Iceland's President Olafur Grimsson said today that Britain and the Netherlands did not need to go to court to recover $5 billion lost in a bank crash as they could be repaid out of the bank's estate.
Britain and the Netherlands said on the weekend they would take Iceland to court after its voters rejected for a second time a negotiated repayment deal.
The debt was incurred when the two countries compensated their nationals who lost savings in online Icesave accounts owned by Landsbanki, one of three Icelandic banks that collapsed in late 2008, triggering economic meltdown in the country of 320,000 people.
Grimsson questioned whether the dispute would go to court because the Landsbanki estate was stronger than anyone had expected two years ago. He suggested there would be enough money to make the repayment, the first instalment of which, worth about £2 billion sterling, would be paid to Britain in the next few months.
Assuming sums in excess of $5 billion will be paid out from the Landsbanki estate by the end of next year, he said that 'it isn't really very sensible to then take the issue to court because it's a possibility that the estate of the bank would cover the entire issue'.
'It is very likely that within a year, a year-and-a-half, two years, the entire sum would have been paid out of the estate,' he said.
Both the Netherlands and Britain were looking into various legal options and the European Commission would play a key role in the procedure, he said.
Grimsson argued the case centred on whether Icelandic taxpayers should have to pay before the assets of the bank are tapped. 'To ask for a state guarantee and that ordinary people shoulder the responsibility is highly doubtful and definitely can be disputed within the European legislative framework,' he added.
