Iceland says Icesave objections only "first response"

REYKJAVIK, Sept 19 (Reuters) - Iceland's finance minister said British and Dutch objections to proposals for repaying debts of more than $5 billion were only an initial response and all three countries wanted to resolve the issue quickly, according to media reports on Saturday.

Iceland owes the two countries the money after they reimbursed savers who had lost money in Icelandic bank accounts during its financial meltdown last year.

After an initial agreement to repay the funds, Iceland's parliament attached amendments stipulating limits on the amount that can be repaid and setting a June 2024 expiry date for the agreement.

Britain and the Netherlands earlier this week objected to the deadline, Icelandic officials said.

Finance Minister Steingrimur Sigfusson, after meeting with the British and Dutch ambassadors, said the objections were only a "first response" and more talks were needed to clarify whether the issue would need to be taken up again by Iceland's parliament, Frettabladid reported.

"Everyone agrees that it is in the best interest of all three countries to resolve the issue as soon as possible," Sigfusson was quoted as saying, adding there was no reason to see the initial response as an ultimatum.

The minister was quoted by daily Morgunbladid as saying the Britain and the Netherlands wanted to hear Iceland's own response before adopting a formal stance.

The debts stemmed from billions of pounds and euros lost by some 400,000 savers who had placed money in high-interest online "Icesave" accounts run by Landsbanki, one of Iceland's top commercial banks which collapsed last year.

There is more at stake than relations between the countries. Iceland depends on financial assistance from the International Monetary Fund and several European countries and any impasse in the Icesave saga could lead to aid being held up.

But Icelandic citizens are angry over the issue, believing they have been unfairly treated and worry that the terms could leave the country in even worse financial shape.

Prime Minister Johanna Sigurdardottir told Icelandic radio on Friday that the 2024 expiry date was the issue that Britain and the Netherlands were concerned about. (Reporting by Omar Valdimarsson via Stockholm newsroom, editing by Mike Peacock)