Icesave dispute

The Icesave dispute was a diplomatic dispute that began after the privately owned Icelandic bank Landsbanki went into receivership (informally "bankrupt" used in the article) on 7 October 2008, with a subsequent dispute evolving between Iceland on one hand and the United Kingdom and the Netherlands on the other. As Landsbanki was one of three systemically important financial institutions in Iceland to go bankrupt within a few days, the Icelandic Depositors' and Investors' Guarantee Fund (Tryggingarsjóður) had already been drained of capital reserves. This resulted in no funds to repay the legally required deposit guarantees to the foreign Landsbanki customers, who had lost all their savings in the Icesave branch of the bank. The Icelandic state refused to underwrite this liability on behalf of the guarantee fund. Originally this was because the state had lost funding access at credit markets due to the Icelandic financial crisis, but later proposed bilateral loan guarantees for repayment were rejected by the Icelandic electorate.