Financial Regulatory Forum

REYKJAVIK, Jan 6 (Reuters) – Iceland’s government is proposing a national referendum be held on Feb. 20 on a bill to repay Britain and the Netherlands more than $5 billion their savers lost when Icelandic banks collapsed, according to a draft bill seen by Reuters on Wednesday.

Iceland’s parliament had approved a repayment bill late last year, but Icelandic President Olafur Grimsson said on Tuesday he would not sign the bill into law.

The rejection means Iceland must hold a referendum, according to the country’s constitution.

((Reporting by Omar Valdimarsson in Reykjavik via Stockholm Newsroom, tel: +46-8-700 1017, e-mail: stockholm.newsroom@thomsonreuters.com))

By Omar Valdimarsson

REYKJAVIK, Jan 5 (Reuters) – Iceland’s president refused to sign a bill to repay Britain and the Netherlands more than $5 billion for money lost by their savers when its banks collapsed, calling for a referendum and sparking a political crisis.

President Olafur Grimsson’s rejection of the unpopular Icesave bill on Tuesday put aid from international lenders and his country’s aspirations to join the European Union in serious jeopardy, analysts said.

A Finnish official said the decision was likely to delay a loan of 1.8 billion euros from Nordic countries, part of an aid package led by the International Monetary Fund (IMF) which is vital the country’s economic recovery.