Page last updated at 14:52 GMT, Wednesday, 15 October 2008 15:52 UK

UK helps States over Landsbanki

The UK Treasury has pledged to support Guernsey States in its dealings with the Icelandic Government over Landsbanki Guernsey.

The bank went into administration when its parent company, based in Iceland, got into difficulties.

Savers with the bank are waiting to hear what will happen to money they have deposited.

The announcement follows a meeting on Monday between States officials and treasury officials in London.

An awful lot of work has been going on behind the scenes
Deputy Charles Parkinson, Treasury and Resources Minister

Charles Parkinson, States Treasury and Resources Minister, said: "This is a valued development and supports some of the many actions we have been taking.

"We have been accused of failing to act appropriately to this crisis but nothing could be further from the truth.

"An awful lot of work is going on behind the scenes."

The Guernsey Financial Services Commission has also written to the Icelandic regulators, who are currently controlling Landsbanki Guernsey's parent bank.

It is pressing for "parental commitments" to meet Landsbanki Guernsey's liabilities, to be honoured.

This would making sure depositors are not left short-changed.

No protection

Unlike the UK, Guernsey has no depositor protection scheme to guarantee savings if a bank collapses.

However accountants from the firm Deloitte, called in to administer Landsbanki Guernsey, have said there are significant liquid assets available to the bank.

Landsbanki Guernsey is a subsidiary of Landsbanki Islands HF.

Share trading in Landsbanki was halted by the Icelandic goverment on Monday 6 October.

Deloitte said the Guernsey branch's difficulties stemmed placing funds with a UK subsidiary, Heritable Bank, which has also gone into administration.

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