Bloomberg News

Glitnir’s Board Drops Plan to Complete Creditor Deal This Year

November 09, 2012

The board that’s winding up failed Icelandic lender Glitnir Bank hf dropped its plans to present a repayment plan to creditors by the end of this year after the country’s central bank signaled it might block such a move.

“Following the recent comments made by the Governor of the central bank” the caretakers of Glitnir have “sought further clarification as to the implications for the previously announced target timetable,” the lender said in a statement on its website. “It has become apparent that the target launch date of December 2012 is no longer achievable.”

Morgunbladid reported yesterday, without citing where it got the information, that the Reykjavik-based central bank opposes so-called composition agreements, which could lead the winding-up committees of the failed lenders to undergo bankruptcy proceedings. Finance Minister Katrin Juliusdottir said last month that debt settlements with creditors of Iceland’s failed banks will increase an overhang of offshore krona assets and stoke volatility in the currency.

Iceland’s parliament will support the central bank if it chooses to block the composition agreements of Glitnir, Kaupthing Bank hf and Landsbanki Islands hf, said Helgi Hjorvar, chairman of the legislature’s economy and tax committee.

“Parliament will do anything and everything to assist the central bank’s objective to maintain financial stability in the country,” he said yesterday in a telephone interview. If that includes blocking the banks’ composition agreements, “parliament will support the central bank.”

To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik at valdimarsson@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net


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