Iceland faces court over its refusal to pay out for Icesave

LEGAL action will be taken to claw back billions of pounds of British savers’ cash from collapsed Icelandic banks, the chief secretary to the Treasury has signalled.

Plans to pay back money lost in Icesave accounts were rejected for a second time by Icelanders in a referendum held over the weekend.

Danny Alexander called the development “disappointing” and said the government would use the European courts to reimburse Britons who lost money.

“It looks like this process will now end up in the courts,” he told BBC1’s Andrew Marr Show.

He added: “We have a obligation to people in this country who had saved with those banks, we have an obligation now to get that money back, and we will continue to pursue that until we do.”

About £3.5bn is owed to the UK and the Netherlands, who stepped in to compensate savers who lost money deposited in Icesave accounts.

Icelandic lender Landsbanki ran the accounts, but collapsed in 2008 along with two more of the country’s banks.

Sixty per cent of Icelanders voted against the latest repayment plan.