BoE move to free up frozen accounts

Britain is to loan Iceland's Landsbanki up to £100 million to help thousands of UK savers whose cash has been frozen in accounts there.

Billions of pounds belonging to small investors, along with £1 billion of local authorities' cash and millions belonging to charities, were put at risk when Icesave and other Icelandic banks were nationalised.

The move led Prime Minister Gordon Brown to brand Iceland's behaviour "unacceptable" and threaten legal action.

Chancellor Alistair Darling told MPs in the House of Commons: "The Bank of England is today providing a short-term secured loan of up to £100 million to Landsbanki, to help maximise the returns to UK creditors."

He said the Government is working closely with Icelandic authorities to facilitate claims by UK charities and local authorities on their deposits held at Icelandic banks.

Iceland had already said it could be forced to call on the International Monetary Fund for help as well as an emergency loan from Russia.

Industry Minister Ossur Skarphedinsson said of any IMF move, "My conclusion is that if we appeal to the IMF, other central banks and other nations would follow that track."

He added that it would give Iceland a chance to rebuild its foreign exchange market swiftly and would "strengthen our own currency and ensure a considerable cut in interest rates".

An official at Iceland's financial watchdog has said a decision is also due to be made on whether to reopen the stock market, which was shut at the height of last week's turmoil.

Elsewhere, UK retail billionaire Philip Green has edged closer to a deal to buy the debts of Icelandic investor Baugur which owns a string of famous high street brands.

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