ING Direct to take over Icelandic deposits

ING Direct is to buy more than £3 billion of deposits held by UK savers in Icelandic banks.

The Dutch-owned online bank said it has agreed with the Treasury to acquire £2.5 billion of deposits and 160,000 customers from Kaupthing Edge and £538 million from Heritable Bank.

Heritable, owned by Landsbanki, closed its doors to savers yesterday when its parent bank was taken into receivership.

Under the plan, savers will be able to access their cash through ING Direct.

"ING Direct is working to rapidly ensure that it is business as normal for all customers," the Treasury said in a statement.

ING Direct have so far not commented on how long any transfer of accounts will take.

The Chancellor has also made a guarantee to savers with Icesave, the online UK banking arm of Landsbanki, that they will get all their money back despite the likelihood the Icelandic government will default on compensation.

Kaupthing Edge said it is not commenting at this stage but will have a statement on the issue soon.