An Icelandic reply to ESA
Tonight, the Althingi Foreign Policy Committee will discuss the Icelandic answer to the EFTA Surveillance Authority, ESA. To Icelandic media minister for trade Arni Pall Arnason the indicated that the answer will be sent to ESA tomorrow.
As reported earlier on Icelog, ESA is inquiring into the Icelandic handling of the Deposit Guarantee Directive, both regarding the minimum guarantee and the fact that Icelandic authorities guaranteed all deposits in Iceland but not in Icelandic branches abroad, ie Landsbanki’s Icesave deposits in the UK and the Netherlands.
As ESA opened up its inquiry in May last year it stated:
The EFTA Surveillance Authority has the task to ensure that Iceland, Norway and Liechtenstein comply with the terms of the EEA Agreement. The Deposit Guarantee Directive forms part of that agreement. According to the Directive, Iceland was obliged to guarantee for EUR 20.000 per depositor after Landsbanki and its Dutch and British branches, called Icesave, collapsed in October 2008. …
The Icelandic Government has in a letter to the Authority argued that it considers setting up a guarantee scheme to be enough to fulfill its obligations under the Directive. It has also argued that that the Directive may not be applicable if deposits are unavailable because of a major and general banking crisis. The Authority disagrees on both points. …
In its emergency response to the banking crisis in October 2008, the Icelandic Government made a distinction between domestic depositors and depositors in foreign branches. Domestic deposits continued to be available after they were taken over by New Landsbanki, whereas the foreign depositors lost access to their deposits and did not enjoy the minimum guarantee. It is not possible to differentiate between depositors to the extent they are protected under the Directive. By acting as it did and leaving the depositors in Icesave’s Dutch and UK branches without even the minimum guarantee, Iceland acted in breach of the Directive.
The Icelandic answer will be made public once it’s been sent to ESA.
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