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Banking: Iceland

My right honourable friend the Chancellor of the Exchequer (Alistair Darling) has made the following Written Ministerial Statement. On 8 October 2008, I announced to Parliament that the Government would ensure that no depositor in Icesave, the internet product made available by the UK branch of the Icelandic bank, Landsbanki, would lose any money as a result of the closure of Icesave. I have today laid a Treasury Minute to explain several contingent liabilities into which the Government have entered in order to give effect to part of this commitment. The Government are also making an advance of approximately £800 million to the Financial Services Compensation Scheme (FSCS) in order to enable the FSCS to pay out that part of a depositor's rights arising from deposits of over the FSCS depositor compensation limit of £50,000. The Bank of England is initially providing loan facilities to enable the FSCS to pay out that part of a depositor's rights arising from deposits of under the FSCS depositor compensation limit. The Treasury will refinance these facilities. Authority for this advance and for refinancing is sought in the winter supplementary estimate, which will be presented to the House later this month. Statutory authority for the expenditure will be provided on a retrospective basis by the Banking Bill.