Glitnir’s Resolution Committee and the Government Reach a Settlement on Bank Assets

Glitnir's Resolution Committee and the Icelandic government have signed an agreement on settlement for assets transferred from Glitnir to Íslandsbanki after the Icelandic banks' collapse in October last year. This settlement has been concluded following a preliminary agreement announced on 20 July this year, pursuant to which the Treasury decided to provide Íslandsbanki with ISK 65 billion in additional equity on 14 August.

Under the agreement, Glitnir's Resolution Committee, on behalf of the bank's creditors, has the option of acquiring 95% of share capital in Íslandsbanki. A decision as to whether they intend to avail themselves of this option is to be made by the end of September. If Glitnir decides to take this option, the government has, furthermore, pledged to provide the bank with ISK 25 billion in liquidity and equity support. This will ensure the bank a very strong equity and liquidity base, with an estimated capital adequacy ratio of over 16%, assuming that Glitnir does acquire a majority holding in Íslandsbanki on behalf of creditors.

Rather than acquiring a holding in Íslandsbanki immediately, creditors also have the option of accepting payment in the form of a debt instrument issued by Íslandsbanki, plus call options on as much as 90% of the bank's shares over the next five years.

Árni Tómasson, chairman of Glitnir's Resolution Committee, is pleased that an agreement has been reached on settlement for the assets transferred from Glitnir to Íslandsbanki last year.  "In our estimation, this is a fair outcome, safeguarding the interests of creditors to the greatest extent possible," he stated.