Page last updated at 19:52 GMT, Friday, 5 June 2009 20:52 UK

Iceland near to Icesave debt deal

Icesave website
Icesave collapsed last October

Iceland's Prime Minister Johanna Sigurdardottir says a deal, with the UK and Netherlands, is near over savings accounts frozen when its banks failed.

She said agreement is being negotiated on the Icesave accounts of Landsbanki, which collapsed with other main Icelandic banks in October.

The deal would give Iceland seven years to reimburse the frozen savings.

The total debt owed on the accounts is estimated at about 640bn Icelandic crowns ($5.28bn: £3.2bn).

The money would be repaid at 5.5% interest, Ms Sigurdardottir said.

"This is a much more agreeable solution than we were looking at in the winter," she said.

"The interest rates are lower, we'll have longer time to pay out and last, but not least, it means the assets of Landsbanki in the UK will cover most of the debt."

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