Iceland compensation deal in doubt

Jan 5 2010

A deal for Iceland to repay up to £2.3 billion lost by savers in Britain when the country's banking system collapsed has been thrown into doubt after its president refused to sign it off.

Just days after a Bill was finally agreed by Iceland's parliament, Olafur Ragnar Grimsson announced his decision, which means that it must now be put to a referendum.

Around a quarter of Icelandic voters had signed a petition urging him to veto the legislation and allow a public vote amid fears the country could not afford repayments.

The Treasury would recoup up to £2.3 billion from Iceland under the measure, after it stepped in to compensate British depositors with the Icesave scheme.

A spokesman said: "The Treasury will consult with colleagues in Iceland to understand why this Bill has not been passed.

"And we will work with them, the Netherlands and within the EU to resolve this issue as soon as possible."