Iceland's state-run Kaupthing bank will sue the British government for its decision to force the bank's British subsidiary into a form of bankruptcy, the Icelandic Prime Minister's office said on Tuesday.
The committee appointed to run Kaupthing - which collapsed last autumn - is taking Britain to court because it forced the unit, Kaupthing Singer & Friedlander, into administration at the height of Iceland's financial crisis, according to the prime minister's press secretary, Kristjan Kristjansson.
"They are suing on the grounds of the actions taken by the Financial Services Authority (Britain's financial regulator)," Kristjansson said.
The FSA swooped in to protect British 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.
Britain said the moves were necessary to safeguard British savers' deposits, but the actions strained relations between the north Atlantic neighbours. Iceland has repeatedly threatened to sue over the matter.
It was not clear whether damages would be sought in the Icelandic suit. The FSA and Britain's treasury did not immediately return requests for comment.
Prime Minister Geir Haarde said on Monday that his government supported the lawsuit and could help fund it.
"We think that it is very important that we ascertain if UK laws were misused against Icelandic interests," he said.
Front page
RSS Feed