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State Aid

State aid: Investigation into the purchase of assets held by investment funds in Iceland



The EFTA Surveillance Authority today opened a formal investigation into potential unlawful state aid in transactions amounting to c. €460 million. The transactions involved the purchase in October 2008 of bonds owned by investment funds[1] operated by fund management companies linked to the three collapsed Icelandic banks.

Acting following the receipt of a complaint from Icelandic competitors of the management companies, the Authority will assess whether the assets were purchased on commercial terms by the three newly formed banks Islandsbanki (New Glitnir), Arion (New Kaupthing) and (New) Landsbankinn.

The Authority has doubts as to whether the new banks acted on commercial terms when they entered into transactions at a time when Icelandic financial markets were in turmoil. These transactions amounted to:

·        ISK 63 billion (Landsbankinn)

·        ISK 12.9 billion (Islandsbanki)

·        ISK 7.7 billion (Arion) 

In addition, the Icelandic authorities have in the Authoritys opinion not demonstrated that the banks acted independently of the state. The decisions to acquire the assets were made by temporary boards of the newly created and state-owned banks within days after of their appointments by the Icelandic Government. Each bank has since faced substantial losses on the transactions following write downs of the value of the assets purchased.

The Authority will now conduct a detailed investigation and calls for further comments from the Icelandic authorities and from third parties with an interest in the case.

A non-confidential version of the Authority's Decision to open the formal investigation will shortly be published on the Authority's website and in the Official Journal of the European Union.

For further information, please contact:


Mr Trygve Mellvang-Berg
Press & Information Officer
tel. (+32)(0)2 286 1866
mob: (+32)(0)492 900 187


Mr Dylan Hughes
Officer, Competition and State Aid
tel. (+32)(0)2 286 18 80


[1] Funds regulated under the Icelandic “UCITS” (Undertakings for Collective Investment in Transferable Securities) Act.

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