Hundreds of thousands of savers were left uncertain about whether they had lost their life savings yesterday, after Iceland’s second-largest bank went into receivership.

The 300,000 British customers of Icesave, the internet savings bank owned by Landsbanki, could face weeks of uncertainty as their deposits were frozen, after the decision by Iceland’s financial regulator to take control of the stricken bank.

Savers were left bewildered and angry after a message appeared on the bank’s website declaring: “We are not currently processing any deposits or any withdrawal requests. We apologise for any inconvenience this may cause our customers. We hope to provide you with more information shortly.”

As recently as Monday, Icesave was still insisting that it was “business as usual” despite the bank’s website temporarily crashing as thousands of savers desperately tried to gain access to their cash. It has grown popular with British depositors by offering interest rates as high as 7.06 per cent, more than two percentage points above the Bank of England base rate.

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A spokeswoman for Icesave said: “Landsbanki is still operational but it is in receivership. It has not been declared bankrupt, which means that no compensation arrangements have been triggered. At this stage, we have no idea how long it will take for the situation to become clear, we are waiting to hear like everybody else.”

British savers have approximately £4.5 billion in Icesave, with an average deposit of about £15,000. Savings are protected up to £50,000 although the first €20,000 (£15,500) or so must be claimed from the Icelandic authorities, with the balance coming from the British Financial Services Compensation Scheme.

Although 95 per cent of British depositors are believed to have less than £50,000 with Icesave, there are growing fears over the Icelandic Government’s ability to finance any compensation. Geir Haarde, the Prime Minister, said yesterday that he believed Landesbanki had enough assets to cover British customers.

Iceland’s central bank announced that it hoped to arrange a €4 billion loan from Russia. Officials will travel to Moscow tomorrow for talks. The British Government said that it would not protect British depositors if the Icelandic compensation scheme, which guarantees the first €20,000, failed. A spokesman for the Treasury said: “Landsbanki is regulated by the Icelandic authorities so the issue is one for the Icelandic Government.”

A spokeswoman for Icesave said that if the Government could not honour its commitments, Sweden, Denmark and Norway would step in.

Case study: ‘My calls are ignored’

Peter Amodio has lost a big bet on the Icelandic economy (Helen Power writes). Eighteen months ago he took out a £450,000 buy-to-let mortgage guaranteed on his own home. He wanted to buy two houses, but when he could only find one, he put the remaining £180,000 in Icesave. When Iceland’s banks started to look shaky last week, Mr Amodio tried to take the money out. “When I called last Friday I was sent an e-mail saying I could not take the money out in exceptional circumstances. So I wrote to them and said I needed £150,000 to buy a house,” he said.

“Now you just can’t get through on the phone. It just rings and rings and I can’t find out what’s happening.” It is unclear how much he will get back eventually but, at worst, it could be as little as £34,000. His mortgage is with Northern Rock. Had he put his money there as well, he would still have his £180,000.