The Referendum on saturday April 9 2011

English (United Kingdom)Icelandic(IS)
You are here: Monetary amount and terms
E-mail Print

Monetary Amounts and Terms

The Guarantee Fund is to pay the Dutch authorities up to EUR 1,322 m (just under ISK 215 billion, based on the sale exchange rate on 25 March 2011, ISK162.33 = EUR 1.00) and the British authorities up to GBP 2,350 m (ISK 433.5 billion based on the sale exchange rate on 25 March 2011, ISK 184.47 = GBP 1.00). This is part of what the British and Dutch authorities have disbursed to the customers of Landsbanki Íslands hf. in their two countries.

Payments from Landsbanki Íslands hf. will be deducted from these sums, lowering the principal of the loans when they are received.

These claims are interest-free until 1 October 2009, after which the principal bears 3% annual interest (in the case of the payment to the Netherlands) and 3.3% (in the case of the payment to the United Kingdom) until 30 June 2016.

The Icelandic State is to guarantee the payment of interest until 30 June 2016, and also any outstanding balance there may then be on the Icesave obligations. If payments remain to be made after 2016, they are to carry the lowest rate of interest generally applying to international loan agreements.

If recovery of assets from the estate of Landsbanki goes ahead in accordance with current estimates, payment under the agreements will have been made in full in 2016. If recovery does not go ahead as estimated, further payments may remain to be made, and could go on until as late as 2046.

Two types of economic provisos are included in the agreements to cover situations in which unforeseeable changes in circumstances occur. The purpose of these provisos is to ensure that the payment burden would be manageable.

  • Firstly, if the outstanding balance exceeds ISK 45 billion in 2016, the payment period is prolonged for one year for each ISK 10 billion.

  • Secondly, the yearly payment shall not exceed a sum equivalent to
If this provision is applied, the higher of these two sums would be chosen.

It is possible to request a review of the agreements if a survey by the International Monetary Fund (IMF) reveals that Iceland’s solvency has declined appreciably since the IMF’s survey of 19 November 2008.

The Icelandic government negotiating committee currently estimates that the entire amount to be paid by the Treasury will be ISK 32 billion. It should be reiterated that this is only an estimate. The final amount may change and could be greater or smaller.