Mr.
Hoban: What assessment have the Government made of the
exposure of the Treasury and the FSCS as a consequence of the
situation?
Ian
Pearson: We do not have as much information as we would
like about the progress of the administration in Iceland, so it is not
possible to give the hon. Gentleman direct figures for that matter at
this time. We are still working and making contact with administrators,
and, as I indicated, officials from the Treasury were in Iceland last
week for further discussions with the Icelandic
authorities.
Mr.
Hoban: What conditions need to be triggered for the
amounts that have been frozen to be
released?
Ian
Pearson: We need to be confident that UK creditors will be
treated fairly in the administration process. We still do not have
confirmation that that is the case. It has been reported in the media
that one way in which the Government will ensure speedy payout is by
providing a loan to the Icelandic authorities so that they can pay the
first tranche to which I referred. However, we will need assurances
that UK creditors will be treated fairly in the administration before
we take action with regard to the freezing order. We will review it
regularly, and the order will remain in force only for as long as we
think it is
necessary.
Mr.
Hoban: The Minister is saying that the Treasury could make
a loan available to the Icelandic authorities to cover the first
£2.2 billion, the amount that would be
due to people holding accounts of £16,000 or less, to enable that
sum to be paid. Is that correct?
Ian
Pearson: Yes, that is our intention, but we would need to
have assurances that that money will be
repaid.
Barry
Gardiner: Is it my hon. Friend’s understanding that
the liquidators could have any legal standing other than to treat UK
creditors equally in the winding up of the
company?
Ian
Pearson: I am not a lawyer, as my hon. Friend knows, but
it is certainly the case that the liquidator should act in accordance
with the law, and one of the basic tenets of law is that all creditors
should be treated fairly. It is true that the legislation proposed in
Iceland caused serious doubt about whether the law would be followed
there that triggered the action we have taken. That is why we need to
ensure that these matters are clarified. The most recent round of
discussions has ended, but talks are not over and a conclusion has not
yet been found.
Discussions
have been taking place between Iceland and the International Monetary
Fund, and the IMF issued a press release on 24 October announcing that
it had reached an initial staff-level agreement with Iceland on a $2.1
billion two-year loan to support an economic recovery programme, to
help it to restore confidence in its banking system and stabilise its
currency. We welcome that and hope that the IMF would want to stress,
as part of the conditions of any loan, that Iceland must act in
accordance with the law and treat all creditors favourably, from
whichever country they come.
This has been
an important and useful debate, and a number of questions have rightly
been raised. I would like to think that I have answered as many of the
key questions as possible. The hon. Member for Leominster raised a
number of detailed questions. If the Committee allows, I shall respond
to those directly in writing, because I do not think that that level of
detail can easily be responded to straight away.
Question
put and agreed to.
Resolved,
That the
Committee has considered the Landsbanki Freezing Order 2008 (S.I. 2008,
No.
2668).
LANDSBANKI
FREEZING (AMENDMENT) ORDER
2008Resolved, That
the Committee has considered the Landsbanki Freezing (Amendment) Order
2008 (S.I. 2008, No. 2766).—[Ian
Pearson.] Committee
rose at six minutes to Six
o’clock.
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