Iceland

Creditors Vote on Deal Setting Iceland Up for Currency Freedom

2015-09-30 23

Iceland is expected to move closer to ending seven years of capital controls on Friday, when the creditors of failed lender Landsbanki Islands hf are due to approve a so-called stability payment.

Under a deal proposed by the Treasury in June, the creditors of Iceland’s failed banks have until the end of the year to either agree to pay a combined contribution of up to $3.8 billion, or face a 39 percent tax equivalent to an estimated $5.1 billion. Landsbanki, now known as LBI hf, is the last of the country’s failed lenders to vote.

The creditors of Glitnir Bank hf and Kaupthing Bank hf have already agreed to pay more than 200 billion kronur ($1.6 billion) and 120 billion kronur, respectively. LBI’s contribution will be "considerably less," Pall Benediktsson, an LBI spokesman, told Bloomberg. He declined to disclose the exact amount.

Central bank Governor Mar Gudmundsson said on Wednesday that technical and legal issues mean the whole process probably won’t be finalized until "the end of the year."

Note: Results of Kaupthing voting are here: http://www.kaupthing.com/home/announcements/all-announcements/2015/09/30...

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Jailed Former Bank Exec “Bankrupt”

Posted 27/09/2015 - 07:07 by anrigaut

2015-09-24 23

Sigurður Einarsson, the former chairman of Kaupþing bank, has formally requested the Reykjavík District Court declare him personally bankrupt.

Sigurður confirmed the news to DV, but would not say precisely why he is bankrupt, and why it should happen now.

The newspaper speculates, however, that a possible reason is the Reykjavík District Court’s decision in 2012 to find Sigurður guilty—forcing him to pay back around ISK 500 million (EUR 3.5/USD 3.9 million), plus interest, due to personal loans he took with Kaupþing in the lead up to the bank’s demise. He used the loans from Kaupþing to buy shares in the bank itself.

Sigurður is currently serving a prison sentence at Kvíabryggja.

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Kaupthing files an exemption request from capital controls

2015-09-08 23

An exemption application from certain restrictions under the Act on Foreign Exchange (No. 87/1992) was submitted by Kaupthing to the Central Bank of Iceland on Friday, 4 September 2015. The exemption is required in order to make distributions to creditors domiciled outside of Iceland and in order to fulfil the terms of an approved composition agreement. The exemption application is based on a proposal submitted by representatives of certain of the larger creditors of Kaupthing (the “Kaupthing Creditors Proposal”) outlined in the announcement by the Ministry of Finance and Economic Affairs ("Iceland in Continuing Consultations Regarding - Capital Control Liberalization (Kaupthing)") on 8 June 2015. Kaupthing will provide creditors with an update on the progress of the application in due course.

Note: The Ministry of Finance announcement is here: http://www.ministryoffinance.is/news/nr/19597

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More Kaupthing Executives jailed

2015-06-25 23

Six defendants in the Kaupþing market manipulation case, the biggest case of this type in Iceland’s history, have been handed prison sentences ranging from one year to four years and six months.

By fully financing share purchases with no other surety than the shares themselves, the bank was accused of giving a false and misleading impression of demand for Kaupþingi shares by means of deception and pretence.
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See also here: http://icelandreview.com/news/2015/06/26/more-kaupthing-execs-jailed
and here: http://uti.is/2015/06/yet-another-fraud-investigation-ending-in-prison-s...

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Kaupthing hf: Response to the Announcement from the Government Regarding Capital Control Liberalization

Posted 08/06/2015 - 19:23 by anrigaut

2015-06-07 23

Reference is made to the announcement made today by the Icelandic Government in relation to the intention of the government to introduce a stability tax and exemption framework as part of its strategy to allow for the liberalization of the capital controls that were introduced in 2008.
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Iceland moves on capital controls, to tax money outflows

Posted 08/06/2015 - 16:18 by anrigaut

2015-06-07 23

Iceland said on Monday it would impose a 39 percent tax on creditors wanting to take assets reclaimed from its failed banks out of the country, a first step to lifting capital controls that have been in place since its 2008 crash.

