Iceland faces a meltdown
With the global credit crunch now battering down the doors of banks around the globe, I’m sure the people of Iceland, all 320,000 of them, are wondering what on earth will happen next.
In last 48 hours the country’s banking system has been teetering on the brink of collapse, leaving many British customers with money invested in the country’s biggest banks worried about their savings.
Monday saw Iceland’s largest bank Kaupthing Edge in crisis talks with the government, over fears the economy was about to nosedive.
Yesterday, Iceland announced emergency legislation and plans to help the financial situation. But by the afternoon, the country’s second biggest bank, Landsbanki, was facing a mammoth-sized meltdown, about to be declared insolvent.
British customers who have savings with Icesave were then told they will have to claim compensation from the Icelandic government and the FSCS to get their money back.
Since this, prime minister, Gordon Brown, has promised legal action against the Icelandic government to get the money back, and Chancellor Darling said this afternoon that he will guarantee all UK savers’ money in Icesave.
So, what should be done? Well firstly, if you’re an Icesave customer you may want to read my Q&A article, which will hopefully answer all your questions about the Icelandic banking crisis.
Secondly, if you’re worried about any savings you may have, be that an ISA with Abbey or a HiSave account with ICICI, now is the time to consider spreading them around.
It is not a good idea to have all your savings with one institution, especially if the amount exceeds the £50,000 guaranteed compensation from the FSA. It’s all very good taking advantage of the high interest rates that are on offer; just make sure you play the game wisely.
It’s yet to be seen what will happen with Icesave, but as its parent bank Landsbanki faces liquidation, it’s certain that whatever move is made, the Icelandic economy will need serious reparation after this week.
And what a week it has been. Oh wait, it’s only Wednesday!
