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9 December 2010
Last updated at 13:58 ET
Iceland has reached a deal aimed at settling the Icesave banking dispute with the UK and Netherlands, the Dutch government has said.
Iceland has agreed to pay back the money the UK and Dutch governments spent reimbursing their citizens who lost money in the collapse of Icesave.
Repayments will begin in 2016 and will be completed by 2046, according to the Dutch finance ministry.
The agreement must now be approved by Iceland's parliament and president.
Representatives of the three countries met in London earlier to agree the final terms of a deal.
Negotiations over repayment terms have been going on for the past two years, since Icesave's parent company collapsed at the end of 2008.
According to the Dutch statement, Iceland will pay a fixed interest rate of 3% to the Dutch and 3.3% to the UK.
This is better terms than a previous deal, later voted down by Icelandic voters in a referendum, which included an interest rate of 5.5%.
The Netherlands will receive 1.3bn euros (£1.1bn; $1.7bn), but the statement did not specify the amount the UK would receive. The UK government put more than £2bn into the Financial Services Compensation Scheme to cover Icesave account holders.
A spokesperson for the Icelandic finance ministry told the BBC that it would make a formal statement after Iceland's political representatives had been briefed on the agreement.
'New chapter' The repayments created a diplomatic row between Iceland and the UK, as well as political controversy in Icesave's home country.
The then Prime Minster Gordon Brown accused his Icelandic counterpart of "unacceptable" and "illegal" behaviour after Iceland said it could not give a guarantee to reimburse UK customers of the online bank.
In response, Icelandic PM Geir Haarde accused the UK government of "bullying" and bringing down one of its other banks after the Treasury froze the assets of Icelandic institutions in the UK.
The UK Treasury said it looked forward to finally resolving the issue.
"Mutually satisfactory closure of this issue will mark a new chapter in UK-Iceland relations," it said.
Iceland was plunged into a deep recession following the collapse of its leading banks, including Icesave's parent company Landsbanki, in 2008.
Voters angry at having to pay for the failures of the country's financiers and politicians rejected the terms of an earlier Icesave repayment deal in a referendum in March this year.
The latest talks in London included representatives of Iceland's opposition, the Dutch pointed out.
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Iceland has agreed to pay back the money the UK and Dutch governments spent reimbursing their citizens who lost money in the collapse of Icesave.
Repayments will begin in 2016 and will be completed by 2046, according to the Dutch finance ministry.
The agreement must now be approved by Iceland's parliament and president.
Representatives of the three countries met in London earlier to agree the final terms of a deal.
Negotiations over repayment terms have been going on for the past two years, since Icesave's parent company collapsed at the end of 2008.
According to the Dutch statement, Iceland will pay a fixed interest rate of 3% to the Dutch and 3.3% to the UK.
This is better terms than a previous deal, later voted down by Icelandic voters in a referendum, which included an interest rate of 5.5%.
The Netherlands will receive 1.3bn euros (£1.1bn; $1.7bn), but the statement did not specify the amount the UK would receive. The UK government put more than £2bn into the Financial Services Compensation Scheme to cover Icesave account holders.
A spokesperson for the Icelandic finance ministry told the BBC that it would make a formal statement after Iceland's political representatives had been briefed on the agreement.
'New chapter' The repayments created a diplomatic row between Iceland and the UK, as well as political controversy in Icesave's home country.
The then Prime Minster Gordon Brown accused his Icelandic counterpart of "unacceptable" and "illegal" behaviour after Iceland said it could not give a guarantee to reimburse UK customers of the online bank.
In response, Icelandic PM Geir Haarde accused the UK government of "bullying" and bringing down one of its other banks after the Treasury froze the assets of Icelandic institutions in the UK.
The UK Treasury said it looked forward to finally resolving the issue.
"Mutually satisfactory closure of this issue will mark a new chapter in UK-Iceland relations," it said.
Iceland was plunged into a deep recession following the collapse of its leading banks, including Icesave's parent company Landsbanki, in 2008.
Voters angry at having to pay for the failures of the country's financiers and politicians rejected the terms of an earlier Icesave repayment deal in a referendum in March this year.
The latest talks in London included representatives of Iceland's opposition, the Dutch pointed out.
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