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'Progress made' in Iceland talks 'Progress made' in Iceland talks
(about 2 hours later)
Significant progress has been made over frozen UK investments in failed Icelandic banks, say the Treasury and the Icelandic authorities.Significant progress has been made over frozen UK investments in failed Icelandic banks, say the Treasury and the Icelandic authorities.
Arrangements have been agreed "in principle" for a quick payout to depositers in Landsbanki's closed internet bank Icesave, they said.Arrangements have been agreed "in principle" for a quick payout to depositers in Landsbanki's closed internet bank Icesave, they said.
The delegations agreed to work closely on the other remaining issues over the coming days, the statement said. The talks continue as world leaders meet to tackle the financial crisis.
The delegations met "in a friendly atmosphere in Reykjavík", it added. Meanwhile, Chancellor Alistair Darling said he would unveil more details about the UK's bank rescue plan next week.
British investors have roughly £4bn in the Icelandic bank. His comments came in a BBC interview in Washington where he has been meeting finance ministers from the group of seven industrialised nations and US President George W Bush.
Although Chancellor Alistair Darling had promised to compensate investors in full, the first £16,000 of a deposit is meant to be guaranteed by the Icelandic authorities. Mr Darling would not say whether the details would be released before markets opened on Monday.
It is understood Iceland has now agreed in principle to honour this commitment. Significant progress was made on retail depositors of Icesave with arrangements agreed in principle for an accelerated payout to depositors Treasury and Icelandic officials
"What we're doing over the weekend is looking at specifics, how do we implement it and we'll be making an announcement at the beginning of the week," he said.
Policy makers from around the world are meeting to coordinate efforts to battle the crisis engulfing the global financial system and threatening to plunge major economies into recession.
Prime Minister Gordon Brown is to fly to Paris on Sunday to hold crisis talks with French president Nicolas Sarkozy before joining in a scheduled meeting with other leaders from eurozone countries.
Meanwhile, tensions have flared up between Britain and Iceland as the collapse of Iceland's banks have put billions of pounds of UK savers money at risk.
Iceland guarantees
The chancellor has said all UK private accounts affected by the bank crisis will be protected.
A Treasury delegation is in the Icelandic capital to seek assurances UK savers with money in collapsed Icelandic banks will not lose their deposits.A Treasury delegation is in the Icelandic capital to seek assurances UK savers with money in collapsed Icelandic banks will not lose their deposits.
The group wants to establish a claims procedure for British depositors to get their money back as soon as possible.The group wants to establish a claims procedure for British depositors to get their money back as soon as possible.
The UK government is also pressing for the quick return of almost £1bn of funds invested by councils and other public bodies, including charities. The UK government has already taken measures to secure UK deposits held by Iceland's Heritable and Kaupthing banks. ING Direct has agreed to take over the deposits from these banks.
But customers of internet bank Icesave are still waiting to hear what will happen to their money after its parent Landsbanki went into administration last week.
British investors have roughly £4bn in the Icelandic bank.
Although the chancellor had promised to compensate UK investors in full, the first £16,000 of a deposit is meant to be guaranteed by the Icelandic authorities.
It is understood Iceland has now agreed in principle to honour this commitment.
"Significant progress was made on retail depositors of Icesave with arrangements agreed in principle for an accelerated payout to depositors," said the statement issued by Treasury and Icelandic officials on Saturday.
'Friendly atmosphere'
The UK government is also pressing for the quick return of almost £1bn of funds invested by councils and other public bodies, including charities, which the government has not offered to protect.
It is thought this will also be discussed over the weekend.
The Treasury delegation in Reykjavik includes officials from the Bank of England and the Financial Services Authority.The Treasury delegation in Reykjavik includes officials from the Bank of England and the Financial Services Authority.
After a number of sharp exchanges between Gordon Brown and his Icelandic counterpart Geir Haarde, the countries have sought to show they are now working together.
"Delegations of Iceland and the United Kingdom have met in a friendly atmosphere in Reykjavík to discuss issues of mutual interest related to the current financial crisis," the joint statement said.