ESA May Take Icesave to Court despite Repayment Skip to content

ESA May Take Icesave to Court despite Repayment

Contrary to yesterday’s news, the EFTA Surveillance Authority (ESA) may not wait for the settlement of the Landsbanki bankruptcy estate and instead take the Icesave dispute to court, despite a possible payment of ISK 200 billion (USD 1.7 billion, EUR 1.3 billion) into the Icesave accounts from the bank’s estate in the coming months. This could increase claims to Iceland by ISK 475 billion.


The headquarters of Landsbanki in Reykjavík. Photo by Páll Stefánsson.

Information officer at the ESA Trygve Mellvang-Berg would not comment on Icesave to Fréttabladid. However, he confirmed that the ESA had given Icelandic authorities an extension until the end of this month to present their case.

Icelandic Minister of Economic Affairs Árni Páll Árnason has stated that reclamation of Landsbanki’s assets has a substantial impact on this case but according to the newspaper’s sources, the ESA does not see it that way.

The ESA has concluded that Icelandic authorities are responsible for paying the minimum deposit insurance of approximately EUR 20,000 (ISK 3.2 million, USD 27,000) per depositor. Once the repayment has been made, the court case will allegedly be dropped.

However, according to Lárus Blöndal, a Supreme Court attorney who had a seat on the Icelandic committee in the negotiations with British and Dutch authorities, repayment from Landsbanki’s estate will not begin until next month and only after the Supreme Court has confirmed the emergency law of October 2008.

A verdict is expected in the coming weeks and if the emergency law is confirmed, it is assumed that ISK 400 billion of priority claims will be paid out to Landsbanki claimants, of which ISK 200 billion will go to Icesave depositors. That leaves ISK 475 billion (USD 4.0 billion, EUR 3.0) of the minimum deposit insurance.

Blöndal reasoned that if the ESA will confirm its view that Iceland should have guaranteed the minimum deposit insurance of the Icesave accounts, British and Dutch authorities might ask for interest on the amount that they paid out in 2008 to cover the loss of savings.

The original Icesave agreements, which were rejected in a national referendum in 2010, assumed 5.55 percent interest and the second agreements, rejected earlier this year, interest of 2.57 percent.

Blöndal stressed that at this stage this is merely speculation, but if a verdict is brought concluding that Iceland discriminated against savers in Icelandic banks on the basis of their nationality when the emergency law was established in 2008, British and Dutch authorities might demand that Iceland cover the Icesave deposits in full, as was done with deposits in Landsbanki’s branches in Iceland.

That would increase Iceland’s total Icesave debt from ISK 675 billion to ISK 1,150 billion (USD 9.7 billion, EUR 7.2 billion) and interest may then have to be paid on the latter sum.

Click here to read yesterday’s news on Icesave.


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