The Ministry of Finance and Economic Affairs announced this morning that a group of Glitnir's hf. creditors has submitted amendments to its previous proposal concerning Glitnir's stability contributions to the State announced on June 8th 2015, in relations to the government's plan of lifting of the capital controls.
The main changes from the already proposed stability contribution is that Glitnir will relinquish to the authorities all of its shares in ISB Holding ehf., which owns 95% of shares in Íslandsbanki hf. Íslandsbanki's equity totalled about ISK 185 bn. at the end of June 2015.
On July 16th, Glitnir and Íslandsbanki entered into Heads of Agreement regarding certain measures to facilitate the composition of Glitnir. The main change from the existing Agreement is that the total equity ratio will not be reduced, as the current proposal does not entail a special dividend from the bank. Glitnir will purchase from the Government the existing Tier 2 notes issued by Íslandsbanki. Deposits in FX are to be termed out, while repayment of ISK deposits is subject to an agreement with the Central Bank.
The above described measures are subject to the same assumptions as were specified in the proposals of 8 June 2015, including an exemption from the Foreign Exchange Act, no. 87/1992, which will authorise Glitnir to conclude its composition agreements. Glitnir's composition agreement is not expected to be concluded before year end.
These changes will not impact Íslandsbanki's daily operations and will leave the bank with very strong capital ratios.
The announcement from the Ministry of Finance and Economic Affairs can be found here: