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State Aid

Loan agreements with Íslandsbanki and Arion banki did not involve state aid




Loan agreements concluded between the Central Bank of Iceland (CBI) and Íslandsbanki hf. and Arion banki hf. were on market terms and thus did not constitute state aid. This is the conclusion of the EFTA Surveillance Authority (ESA) today. ESA started looking into this matter after receiving a complaint.

Following the opening of the formal investigation in May 2015, ESA received substantial information concerning average interest rates for comparable debt instruments concluded at the same time as the loan agreements. This information demonstrated that the terms agreed by the CBI were in line with commercial conditions at the time. Therefore, ESA concludes that the CBI acted in line with the conduct of a private creditor and consequently the loan agreement did not constitute state aid within the meaning of the EEA rules.


The case concerned two separate loan agreements concluded between the Central Bank of Iceland and Íslandsbanki (formerly Glitnir) and Arion banki (formerly Kaupthing), in September 2009 and January 2010. The purpose of the two loan agreements was to reschedule short-term collateral and securities loans from the Central Bank to long-term loans.

These short-term collateral loans were secured against various collateral securities, including mortgage loans. On the capitalisation of the new banks (Íslandsbanki and Arion), domestic assets and liabilities of the predecessor banks, Glitnir and Kaupthing, were transferred to the new banks, including the liabilities towards the Central Bank. As the debt consisted of short-term collateralised lending, instant repayment would have had a serious impact on the new banks' liquidity positions and, consequently, the possibility of the CBI to collect all of its claim. 

A non-confidential version of the decision will shortly be published on ESA's website and in the Official Journal of the European Union.

For further information, please contact:

Ms. Anne Vestbakke
Head of Communications
tel. (+32)(0)2 286 18 36
mob. (+32)(0)489 98 77 55

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