Iceland to Sue Britain

From the 1950s through much of the 1970s, Britain and Iceland were involved in the Cod Wars, which was an overgrown fishing dispute. Now the financial mess has brought these two rivals back to confrontation.

Iceland’s state-run Kaupthing bank will sue the British government for its decision to force the bank’s British subsidiary into a form of bankruptcy, the Icelandic Prime Minister’s office said Tuesday.
The committee appointed to run Kaupthing — which collapsed last autumn — is taking Britain to court because it forced the unit Kaupthing Singer & Friedlander into administration at the height of Iceland’s financial crisis, according to the prime minister’s press secretary, Kristjan Kristjansson.
”They are suing on the grounds of the actions taken by the Financial Services Authority,” Mr. Kristjansson told The Associated Press.
The F.S.A., Britain’s financial regulator, swooped in to protect British depositors shortly after Iceland’s banking sector fell under the weight of its bad debts, removing savings accounts from Kaupthing Singer & Friedlander and seizing assets from another Landsbanki, another Icelandic bank.
Britain said the moves were necessary to safeguard British savers’ deposits, but the actions strained relations between the north Atlantic neighbors. Iceland has repeatedly threatened to sue over the matter.
It was not clear whether damages would be sought in the Icelandic suit. The F.S.A. and Britain’s treasury did not immediately return requests for comment.
Prime Minister Geir Haarde said Monday that his government supported the lawsuit and could help fund it.
”We think that it is very important that we ascertain if U.K. laws were misused against Icelandic interests,” he said.

Honestly, it’s hard for me to read that last sentence without laughing.

Posted by on January 6th, 2009 at 11:05 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.