Bloomberg News

Kaupthing Postpones Creditor Deal Amid Central Bank Delays

November 30, 2012

The board that’s winding up failed Icelandic lender Kaupthing Bank hf will be unable to provide creditors with a date for when it plans to present a repayment plan amid reports the central bank may block such a move.

“Due to uncertainties on the timing of any formal response from the central bank of Iceland, it’s currently not possible to provide a revised target launch date for a potential composition proposal,” the bank said today in an e-mailed statement. The bank continues “to move forward with preparations for a composition proposal and is prepared to work closely with the central bank of Iceland to address any concerns or questions that may arise.”

Morgunbladid reported earlier this month, without saying where it got the information, that the Reykjavik-based central bank opposes composition agreements with the creditors of Kaupthing, Glitnir Bank hf and Landsbanki Islands hf, which could lead to 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 composition agreements, said Helgi Hjorvar, chairman of the legislature’s economy and tax committee.

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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