Brown 'was told about Iceland's banking crisis six months
Nov 02 2008
Gordon Brown was warned that Iceland's banks had serious
problems in April - six months before they crashed, it was
claimed last night.
Prime Minister was allegedly told by his Icelandic counterpart
Geir Haarde that his country's banking sector was experiencing
The Bank of England
also had concerns about the parlous state of Iceland's financial
institutions as long ago as March, Channel 4 News reported.
But they chose
not to alert British savers, companies and public bodies,
including local councils, police forces and charities, which
continued to pour money into the teetering banks.
last night called for an investigation into exactly what
the British Government knew.
of Iceland's major banks in October left UK investors facing
the loss of hundreds of millions of pounds.
Darling has promised to compensate individual investors
- but not local authorities and charities.
Channel 4 News, the Central Bank of Iceland approached the
Bank of England for help in March to try to shore up its
It warned that
international confidence was draining away from Iceland's
debt-laden banks because the economy was unstable.
Governor of the Bank of England, was said to have asked
his officials to assess the risks to Iceland's banks in
The Bank then
rejected the request, said the report, because the 'Icelandic
system was far too large'.
Later that month,
Mr Brown met Mr Haarde at Downing Street. It was claimed
they discussed the problems affecting Iceland's banks and
Mr Brown advised Mr Haarde to approach the International
Monetary Fund for assistance.
Last night LibDem
Treasury spokesman Vince Cable said: 'There is a need for
an investigation and at the very least a proper statement
of exactly what the British Government was told, when they
were told and what they did.'