Majority of Icesave Covered by Landsbanki’s Assets Skip to content

Majority of Icesave Covered by Landsbanki’s Assets

By Iceland Review

The Icelandic government, the resolution committee of Landsbanki and New Landsbanki (NBI) signed an agreement yesterday, which guarantees that almost 90 percent of the bank’s assets are retrievable for priority claims in the bank, primarily Icesave claims.

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

Representatives of the bank’s main claimants participated in the negotiations, Fréttabladid reports.

This means that approximately ISK 75 billion (USD 600 million, EUR 370 million) falls onto the Icelandic nation in addition to interests; the total amount could be around ISK 200 billion (USD 1.6 billion, EUR 1 billion).

According to the agreement, NBI issues a commercial paper in the bank worth ISK 260 billion (USD 2.1 billion, EUR 1.3 billion), valid for ten years. The paper is indexed in foreign currency and thus foreign funding is ensured.

Shares in the old banks will be issued for ISK 28 billion (USD 220 million, EUR 140 million)—approximately 20 percent of shares in NBI. That way, claimants in the old bank will acquire shares in the new one.

Lárentsínus Kristjánsson, chairman of Landsbanki’s resolution committee, said the agreement is acceptable for the committee and a step forward.

Director of NBI Ásmundur Stefánsson said it is pleasing that negotiators have chosen to acquire an ISK 28 billion share in the bank.

Minister of Finance Steingrímur J. Sigfússon described the agreement as a vastly important stage and one of the final steps in restoring the banks.

“I celebrate the fact that people have started to see land regarding Landsbanki. The negotiations have been long and complicated,” the minister said, adding, “I find it especially pleasing if the state will get away with smaller expenses and the bank will be in a solid position and well funded. I believe this is a good conclusion and acceptable to all.”

Sigfússon said negotiations with British and Dutch authorities are going well and he even expects a conclusion in the next 24 hours. “We are in constant communication and people are trying out possible solutions. We are waiting for their reactions, which we hope will be clear [today] or in the next 24 hours.”

Click here to read more about Icesave and here to read more about the restoration of the Icelandic banks, which is expected to be completed by November 1 with a lower contribution from the Icelandic state than originally expected.

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