In view of recent events
Over the past few days, Íslandsbanki has carefully examined the verdict of the Supreme Court of Iceland concerning automobile loans denominated in foreign currency and assessed the conceivable impact of the court’s verdict on the equity positions of Íslandsbanki.
Should an eventual outcome be that all loans to individuals denominated in foreign currency are judged to be illegal, the nominal value of such claims held by the bank on those customers could decrease substantially. According to the bank’s calculations, the bank would still meet capital requirements set by the Icelandic Financial Supervisory Authority (FME). The bank’s capital ratio as of year-end 2009 was 19.8%, while the FME requires a capital ratio of 16%, which is somewhat higher than in neighbouring countries.
In view of the high uncertainty resulting from the verdict of the Supreme Court, that denominating automobile loans in foreign currencies is unlawful, Íslandsbanki regards it as urgent that the legality and premises for settlement of other such loans to individuals be resolved by the courts with expediently.
Íslandsbanki has previously stated that those customers, who have already availed themselves of the bank’s remedies with regard to foreign-denominated auto loans, have not forfeited any rights to a more favourable solution, should this be the eventual conclusion of the Supreme Court or the government.