Bankrupt Bank – Heritable Bank has been placed into administration

Heritable Bank has been placed into administration sources have stated.

Its parent firm Landsbanki has been officially placed into liquidation today after the Icelandic Financial Supervisory Authority yesterday nationalised the bank and sacked its entire board of governors. Heritable raised its money from a combination of wholesale deposits and a top up retail deposits from parent group Lansbanki.

But the source says that it had become clear to Heritable staff over the weekend that the top up facility "was no longer tenable".

The source says: "Fundamentally Heritable is a sound business – its asset quality was good and it was making a profit. But in the current market cash is king and it was ultimately beaten by a lack of liquidity."

The deposits generated by Landsbanki's UK-based savings account Icesave have now been transferred to Dutch giant ING. Earlier this morning the chancellor Alistair Darling told the Today show that despite being told by the Icelandic government that it was washing its hands of all responsibility for UK depositors, the UK government would provide cover.