The exposure that Kaupthing created by offering to lend Alisher Usmanov and related parties ISK270bn exceeds the legal limit according to Icelandic legal act on financial institutions from 1996. This exposure was around 58% of the bank’s equity base whereas the legal limit is only 25%.
However, this was nothing out of the (extra)ordinary, neither at Kaupthing nor the other Icelandic banks. As the report of the Althingi Special Investigative Commission shows clearly the banks habitually broke law on limits to large exposures.
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