Kaupthing, the Icelandic state-run bank, will sue the British Government for its decision to force the bank's UK subsidiary into a form of bankruptcy, the Icelandic prime minister's office said yesterday.
Kaupthing, the Icelandic state-run bank, will sue the British Government for its decision to force the bank's UK subsidiary into a form of bankruptcy, the Icelandic prime minister's office said yesterday.
The committee appointed to run Kaupthing - which collapsed last autumn - is dragging the government into court because it forced Kaupthing Singer & Friedlander, a City-based brokerage and financial services firm, into administration at the height of Iceland's financial crisis, the prime minister's press secretary, Kristjan Kristjansson, stated.
"They are suing on the grounds of the actions taken by the Financial Services Authority (Britain's financial regulator)," Kristjansson said.
The FSA swooped to protect UK 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 Landsbanki, another Icelandic bank.
The government said the action was necessary to protect the deposits of British savers, but the actions strained relations between the north Atlantic countries. It was not clear whether damages would be sought in the Icelandic suit.
The UK Treasury said it was aware of the Icelandic announcement but noted that "responsibility for the failure of Kaupthing rests squarely with the bank".
"The (British) government acted to protect UK retail depositors in Kaupthing, Singer & Friedlander once it became clear to the authorities that the bank could no longer continue to meet its obligations to its UK customers," the Treasury said.
On Monday, Prime Minister Geir Haarde said his government supported the lawsuit and could help finance it.
"We believe that it is of great importance to find out whether laws in the UK were violated, damaging Icelandic interests," he said at a press conference in Reykjavik.
Iceland has long been angry at Britain's handling of the situation, which included the use of anti-terror legislation to seize the assets of Landsbanki.
