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UK Treasury lends £100 million to Landsbanki

After the big political spat at the weekend it has been revealed that the UK government has agreed to lend £100 million to Iceland's Landsbanki in a move which should see UK depositors receive some form of compensation. The loan is secured against the assets of the group held in the UK and while there are hopes that this is a major breakthrough, nothing is guaranteed.

The UK government is taking a risk because the £100 million loan to Landsbanki does not cover all that is owed to UK investors, a figure which is now in the region of £1 billion and not just involving Landsbanki. Interestingly it has also emerged that the Icelandic government is now looking at joining the EU having refused to join for over 50 years. While it is obviously a strategy to try and calm the political trouble which the country is in it should actually open up a number of funding streams to see the country through its worst financial crisis of recent times.

On a more positive note it has been revealed that there is a loan on the table from Japan and talk of one from the Russian authorities. It seems as though too many countries have too much to lose to just walk away from this mess.

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