Iceland’s central banks have increased its key interest rate from 12 percent to 18 percent as it tries to save the country from a total financial collapse. This Icelandic rate jump comes less than two weeks after they cut the rates from 15.5 percent.

Iceland’s Prime Minister said in a meeting with other Nordic countries that the Iceland needed a further $4 billion (£2.6 billion) in loans. Shortly after news broke that he was raising the key interest rate to 18 percent.

The Icelandic government has been fighting off a collapse ever since it was forced to take control of three of its largest banks, Kaupthing, Landsbanki and Glitni Kaupthing after they had been hit with the credit crunch.

It wasn’t said how much extra money was needed from other Nordic countries such as Denmark, Norway, Finland and Sweden, the Prime Minister added that he didn’t want to put pressure on the countries.

Iceland has agreed already to a loan from the International Monetary Fund (IMF) for $2 billion. The Central Bank in Iceland will give reason for its decision in a statement that should be announced about 11am GMT today.

Source: BBC

Landsbanki the failed Icelandic bank that was nationalized by the Icelandic government will be given a £100 million bailout from the Bank of England the Chancellor Alistair Darling announced today, to help its British savers to recoup their deposits from the failed bank in Iceland.

Mr Darling has been in talks with the Icelandic Authorities to help push through claims by UK local councils and charities to get the money back from the Icelandic banks.

Darling said that he will be providing to the short-term secured loan of up to £100 million to Landsbanki to maximize the returns to the UK creditors.

Icesave which is the British online arm of Landsbanki prevented its depositors to withdraw money from their accounts after the nationalization of Iceland’s second biggest bank Landsbanki last Tuesday. The Chancellor has said that the government will guarantee to cover all deposits from British savers who have deposits in Icesave. Since the nationalization of Iceland’s three largest banks the stock markets in Reykjavik have remained shut.

Source: Guardian

The UK government has been using anti-terror laws to seize Icelandic assets to pay back British savers, after the near collapse of Iceland and the crash of its banking system caused concern that Iceland will become bankrupt. It was revealed that the British government has seized £4 billion in Icelandic assets which is £1 billion over what they needed.

The estimated loss to UK charities, UK Councils and individuals stood at £3 billon. Yvette Cooper the Treasury Chief Secretary insisted that until a deal has been signed with Iceland’s authorities to give the money back to the British savers then the government will not release the frozen Icelandic assets.
Ms Cooper told the press that the government has sent a team over to Iceland to hold meetings with the Icelandic authorities to devise a plan for them to return the money back to the British savers.

A statement announced by the Treasury delegation conducting talks in Iceland said: “significant progress” had been made. It’s been hinted that no resolution has been made of yet for the larger investors although there is a plan being put in place to accelerate small payments to UK depositors.

Source: ukpressgoogle

Prime Minister Gordon Brown announced that he would take further action and seize the assets of Icelandic companies over the collapse of the Island’s banks. After the failure of Lansbanki, Kaupthing and Glitni Kaupthing a diplomatic row has began as it emerged that over 100 local authorities have money in Iceland and they are set to lose more than £1 billion. British savers are said to have more than £6 billion in Iceland and British companies could be as much as £12 billion.

It’s likely that the British tax paying the bill to bail out local councils and other public bodies if the Icelandic government does not return the cash to the UK. This would mean the British taxpayer could see steeper council tax bills, The Bank of England have already agreed to use £500 billion of taxpayers’ money in a bid to save the British banks from collapse.

The FTSE-100 closed yesterday 1.2 percent down but shares rose giving us the first sign that the Prime Ministers bail-out plan could be paying off. As of yet, no British Bank has requested any of the £50 billion that is available as part of the bank rescue plan.

Gordon Brown said that the Icelandic government failing to guarantee the return of the money to the UK is unacceptable and that the UK government is freezing the assets of Icelandic companies in the UK where in can, he added that they will do whatever it takes to recover the money the UK is owed.

Source: Telegraph
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Iceland the tiny Island home to just 304,000 people and has now become the biggest victim of the global financial crisis.

Kaupthing, Iceland’s largest bank was taken for government control on October 9. Kaupthing will not trade on the Reykjavik stock exchange until October 13.

Lansbanki, Iceland’s second largest bank was seized by the Icelandic government on Monday and now re-named “New Landsbanki” controlled fully by the government as Iceland’s banking system crumbled, the authorities swept in using emergency powers to cream off the domestic assets. The Icelandic people left in a state of shock to what has happened to their beautiful Island in just one week, coming to terms with the fact that the majority of Iceland’s banking sector has been nationalised.

Then the third shock came with Icelandic bank Glitni Kaupthing was forced to take an emergency $702 million loan from Sweden to help the banks Swedish arm, while Norwegian Banks Guarantee Fund offered $819 million in liquidity support to the local unit of Glitnir.

It’s hard to believe that a country that was one of the poorest countries in Europe in less than a generation managed to transform itself into one the richest could now face bankruptcy. Geir Harrde Prime Minister of Iceland said: “There is a very real danger, fellow citizens, that the Icelandic economy in the worst case could be sucked into the whirlpool, and the result could be national bankruptcy.”
The Russian government has said they may lend Iceland $5.5 billion.

Source: Businessweek

It is now Iceland’s turn to be swept up in the financial turmoil that’s been hitting everywhere in the world, the Icelandic government issued a statement saying it has taken control of Landsbanki the lead Icelandic financial institution, Icesave the internet bank has also been affected as it is part of Landsbanki banking brand stopping its savers from withdrawing their cash.

The Icelandic government sought to reassure domestic savers their money was safe after they nationalized Landsbanki, they announced that the depositors money was safe and fully guaranteed by the government, adding call centre’s, cash machines and domestic branches as well as internet operations would be “open for business as usual”. But bad news for UK savers of icebank, the guarantee does not extend to UK savers.

But as UK savers logged onto the ICesaves website they were greeted with a message telling them that the group were not currently processing any withdrawals or deposits requests on its internet account.

Concerns have grown over the weeks as to the health of the Icelandic banks, and the announcement on Monday from Iceland’s Prime Minister Geir Haarde warning the island that there is a real possibility” of “national bankruptcy” as the economy could get sucked into the “global banking swell”.

Although there have been no hard figures out regarding how many UK savers have money with Icesave, although the general census is about 300,000.

Source: ukpressgoogle