Iceland today rejected a new proposal on terms for the repayment of 5.4 billion dollars to British and Dutch investors following the collapse of an Icelandic bank, according to dpa. Officials from the three countries have in recent weeks discussed terms for Reykjavik to repay the money lost when Icesave bank, an arm of the Landsbanki lender collapsed in the autumn of 2008. Iceland had over the weekend considered the latest proposal from the British and Dutch governments, which had initially stepped in to compensate their own citizens. The latest proposal included two interest-free years and a floating interest rate based on the euro interbank rate plus a 2.75 per cent premium, public broadcaster RUV reported. The compensation plan has divided Icelanders, who are to vote in a referendum on March 6. Polls have suggested that a majority of voters oppose the current terms. Parliament approved the compensation deal in December, but the president refused to sign the bill into law and called a referendum after 61,000 people - or a quarter of the electorate - signed a petition against the deal. Fulfilling the Icesave compensation plan, with payments made in installments over the next 14 years, is seen as necessary for Iceland to progress with its efforts to join the European Union. Reykjavik applied for membership in July.
