Press release No. 49/2009
In recent weeks, negotiations have been ongoing between representatives of the Government of Iceland and the Resolution Committees of the three old banks on behalf of their creditors regarding the final resolution of the separation between the new and the old banks. In February the Government decided that representatives of three ministries would assume responisbility for the negotiations on behalf of the Government, with the Ministry of Finance in the lead and appointing financial advisors to manage the negotions on its behalf (London-based financial adviser, Hawkpoint). The Ministry of Finance appointed an experienced banker, Þorsteinn Þorsteinsson, as chief negotiator.
On the basis of the emergency law adopted following the collapse of the three Icelandic commercial banks (Kaupthing, Landsbanki and Glitnir) in October, assets and liabilities were transferred to three new banks under the ownership of the Ministry of Finance. The Government undertook to compensate the creditors of the new banks for the net transfer of assets and committed to a fair and transparent process of valuation. As part of this process, the FME appointed an independent and impartial party, Deloitte LLP, to perform a valuation of the net assets transferred and a professional services firm, Oliver Wyman to execute the valuation. By these actions, the government fullfilled the promise made in the Letter of Intent to the International Monetary Fund (“IMF”) issued last November.
The FME issued a decision for the negotiating parties to reach an agreement by no later than 17th July 2009, having extended a previous deadline.
Preparations for the negotiations were initiated in March but actual negotiations started later. In the past weeks, negotiations have been ongoing and have been both sensitive and complex. The Government has striven to safeguard the interests of Iceland, whilst also being fully committed to ensuring a fair and transparent treatment of the other parties, the interests of which vary greatly.
Negotiations have now reached a final stage and are on course to be finalised within the stated timeframe, although the next few days will be used for finalisation and the dissemination of information to the creditors. The Government is planning to make an official announcement on Monday 20 June on the conclusion of the negotiations and how the three new banks will be capitalised.
Ministry of Finance, July 17 2009