheet is funded by deposits. | "We have a strong capital base and 63% of our balance sheet is funded by deposits. |
| "We maintain strong liquidity levels." | "We maintain strong liquidity levels." |
| Asked specifically if customers could be sure their money was safe and they could get it out when they wanted he replied, "Yes. They can be." | Asked specifically if customers could be sure their money was safe and they could get it out when they wanted he replied, "Yes. They can be." |
| RELATED AUDIO Tryggvi Herbertsson and Mark Sismey-Durrant on BBC Radio 4's Money Box Ray Furlong on Iceland, on BBC Radio 4's PM | RELATED AUDIO Tryggvi Herbertsson and Mark Sismey-Durrant on BBC Radio 4's Money Box Ray Furlong on Iceland, on BBC Radio 4's PM |
| At the end of September the Icelandic government rescued the country's third biggest bank, Glitnir, buying three quarters of it for £478m. | At the end of September the Icelandic government rescued the country's third biggest bank, Glitnir, buying three quarters of it for £478m. |
| And some questioned whether the government could afford to bail out either of its two biggest banks, Kaupthing and Landsbanki - which trades as Icesave in the UK - if they got into difficulties. | And some questioned whether the government could afford to bail out either of its two biggest banks, Kaupthing and Landsbanki - which trades as Icesave in the UK - if they got into difficulties. |
| Both banks are far bigger than Iceland's economy. | Both banks are far bigger than Iceland's economy. |
| Icelandic government stance | Icelandic government stance |
| But Tryggvi Herbertsson, economic adviser to the Icelandic prime minister, said the government could and would step in. | But Tryggvi Herbertsson, economic adviser to the Icelandic prime minister, said the government could and would step in. |
| "Definitely we would come to the rescue of a bank - definitely. | "Definitely we would come to the rescue of a bank - definitely. |
| "The banking system in Iceland is very large compared to the economy, but still we think we can maintain the problem because the balance sheet of the bank is very good." | "The banking system in Iceland is very large compared to the economy, but still we think we can maintain the problem because the balance sheet of the bank is very good." |
| "They have not been involved in sub-prime or buying housing debts from abroad and we are pretty confident that the balance sheet is healthy and the banks can operate healthily in the future." | "They have not been involved in sub-prime or buying housing debts from abroad and we are pretty confident that the balance sheet is healthy and the banks can operate healthily in the future." |
| The best way of seeing Iceland is as a country that turned itself into a giant hedge fund Robert Peston, the BBC's business editor Robert Peston's Blog: Markets call time on Iceland Despite such reassurances Icesave confirmed that many of its 300,000 customers had been reducing their accounts so they were below the limit that is protected by the financial services compensation scheme. | The best way of seeing Iceland is as a country that turned itself into a giant hedge fund Robert Peston, the BBC's business editor Robert Peston's Blog: Markets call time on Iceland Despite such reassurances Icesave confirmed that many of its 300,000 customers had been reducing their accounts so they were below the limit that is protected by the financial services compensation scheme. |
| At the same time, a spokeswoman added, every week thousands of customers are moving money to Icesave to keep their balances down in other banks. | |
| Compensation limit | Compensation limit |
| The limit will be £50,000 - up from £35,000 before 7 October 2008. | The limit will be £50,000 - up from £35,000 before 7 October 2008. |
| The first 20,000 euros of that comes from the Icelandic compensation scheme, with the balance coming from the scheme in the UK. | The first 20,000 euros of that comes from the Icelandic compensation scheme, with the balance coming from the scheme in the UK. |
| Tryggvi Herbertsson said, despite its economic problems, the Icelandic government would honour that commitment if a bank did get into trouble. | Tryggvi Herbertsson said, despite its economic problems, the Icelandic government would honour that commitment if a bank did get into trouble. |
| "We are not in that kind of difficulty. | "We are not in that kind of difficulty. |
| "We are part of the European directive on deposit insurance and we are bound by international law." | "We are part of the European directive on deposit insurance and we are bound by international law." |
| The other Icelandic bank which operates savings accounts in the UK, Kaupthing Edge, is separately registered here and so savers will be protected through the UK scheme up to the £50,000 limit. | The other Icelandic bank which operates savings accounts in the UK, Kaupthing Edge, is separately registered here and so savers will be protected through the UK scheme up to the £50,000 limit. |
| A spokesman for the bank told the BBC: | A spokesman for the bank told the BBC: |
| "We are in a strong financial position and our liquidity is good. | "We are in a strong financial position and our liquidity is good. |
| "Kaupthing Edge savers should be reassured that their deposits are covered by the UK's Financial Services Compensation Scheme." | "Kaupthing Edge savers should be reassured that their deposits are covered by the UK's Financial Services Compensation Scheme." |
| BBC Radio 4's Money Box was broadcast on Saturday,4 October 2008 at 1204 BST. | BBC Radio 4's Money Box was broadcast on Saturday,4 October 2008 at 1204 BST. |