Icesave: Iceland to be taken to Court for failing to pay minimum compensation
The EFTA Surveillance Authority has today decided to take Iceland to the EFTA Court over its breach of the Deposit Guarantee Directive.
According to the Directive, Iceland was obliged to ensure payment of a minimum compensation of EUR 20.000 per depositor after Landsbanki and its Dutch and British branches, called Icesave, collapsed in October 2008. More than three years after the bankruptcy of the bank, Iceland has still not complied with its obligation.
The Deposit Guarantee Directive seeks to enhance consumer/depositor confidence in the banking system in the event of banks going bankrupt. The banking system depends on trust and consumer confidence and the Directive is a key instrument in that respect.
In May 2010, the Authority issued a letter of formal notice to Iceland, giving the Government the possibility to justify its position. After carefully examining Iceland's reply in May 2011, the Authority issued a reasoned opinion on 10 June 2011. The purpose of this reasoned opinion was to give Iceland a final possibility to comply with the Directive.
Iceland has now replied to that reasoned opinion, but remains in breach.
“The Authority's position is unchanged. Iceland must comply with its obligations under the EEA Agreement. It must ensure compensation of all depositors under the conditions prescribed by the Deposit Guarantee Directive and without discrimination,” reiterates Mrs Oda Helen Sletnes, president of the EFTA Surveillance Authority.
The Authority notes that the bankruptcy estate of Landsbanki has started to pay out the claims of depositors. However, according to the information provided by Iceland, those claims will not be paid in full before the end of 2013.
“One of the main purposes of the Directive is to avoid depositors having to have recourse to bankruptcy procedures. More than three years after the deposits became unavailable, the claims have still not fully been reimbursed. This only serves to underline the importance of compliance with the Deposit Guarantee Directive,” says Mrs Sletnes.
The case will now be brought before the EFTA Court. Iceland will have the opportunity to present its position. If the EFTA Court finds that there is a breach, Iceland will be required to take immediate actions to comply with that judgment.
- For background information, read the Q & A available here.
- UPDATE: Read the Authority's reply to the Court of 10 April 2012 here.
- Read the Authority's application to the EFTA Court here.
- Read the letter of 30 September 2011 from Iceland to the Authority here
- Read the Authority's reasoned opinion of 10 June 2011 here.
- Read the letter of 2 May 2011 from Iceland to the Authority here
- Read the Authority's letter of formal notice of 26 May 2010 here
For further information, please contact:
Mr. Trygve Mellvang-Berg
Press and Information Officer
tel. (+32) (0)2 286 18 30
mob. (+32) (0)492 900 187