Money Market Fund Members will not have to Reimburse Skip to content

Money Market Fund Members will not have to Reimburse

The new banks, or those profiting from purchasing the assets of the old banks’ money market funds, could be forced to reimburse to the state the amount they spent on the purchases.

Landsbanki. Photo by IPA.

“Their clients, the people who invested their money in the funds, don’t have to pay anything,” Per Sanderud, president of ESA, EFTA’s surveillance authority told Fréttabladid. reports this today.

Yesterday, ESA announced that a formal investigation of the Arion Bank, Íslandsbanki and Landsbanki’s purchase of money market funds operated by the old banks is now under way.

Following the banking collapse, many were discontented with the fact that the emergency law did not ensure the ownership of individuals and companies in money market funds in the same ways as bank balances.

On that issue, Minister of Commerce Björgvin G. Sigurdsson said that the damage suffered by money market fund members would be as limited as possible.

In October 2008, The Financial Supervisory Authority ordered the banks to liquidate the funds and disburse the members. Soon after that, the banks purchased the assets of the funds at the price of 83,6 billion ISK (705 million USD, 554 million EUR), a large part of which has now been written off.

At the end of October, the funds were liquidated and their clients disbursed somewhere in the range of 69 percent to 85 percent of their assets. Four financial companies, which operated similar funds, did not get a comparable offer for their assets and filed suit to the ESA last April. Some of them have not been able to fully reimburse fund members.

The Ministry of Finance has objected to ESA’s findings and claims that the government did not give any instructions regarding the purchasing of the funds’ assets. Their liquidation was subjected to civil liability after the fall of the banks. Independent parties have estimated their worth. According to Sanderud, the investigation’s results may be ready next year.

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