Fear as Icelandic bank freezes British transactions

LONDON, October 7, 2008 (AFP) – British customers with accounts in the online arm of faltering Iceland’s second-biggest bank voiced alarm after it halted transactions.

Icesave stopped British customers withdrawing or depositing money, it announced, as Icelandic authorities said they had taken control of the bank and the island’s financial sector teetered on the brink of collapse.

Internet bank Icesave, the British sector of Iceland’s Landsbanki, posted a notice on its British website which offered no explanation for the move.

“We are not currently processing any deposits or any withdrawal requests through our Icesave Internet accounts. We apologise for any inconvenience this may cause our customers,” said the notice.

“We hope to provide you with more information shortly.”

British press reports said more than 300,000 British customers had four billion pounds (5.1 billion euros, seven billion dollars) deposited in Icesave accounts, which offer higher rates of interest than British banks.

Icesave customers vented their fury and set about rescuing their savings.

Steve, 48, a textile management agent from Derby, central England, said: “My