ING acquires Icelandic saving accounts

8 October 2008

Savings bank ING Direct is to buy more than £3 billion of British cash deposits held in Icelandic-owned banks Heritable Bank and Kaupthing Edge.

The Dutch-owned savings bank says it will acquire 160,000 saving accounts from Kaupthing Edge and 22,200 from Heritable.

Heritable Bank, the mortgage and savings bank owned by Landsbanki, has now been closed by the Financial Services Authority (FSA). The watchdog says the bank can no longer continue to operate under it rules and has therefore placed it in default. Like savings bank Icesave, Heritable is owned by the now-nationalised Icelandic bank Landsbanki.

The British government has promised to protect 100% of deposits in both Icesave and Heritable. It is also protecting 100% of Kaupthing Edge deposits.

A statement from the Treasury reads: "Kaupthing Edge deposit business has been transferred to ING Direct, a wholly-owned subsidiary of ING Group, which operates through its branch in the UK. ING Direct is working to rapidly ensure that it is business as normal for all customers."  

The chancellor Alistair Darling has also said that this action has been taken to ensure the stability of the UK financial system and to ensure savers’ money is “safe and secure”.

The UK government says it expects Landsbanki to soon be declared in default. However, it says arrangements are ready so that “no retail depositor will lose any money” as a result.

In a statement it says: “The Treasury and the Financial Services Compensation Scheme (FSCS) are working with the Icelandic authorities and its deposit insurance scheme to ensure that depositors are paid back as quickly as possible.

“The chancellor has also spoken to the Icelandic finance minister about the importance of the Icelandic authorities ensuring that UK depositors in Icesave are given the same protections as depositors in Iceland and receive their deposits back in full promptly.”

All ISA customers of Icesave will also continue to “benefit from the tax-free status of their accounts” it adds.


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