Icelandic government agrees $5.4 billion loan with UK and Netherlands
The recent collapse of the Icelandic banking system, which resulted in a number of UK and apparently Dutch savers losing significant amounts of money, has been partially resolved with the announcement of a $5.4 billion loan from the UK and Netherlands governments. The UK is putting forward $3.8 billion and the Dutch government $1.6 billion.
This will allow the Icelandic authorities to pay out compensation to those consumers, local councils and companies which suffered from the collapse although the terms of the loan are somewhat surprising. The loan will be paid back over 15 years, the first seven of which are on an interest-only basis at 5.5%. Iceland itself is still in a very difficult situation and is currently relying upon an International Monetary Fund bailout to avert a complete collapse of the economy.
As a consequence of the agreement between Iceland, the UK and the Netherlands a UK led freeze of certain Icelandic banks assets in the UK will be lifted and relations between the UK and Iceland should start to thaw. However, it is still uncertain as to when UK investors will receive their compensation as no specific timescale has been released into the public domain as yet.
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