Measures regarding money market funds compatible with EEA agreement

The EFTA Surveillance Authority (ESA) has today concluded that the decision by the then Board of Directors of New Glitnir to acquire assets from a money market fund is compatible with EEA agreement. As stated in their release, ESA considers that the measures at issue were necessary in order to try to restore faith in the financial sector. It was in that regard necessary and proportionate to protect the investors from even bigger losses on their savings.

The ESA conclusion includes eight investment funds operated by the subsidiaries of the three commercial banks. The banks acquired assets held by eight investment funds for a total of ISK 82.2 billion, thereof 75.4% was acquired by New Landsbanki, 15.4% by New Glitnir (now Íslandsbanki), and 9.2% by New Kaupthing (now Arion banki) according to a press release from ESA in September 2010. 

When the financial crisis hit Iceland in early October 2008, the investment funds deferred the redemption of equity certificates in order to ensure equality. The funds were subsequently dissolved and owners of equity certificates were paid. This happened partly by the banks acquiring assets (mostly domestic assets) held by the funds based on commercial grounds.. Assets that were purchased were evaluated in a professional manner in times of great uncertainty. The price paid for the assets was determined by the board of the new banks based the valuation of external consultants (audit firms). 

On 27 June 2012, ESA also concluded that the measures taken in 2008, when Íslandsbanki was established on the domestic operations of its predecessor New Glitnir and received support from the Icelandic State, as compatible with the EEA agreement. 

Birna Einarsdóttir, CEO of Íslandsbanki: 
“Two important milestones have been reached in removing uncertainties in the Bank’s operations with these two ESA conclusions. Íslandsbanki was the first bank in Iceland to receive ESA approval on the Bank's restructuring. Now we also have confirmation that the measures taken in 2008, in order to secure the interest of approximately 9,000 customers, were compatible with EEA regulation.” 

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