Iceland president says UK and Holland will get money back
ICELAND President Olafur R Grimsson said there's no case in pursuing depositor claims because the UK and the Netherlands will be more than compensated from the estate of the failed bank.
"By the end of this year and next year Britain and the Netherlands will have received over $9bn," he said yesterday in an interview with Maryam Nemazee on Bloomberg Television.
"When people finally realise that, they will see that there isn't really any case against Iceland because this money is paid out of the estate of the bank."
Icelanders on Saturday rejected the so-called Icesave agreement, a depositor claims accord with the UK and Netherlands to help cover the 2008 failure of Landsbanki, which threatened 350,000 British and Dutch depositors.
The depositors were repaid by their governments, which are now turning to Iceland for compensation.
Britain is lending Iceland £2.35bn to help it repay the depositor losses, while the Netherlands is lending €1.3bn.
"Fortunately, it turns out that the estate of the failed bank is much stronger than anybody expected two years ago, so they will be able to cover this sum," Mr Grimsson said.
The European Free Trade Association's Surveillance Authority in May last year started infringement proceedings against Iceland under its obligation to cover all depositor claims.
The proceedings had been shelved during Iceland's parliamentary handling of Icesave.
Mr Grimsson told Bloomberg he is not concerned about the possibility of harsher terms being imposed by the court.
Iceland has to meet its international obligations and the Netherlands will ultimately get back the money it is owed, Dutch Finance Minister Jan Kees de Jager said yesterday.
"It looks like this process will now end up in the courts," UK's chief secretary to the Treasury Danny Alexander said on BBC1's 'Andrew Marr Show'.
Iceland, which has been rated junk by Fitch Ratings since Mr Grimsson's previous Icesave rejection in January 2010, also faces a rating cut to non-investment grade from Moody's, the company said.
"The record of Moody's in estimating Iceland is really abysmal," Mr Grimsson said. "When the banks were in their difficult stages, Moody's gave them AAA ratings."
Moody's should take into consideration that the financial and business community, including Alcoa, is "investing in Iceland in a big way", he said. (Bloomberg)