20 Oct 2009

Deal reached over repayment of Icelandic funds

11:17 am on 20 October 2009

Iceland has reached a deal to repay the governments of Britain and the Netherlands more than $US5 billion lost in a banking crisis last year.

Iceland has to haver a deal in place before it can benefit from a $US10 billion bailout package from the International Monetary Fund.

The BBC reports a law to reimburse funds paid by the two governments to those who lost money when online bank Icesave's owner collapsed in 2008 was passed in August, but Britain and the Netherlands disagreed with the terms.

A new bill will go before Iceland's parliament on Monday, where it is expected to pass.

About 400,000 depositors lost money when Icesave's owner, Landsbanki, collapsed.

Iceland eventually had to take over its three biggest banks - Glitnir, Kaupthing and Landsbanki.