The government hopes the tax will prevent a sudden exodus of capital that could crush the crown currency and hurt the economy as it recovers from the spectacular collapse of the North Atlantic island's bloated banking sector seven years ago.

But creditors with billions of dollars worth of assets frozen in three bankrupt lenders could launch legal proceedings against the country, risking years of action that would keep Iceland locked out of international markets.

The government said investors in Icelandic assets such as government bonds could also get their money out of the country by selling crowns to the central bank. Alternatively, they could reinvest their capital in newer government debt that will be convertible out of crowns at maturity.

Because the central bank controls the exchange rate, investors using its currency auctions to repatriate their money could get a less favourable price for their crowns than in the currency markets.
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A 40% exit tax to be imposed on foreign investors

Posted 05/06/2015 - 14:29 by anrigaut

2015-06-04 23

The Minister of Finance introduced a plan to lift the capital controls at a cabinet meeting Friday morning. According to the sources of DV, which broke the news, the plan is based on a 40% exit tax on foreign investors holding claims on the banks which collapsed in 2008, unless they reach an agreement which ensures the withdrawal of claims does not threaten the financial stability of Iceland.
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According to today’s reports the government will impose a 40% exit tax, billed a “financial stability tax” on foreign holders of Icelandic krona, which are overwhelmingly investors who own claims on the fallen banks, unless they reach an agreement with the government about a withdrawal of their claims which ensures the financial stability of Iceland. According to the sources of DV this agreement must be reached “in the next few weeks”, otherwise the tax will be imposed.

According to the sources of DV this plan will result in the government receiving “at least” 500 billion ISK (3.8 billion USD/3.4 billion EUR).

The details of the plan will be revealed to the public on Monday.

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Failed Icelandic Bank Debt Said to Gain as Controls May Ease

Posted 30/05/2015 - 06:35 by anrigaut

2015-05-28 23

Trading in debt issued by Iceland’s failed banks is picking up as hedge funds and other investors anticipate a removal of capital controls, according to two people familiar with the matter.

LBI hf and Glitnir hf’s defaulted debt rose about one cent to 11.75 cents and 34 cents on the euro respectively, about two cents higher than in January, said two people who asked not to be identified because trading is private. Kaupthing Bank hf’s claims gained half a point this week to 24 cents, they said.

Trading on debt claims denominated in euros increased this week as new buyers joined the market amid speculation foreign creditors may soon be able to repatriate some of the $6 billion that has been trapped behind capital controls.

Finance Minister Bjarni Benediktsson said on Wednesday the government will propose the law “in the next few days,” paving the way for the repayment of creditors to the nation’s major lenders, which went bust in 2008. The bills will likely be revealed next week, Sigurdur Mar Jonsson, a spokesman for the government, said by telephone on Friday. ...

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Capital controls action… without unleashing the litigation hounds

2015-05-18 23

Will they or won’t they? That is the question regarding how, if and when the Icelandic government will take the long-announced decisive action on easing the capital controls.

The news keeps seeping out in Iceland is that the Icelandic government is just about to present a plan for lifting capital controls. That would then, most likely and uncontroversially, entail the second part of the CBI action from earlier, when investment opportunities for offshore ISK were reined in. Seems, as I mentioned in a blog on earlier CBI action, that this would then be bonds, most likely in FX, with long maturity.

The main interest for foreign creditors will be what measures are chosen regarding the estates of the failed banks, most notably what form of levy or tax will be chosen. Stability tax is the latest jargon to circulate whereas minister of finance Bjarni Benediktsson mentioned an ISK haircut in his March report on capital controls progress.

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Further insight into “Kaupthinking”

2015-05-10 23

The ongoing case against nine Kaupthing managers and staff gives an intriguing insight into the bank’s extensive buying and selling of own shares, which the Office of the Special Prosecutor claims involves market manipulation and breach of fiduciary duty. Witness statements by foreign employees have been especially informative.
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