Britain loans 800 mln pounds to help Icesave customers

LONDON (Reuters) - Britain will lend 800 million pounds ($1.27 billion) to a compensation scheme to refund Britons who had Internet savings with failed Icelandic bank Landsbanki, the finance ministry said on Thursday.

In a statement, Chancellor Alistair Darling said the money would compensate British savers in Icesave, which suspended operations on Oct. 7 after being hit by the global financial crisis.

Around 300,000 British savers had accounts worth some 4 billion pounds in Icesave, which attracted overseas customers with offers of high interest rates on savings.

Darling said the 800 million pounds will go to Britain's Financial Services Compensation Scheme, a statutory body that acts as a fund of last resort for customers of authorised financial services firms.

The finance minister confirmed last month that British savers with the Icelandic bank would get all their money back.