The Government is set to resort to legal action to recoup billions of pounds paid out to cover the deposits of British savers in collapsed Icelandic banks, the Chief Secretary to the Treasury signalled today.
A negotiated settlement to reimburse the UK was rejected for a second time by Icelanders in a referendum yesterday, a result Danny Alexander described as “disappointing”.
But stressed that the British Government had an obligation to continue to pursue the money.
About £3.5 billion is due to Britain and the Netherlands, whose government also bailed out its citizens’ depositors after the 2008 bank crash.
“It’s obviously disappointing. It seems the people of Iceland have rejected what was a negotiated settlement,” Mr Alexander told BBC1’s Andrew Marr Show.
“It looks like this process will now end up in the courts,” he said.
“There is a legal process going on and we will carry on through these processes to try and make sure we do get back the money that the British government paid out in past years.”
The Treasury Chief Secretary said Britain would be looking to join a legal process before a European Economic Area (EEA) court.
He said the UK was owed “a very substantial amount of money, several billion pounds”, which was paid to British people who banked with IceSave and other Icelandic banks that went under.
“We had an obligation to people in this country who saved with those banks and we have an obligation to get that money back, and we will continue to pursue that until we do,” he said.
“We have a very difficult financial position as a country... This money would help.”
It is the second time Icelanders have rejected a repayment settlement, having overwhelmingly rejected a previous deal last year.
The Icelandic government had hoped a new agreement on better terms would win approval.