Iceland's ex-PM apologises for part in bank crash

Speaking before an Independence Party congress, Haarde said the major mistake made by his party, then leading a government coalition, had been not to demand at the time of bank privatisation in the early 2000s that ownership be spread wider.

"I share responsibility for the way this was done and it is right to apologise for this mistake. I hereby do so. And the same goes for other things that went wrong and we were in a position to do better," Haarde said.

"But I cannot apologise for mistakes or legal infringements by people who were forceful in banks or business and went out of bounds with damaging consequences," he said in the webcast speech.

Haarde had previously refused to publicly take responsibility for events leading up to the crash, saying he wanted to wait for the outcome of formal investigations into the crash and the lead-up to it.

Iceland's economy collapsed in October last year after its top banks failed under the weight of a mountain of debts and its currency ceased to trade on international markets.

Despite a $10 billion (7 billion pounds) IMF-led aid package late last year, public anger eventually led to Haarde's resignation.

"When the new owners of our banks became more and more involved in our economy, and the cross-ownership between business alliances became incredibly complex and opaque, the stability of the banking system was threatened," Haarde said.

"If we of the Independence Party had stuck to our original goal of a wide-spread ownership, the likelihood is that the banks would not have become as aggressive and risk-seeking as they turned out to be."

The Independence Party is expected to elect a new leader at the congress, which ends on Sunday.

The Social Democrats, the junior partner in the government coalition that collapsed in January, has formed a caretaker administration with the Left-Greens ahead of early elections scheduled for April.

(Reporting by Omar Valdimarsson via Stockholm newsroom; editing by Andrew Roche)