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Iceland Strikes Loan Accord With U.K., Netherlands
Brutal assumption of foreign currency debt. Clearly not in Iceland's interest.
June 6 (Bloomberg) -- Iceland agreed to take a $5.44 billion loan from the U.K. and the Netherlands to repay Icesave claims, bringing to a close a seven-month dispute and helping the island draw the next tranche of an international bailout.
The Atlantic island must pay back the loan over 15 years, according to a joint government statement sent by e-mail today. The U.K. will lend 2.35 billion pounds ($3.76 billion), the Treasury said, and the Dutch 1.2 billion euros (1.68 billion). It will be interest-only for the first seven years.
Thousands of U.K. and Dutch depositors risked losing their life savings after Landsbanki Islands hf, which offered the high-interest Icesave online accounts, collapsed with the rest of Iceland’s debt-reliant banking system in October, dragging the island’s currency down with it. The island is now relying on its IMF-led bailout to avert bankruptcy.
“There was no other way out of this, but to negotiate,” Iceland’s Prime Minister Johanna Sigurdardottir said at a press conference in Reykjavil today. “Not paying was simply not an option.”
The Atlantic island must pay back the loan over 15 years, according to a joint government statement sent by e-mail today. The U.K. will lend 2.35 billion pounds ($3.76 billion), the Treasury said, and the Dutch 1.2 billion euros (1.68 billion). It will be interest-only for the first seven years.
Thousands of U.K. and Dutch depositors risked losing their life savings after Landsbanki Islands hf, which offered the high-interest Icesave online accounts, collapsed with the rest of Iceland’s debt-reliant banking system in October, dragging the island’s currency down with it. The island is now relying on its IMF-led bailout to avert bankruptcy.
“There was no other way out of this, but to negotiate,” Iceland’s Prime Minister Johanna Sigurdardottir said at a press conference in Reykjavil today. “Not paying was simply not an option.”
Brutal assumption of foreign currency debt. Clearly not in Iceland's interest.
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