For you, the war is over

By Andrew Hill

When this column suggested last year that British customers who put large chunks of their savings into Icesave deserved sympathy but not support from the UK government, many readers were angry. The target of the column was not ordinary savers covered by the guarantee (at the time) for deposits below £35,000, but those that had blithely ploughed higher amounts into the bank on the strength of a promise of unsustainably high interest rates. Those savers had fallen for a marketing ploy and the government did not need to step in to bail them out. Most customers wanted to blame anybody but themselves for their predicament.

As it turned out, the UK government agreed to extend the guarantee to all and press crisis-hit Iceland to play its part. Most onshore savers have been paid, via the UK's Financial Services Compensation Scheme. That should encourage sympathy towards the Icelandic prime minister's pleas for clemency . She wants Britain and the Netherlands to relax their demands for reimbursement of the loan they made to help Iceland help the Icesavers.

In Iceland, this plan is compared with the Versailles treaty, blamed for wrecking Germany's economy after the first world war. It's a crass parallel. Yes, the Icesave collapse was in part a consequence of a wider economic campaign organised by generals who had no idea what they were doing. True, Britain did then use bully-boy tactics against Iceland that it would never have used against a bigger partner such as, say, India (another country whose banks were offering lofty interest rates to UK savers at the same time). But Iceland's finance elite, its then government and regulators in both countries should share the blame. In other words, it is time for a little mutual goodwill, as Iceland's prime minister suggests. Having mostly received the compensation they were due, Britain's Icesavers should gracefully acknowledge their part in the sad saga, too: after all, nobody forced them to charge headlong into high-yielding accounts (Financial Times)