From Iceland — New Icesave Deal Reached

New Icesave Deal Reached

Published December 9, 2010

Iceland, the UK and Holland have struck a new deal on Icesave. It will now be submitted to parliament for a vote.
Negotiations between the three countries have been on rocky ground since the previous agreement, which was voted into law by a parliamentary majority last December, but vetoed by the president and then overwhelmingly rejected in a national referendum last March. Since then, new negotiations have been touch and go.
Today, at a press conference held in downtown Reykjavík, the Icelandic negotiations team introduced the new deal struck between the three countries.
1. Instead of a traditional loan agreement, the three countries have agreed to an indemnity agreement, with the participation of the government and The Depositors’ and Investors’ Guarantee Fund (TIF). It is TIF who will reimburse Britain and Holland for the amount they have paid already to depositors.
2. Government responsibility will focus primarily on paying the interest on these payments.
3. Interest rates will be at 3% for the Dutch government, and 3.3% for the British, starting in 2016. This is significantly less than the initial interest agreement, which was at 5% for both countries.
All told, it is estimated that this will cost the Icelandic government 50 billion ISK (about 328 million euros).
This new agreement will now be put up for parliamentary approval. More details to follow.

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