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Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 1April 19, 2023
The Icelandic banks
After the collapse of the Icelandic banking system Glitnir, Landsbanki and Kaupthing were split into state owned (new) banks and old banks.
The basis for the split was primarily geographic Icelandic assets were put in the state owned new banks International assets were left behind in the old banks
The state owned banks will make up the future new banking system while the old banks will be dissolved and wound up in an orderly manner.
The proceeds from the asset sales will be distributed among the creditors in a fair and transparent manner according to the Icelandic legislation on the winding up of financial undertakings which is in line with the EU Winding up directive.
Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 2April 19, 2023
The Icelandic Banks/Resolution Committees
In each of the three old banks, the Financial Supervisory Authority (FME) replaced the board with a Resolution Committee. Has all the powers of the board Undertakes the affairs of the financial undertaking Conducts its business operations Shall abide to and execute the decisions taken by
the FME
Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 3April 19, 2023
The Icelandic Banks The old banks were granted a Moratorium in November and December
2008 by the district court of Reykjavik An assistant approved by the court
There are various restrictions on any disposal of assets or use of funds during the Moratorium
Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 4April 19, 2023
The Icelandic banks / The Resolution Committees
Currently meetings are on regular basis between the creditors of the old banks and the Resolution Committees. These meetings include i.a. briefings on the process of reorganization of the banking system, the division of the banks and the valuation of their assets.
The resolution committees are working on maximizing the value of the assets of the old banks to the benefit of all stakeholders.
Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 5April 19, 2023
The Icelandic Banks
For each of the three new banks, the Government – the new owner – elected a new board of directors, who in turn recruited a new management team.
Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 6April 19, 2023
Financial Supervisory Authority
The Financial Supervisory Authority is a fundamental institute in restructuring the banking sector.
Following the collapse of the three banks, the immediate challenges facing the Icelandic authorities were to restore a functioning and viable banking system and to stabilize the currency, the króna.
Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 7April 19, 2023
Restructuring the banking sector The work on restructuring the banking sector comprises five processes
running in parallel: A valuation of the net assets of the new banks at the point of their
establishment. A valuation on a similar basis of the net assets of the old banks to serve as
a frame of reference for the Resolution Committees in their work with the creditors.
Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 8April 19, 2023
Restructuring the banking sector The preparation of IFRS compliant primary financial statements for each of
the new banks at the beginning of their operations. The creation of financial instruments linking the new and old banks which
will be supported by the valuation process and the opening financial statements of the new banks.
A review of the bank regulatory framework and supervisory practices to strengthen safeguards against potential new crises.
Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 9April 19, 2023
Restructuring the banking sector
The bank restructuring process is coordinated by a committee, comprising representatives from the Prime Minister’s Office, the Financial Supervisory Authority (FSA), the Central Bank of Iceland, the Ministry for Foreign Affairs, the Ministry of Finance, and the Ministry of Business Affairs. The chairman of this committee is an impartial banking expert appointed by the Prime Minister.
Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 10April 19, 2023
Restructuring the banking sector
After the establishment of audited new opening financial statements for the new banks, the Government is committed to capitalizing them up to a capital adequacy ratio of at least 10%.
The injection of capital will be made using tradable financial instruments issued on market terms.
Nafn fyrirlestrar (Edit/Breyta - Header/Footer) 11April 19, 2023
Restructuring the banking sector The Government will review the bank regulatory framework and supervisory
practice to strengthen safeguards against potential new crises. It has engaged an experienced Finnish bank supervisor with extensive
international experience to assess the regulatory framework and supervisory practices and to propose necessary changes.
In particular, the goal is to assess the framework of rules on liquidity management, connected lending, large exposures, cross-ownership, and the “fit and proper” status of owners and managers.