Government pledges action on bank

The chief minister wants the UK government to press Iceland

Ministers are to press the Icelandic government to honour its commitment to investors in the collapsed Kaupthing Singer and Friedlander bank.

Parent bank Kaupthing issued a parental guarantee in September 2007 to take responsibility for the liabilities, including deposits, of its subsidiary.

Now it has been nationalised, Chief Minister Tony Brown said the Iceland government must uphold the agreement.

The Manx government was one of hundreds of investors in the collapsed bank.

The treasury said it had a number of short-term deposits and long-term investments with Kaupthing Singer and Friedlander.

A treasury spokesman said: "At this point we are still calculating the level of exposure and gathering information."

Kaupthing collapse: Q&A

The total amount is thought to be in the low millions, but Mr Brown said ordinary Manx savers were foremost in the government's mind.

He said: "The Isle of Man Government is determined to protect depositors with the local subsidiary by pressing the Government of Iceland, which has nationalised Kaupthing Bank, to honour the commitment given to its Isle of Man based affiliate.

"Accordingly, we have made representation to the United Kingdom Government - which is responsible for defending the Isle of Man's interests internationally - requesting them to press the Government of Iceland to honour Kaupthing's guarantee."

The government has confirmed that the new Depositors' Protection Scheme (DPS) - which protects savings up to �50,000 - will apply to the bank's customers.

The Financial Supervision Commission said Kaupthing Singer and Friedlander's customers would be contacted to make a claim once the DPS was activated.

A winding-up petition is to be heard in court on 24 October.

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