Iceland bank to sue Britain over freezing of assets

THE Icelandic bank which had its British offshoot placed into administration by Gordon Brown at the height of the autumn credit crisis is to sue the Government over the move.

The Treasury placed Kaupthing Singer and Friedlander in administration on 8 October, at the height of Iceland's financial crisis, saying it was doing so to protect British retail depositors.

Iceland has long been angry at Britain's handling of the situation, which included the use of anti-terror legislation to seize the assets of Icelandic bank Landsbanki. A day later, Iceland took control of Kaupthing, the last of the three biggest commercial banks taken over as the north Atlantic island's financial system collapsed under the weight of tens of billions of dollars in foreign debts. "The Resolution Committee of Kaupthing has decided to sue the British Government and has the full support of the government," a press release from the Icelandic prime minister's office said.

Iceland has argued that Britain's actions helped bring about Kaupthing's failure prematurely.

Mr Brown and the Treasury have stood by the decisions taken. A Treasury spokesman said it was not aware of any legal action. He said that the Financial Services Authority had judged Kaupthing's UK subsidiary to be unable to meet its obligations to depositors.