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State Aid

State aid: Amendments to Icelandic rescue scheme for small savings banks approved



On 21 June 2010, the Authority approved the rescue aid scheme for small savings banks for a period of six months[1]. The scheme concerns the treatment of claims on the savings banks that came into the possession of the Central Bank of Iceland (CBI) as a result of the collapse of Sparisjóðabanki Íslands hf. The following banks benefited from the scheme:

  • Norðfjörður Savings Bank
  • Vestmannaeyjar Savings Bank
  • Svarfdælir Savings Bank
  • Bolungarvík Savings Bank
  • Þórshöfn Savings Bank

As a consequence of the original approval, the Icelandic authorities committed to submit restructuring plans for each savings bank before 21 December 2010. The Authority based its approval of the scheme on its financial crisis guidelines.[2]

However, following two judgments of the Supreme Court of Iceland in June 2010 concerning illegality of exchange rate indexation of loans, the settlement of the CBI claims had to be reviewed with regards to three savings banks: Vestmannaeyjar, Þórshöfn and Svarfdælir. In addition to notifying amendments to the scheme approved by  the Authority, the Icelandic authorities requested an extension of the deadline to submit restructuring plans until 30 April 2011.

In its decision of today, the Authority considers the notified amendments to be compatible with the functioning of the EEA Agreement and grants the Icelandic authorities the requested extension of the deadline to submit restructuring or liquidation plans by 30 April 2011.

For further information, please contact:


Per Andreas Bjørgan,                                                             Ms. Marianne Clayton,
Director                                                                                 Competition and State Aid
Competition and State aid Directorate                                      tel. (+32) (0)2 286 18 23        
tel. (+32)(0)2 286 18 36                                                         

[1] Decision 253/10/COL,  see press release.

[2] Guidelines on the application of state aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis and  Guidelines on the recapitalisation of financial institutions in the current financial crisis: limitation of aid to the minimum necessary and safeguards against undue distortions of competition.

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