An independent commission has concluded that ‘extreme negligence’ and possible illegal activity led to a meltdown of the Icelandic economy.
The report by the Truth Commission, which was set up by the Icelandic government, states that a failure to rein in the country’s three leading banks, including IceSave’s parent bank Landsbanki, contributed to the crisis. The report also accused the banks of being too eager to lend to their parent companies. These institutions were the biggest borrowers, and used the loans to buy shares in the banks, thereby inflating the worth of their stock.
The commission found that around a quarter of the banks’ capital was financed by their own lending. The banks are accused in the commission’s 2,000-page report of illegal share-price manipulation and exaggerating the value of assets.
Former Icelandic government prime minister Geir Haarde as well as then finance minister Árni Mathiesen and commerce minister Mathiesen Björgvin were among those singled out for criticism.
More than 400,000 UK consumers had savings with IceSave when Landsbanki collapsed in October 2008. They were forced to wait for up to eight weeks before they received a refund through the Financial Services Compensation Scheme (FSCS). The IceSave disaster highlighted the importance of splitting cash into sums that would be covered by the FSCS, currently £50,000 per authorised account provider.
More information on how to protect savings can be found in the free Which? Protect your Savings advice guide.
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