Iceland pledges to honour obligations after bank collapse
Iceland's leader said the country would "honour its obligations" over the £2.3bn (€2.55bn) owed to Britain for lost savings.
A deal for Iceland to repay money lost by UK savers when the country's banking system collapsed was thrown into doubt this week when President Olafur Ragnar Grimsson refused to sign it off and instead put it to a public referendum.
But speaking to BBC's 'Newsnight' programme last night, Mr Grimsson said: "The view that we will not honour our obligations is completely wrong.
"The only thing that I have decided is to allow the Icelandic people to have the final say in a referendum which is in accordance with our fundamental democratic principles."
Asked if Britain and The Netherlands would get their money, he replied: "The fundamental basis of the law which is already in existence and which I signed is that Iceland declares it honours its obligations.
"We should involve ourselves in a constructive agreement with the British and Dutch governments in order to resolve this issue."
There has been widespread public opposition in Iceland to the Icesave bill, which commits the country to repaying about €3.4bn to Britain and The Netherlands.
When Mr Grimsson failed to approve the legislation on Tuesday, it was only the second time since Iceland's republic was founded in 1944 that the president had not signed into law a Bill approved by Parliament.
Around 298,000 British savers collectively had £4.56bn (€5.06bn) deposited with Icesave.
Their accounts in the bank were frozen in October 2008 following the collapse of its parent company, Landsbanki.
The UK government pledged that no-one would lose money through the failure of the group, and said it would step in to cover any money lost above the sums covered by deposit guarantee schemes.
Iceland agreed to pay back the first €20,887 that people lost, with the UK's Financial Services Compensation Scheme topping this up to £50,000 (€55,520) and the Government covering sums above this amount.
In August, the Icelandic parliament agreed to pay up to £2.35bn (€2.6bn) to the UK and £1.14bn (€1.27bn) to the Netherlands, effectively turning the bail-out into a loan, which was to be repaid over 15 years from 2016; however, this has now been thrown into doubt.
The FSCS had returned £3.9bn (€4.3bn) of savers' money by the end of March this year.
The £660m (€732.9m) which had yet to be repaid in March was held in fixed-term accounts. These savers will receive their compensation around the time their accounts would have matured.
