ING Direct UK -The UK counterpart of ING Group, has taken over £3billion worth of savings accounts from Icelandic banks Kaupthing Edge and Heritable Bank.

Heritable Banks' parent owner Landsbanki collapsed on Tuesday and Kaupthing was not looking too hopeful yesterday due to the financial crisis in Iceland.

Chancellor Alistair Darling issued a statement in the House of Commons yesterday afternoon stating that the savings accounts operated by Heritable Bank and Kaupthing Edge in the UK have been transferred to ING Direct.

The Treasury later issued a statement saying that Kaupthing Singer & Friedlander, the UK regulated business that runs Kaupthing Edge, had been placed into administration. Any savers whose accounts were not transferred to ING will be compensated in full by the Financial Services Compensation Scheme (FSCS)

This is good news for savers whose accounts have been transferred, as ING are based in the Netherlands and the the Dutch bank appears to be safe.

ING has now signed an agreement with the Treasury to take over £2.5billion of deposits and 160,000 customers from Kaupthing Bank.

It is also acquiring £538m of savings accounts held by 22,200 people with Heritable Bank, after Landsbanki was placed in receivership by the Icelandic government.

chief executive of ING Direct UK Johan de Wit said: "ING Direct is in a position of strength. We are very pleased to have been able to take such rapid and decisive action that has provided Heritable Bank's customers, and those of Kaupthing Edge, with the reassurances they need.

"We are working to rapidly ensure that it is business as usual for all customers."

The Government have agreed to guarantee all deposits made by UK customers (even those that reach beyond the originally set £50,000) of Icesave following the nationalisation of Landsbanki, its parent company.

ING Direct's customers savings are protected using a passport scheme. The scheme is backed by the Dutch government rather than our own Financial Services Compensation Scheme (FSCS), and provides cover for up to €100,000 (approximately £77,700) guaranteed by the Dutch Investors Compensation Scheme. This means that the level of protection offered is higher than that from the FSCS which provides a £50,000 guarantee.

As the amount of protection offered by the Dutch is now higher than in the UK, the full amount would be paid by the Dutch government, in the unlikely event of ING collapsing.

The ING Savings Direct account is only currently paying 4.75% AER for existing customers and 6.5% for new customers. Kaupthing's rates rarely fell below 6% on instant access savings accounts. It has not yet been made clear whether customers will be seen as new or existing customers with ING.