ING Direct buys £3bn of Iceland deposits

Wednesday, 08 October 2008 12:00

ING Direct is to buy more than £3 billion of deposits held by UK savers in Icelandic banks.

The Dutch-owned online bank said it has agreed with the Treasury to acquire £2.5 billion of deposits and 160,000 customers from Kaupthing Edge and £538 million from Heritable Bank.

The Treasury has confirmed both Kaupthing Edge and Heritable are in default and unlikely to meet their obligations to depositors.

All savers with Heritable and Kaupthing Edge have been extended the same guarantee as Icesave customers – their entire deposit will be protected.

The first £50,000 will be covered by the Financial Services Compensation Scheme (FSCS) and anything over this will be refunded by the government, the Treasury said.

Heritable, owned by Landsbanki, closed its doors to savers yesterday when its parent bank was taken into receivership.

Under the plan, savers will be able to access their cash through ING Direct.

“ING Direct is working to rapidly ensure that it is business as normal for all customers,” the Treasury said in a statement.

Johan de Wit, ING Direct UK chief executive, said “ING Direct is in a position of strength.

“We are very pleased to have been able to take such rapid and decisive action that has provided Heritable Bank’s customers, and those of Kaupthing Edge, with the reassurances they need.

“We are working to rapidly ensure that it is business as usual for all customers. We look forward to extending our approach of offering simple and straight-forward products backed by award-winning customer service to our new customers.”

The Chancellor has also made a guarantee to savers with Icesave, the online UK banking arm of Landsbanki, that they will get all their money back despite the likelihood the Icelandic government will default on compensation.

Kaupthing Edge said it is not commenting at this stage but will have a statement on the issue soon.

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