Sigrún Davíðsdóttir's Icelog

Icesave, en route to the EFTA Court?

with 8 comments

On September 30, the Icelandic Government answered the EFTA Surveillance Authority, ESA, reasoned opinion concerning alleged failure of Iceland to comply with Directive on deposit guarantee schemes and/or an article in the EEA agreement on non-discrimination.

Yet again, the Icelandic answer seems to consist of matters irrelevant to the ESA opinion, such as the state of the Landsbanki estate and its pay-out schedule. Regarding the deposit guarantee the answer reiterates earlier points, going against the ESA understanding of  ‘obligation of results’ and denying that foreigners were left worse off than Icelanders.

The Icelandic government denies that a declaration of will, issued by the Icelandic and the Dutch Government October 8 2008, indicates an acceptance on behalf of Iceland of the EU deposit guarantee. Iceland also points out new aspects of the deposit guarantee put forward in a draft of a new EU deposit guarantee.

It is now up to ESA to ponder its next step. It could either accept the Icelandic arguments – which is, to say the very least, extraordinarily unlikely – or it will send the case to the EFTA Court, which is nigh certain.

The only thing that could possibly hinder a court case is if the Brits and the Dutch – satisfied that the Icelandic Deposit Guarantee Fund, with its priority claim in the Landsbanki estate, will soon start paying back its debt to the two countries – would drop their claims. That’s however not entirely plausible since the two countries aren’t only seeking a refund of the deposits but some interests on their pay-out.

Landsbanki is still hampered by ongoing law-suits and its pay-out schedule is consequently unclear. Ergo, it’s unclear when exactly the two countries can expect to recover the money they paid to their Icesave depositors. Landsbanki recovery will, according to the latest estimates, cover priority claims and possibly interests of the UK and Dutch payout. Bondholders will more or less be left with nothing, which might lead to further court cases as bondholders seek to cover their damages.

In an interview with Ruv, Lee Buchheit who led the third and last Icesave negotiations recently pointed out that in its answer to ESA Iceland should have underlined that all depositors had indeed been paid out and that it didn’t really matter who had paid them. The main thing was that no depositor was left unpaid. Further, Iceland should have made the case to ESA that the Icesave dispute was now solely a matter for the three countries to resolve and had nothing to do with ESA any longer.

In its first answer to ESA the Icelandic Government failed to make this point except in a footnote.

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Written by Sigrún Davídsdóttir

October 11th, 2011 at 10:44 pm

Posted in Iceland

8 Responses to 'Icesave, en route to the EFTA Court?'

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  1. is this not a dynamic of Icelandic politics…and elsewhere. You answer the questions that you want to…rather than the one posited.

    The Icelandic fund and tax payer will end up paying ESA requirements….question is when and how much rather than if. On this basis, nthe Icelandic response if for internal comsumption rather than ESA (unless we need to IQ test relevant letter writers :) )


    14 Oct 11 at 12:42 pm

  2. Paul Krugman will be in Iceland next week for a conference. Today he made this entry in his blog –

    Rajan P. Parrikar

    22 Oct 11 at 6:03 am

  3. Non Sequitur again.

    Ripples of Landsbanki Luxembourg troubles in France. 22/10/2011
    Article in French summary:
    Around 400 people have borrowed money on the value of their real estate. They are fighting to avoid the repossession of the collateral by the bank.
    Court case revolve around:
    “escroquerie, abus de confiance et fournitures de services d’investissement sans agrément ».
    Fraud, breach of trust, illegal banking.


    22 Oct 11 at 12:26 pm

  4. What was not mentioned in this article is that the Luxembourg, Landsbanki administrator, Mme Hamilius, is also accused along with the Bank which means that person/persons accused formally of fraud etc. have been happily terrifying us and in our case we are in the process of having our villa seized.

    What arrogance to have failed Banks who have effectively destroyed our lives, attacking US, for their failure.
    We have seen honest people who have worked hard all their lives and saved to buy their homes, made to suffer and bullied in a callous and pretentious way, when it is THEY who went Bankrupt.

    We are in the process of having our villa seized and have been terrified by Bailiffs for the past year and they have even tried to seize our only income from a tenant, who then left.
    We get the result of our hearing which may allow Landsbanki to seize our home, this Tuesday.

    We tried to negotiate but their demands were daylight robbery and were exactly 6 times what we had received between January 2008 and July 2008.

    We were given our first transfer of funds from Landsbanki in January 2008 and by July/August could no longer do business. In January they were obviously already going down.

    Our lives are destroyed and our efforts to negotiate were met with arrogance and aggresion and our lawyers said there was no point negotiating with what was so evidently criminal extortion.

    The Bankers should not be able to hide behind Luxembourg’s outrageous Banking Law conveniently brought out in 2005 which says the Banks in Luxembourg are ‘UNATTACKABLE” should they?
    What about consumer’s rights?

    Rachael Williams

    23 Oct 11 at 11:42 am

  5. Rachel, I’m aware of the cases re Landsbanki in Spain and France. I’m really sorry that I haven’t dealt with it, it’s still on my list. Goupil. thanks for bringing it up.


  6. In fact, what is so shocking is the arrogance and aggressiveness of people who are at fault and who still will not negotiate as they are so greedy, they want as in our case, over 7 times what we took.

    It is not 6 times, but 7 times what we took for a period from January 2008 until July 2008 when they would no longer transfer any funds but kept on lying to us whilst buying stocks in their own bank, without asking us, so that when they went officially bust, they could take everything we had.

    We tried to negotiate and the lawyers are appalled to see that they are not interested, but prefer to seize the homes and terrify people who are in their 70’s and 80’s.

    We are being terrorised and bullied whilst vultures are ready to buy our repossesed villas.

    We have heard that there is already someone who has been allocated our villa. The list of Landsbanki villas being seized is known to all those interested in making a financial killing.
    The price for the auction of our villa has been set at 6 times less than it’s true value.

    We have been told we don’t stand a chance in hell of winning as the whole thing is a massive net of corruption. Let us hope it can be stopped.

    They even siezed the rental from a tenant even though they knew it was our sole source of income and the virulence of the Landsbanki Lawyers is shocking everyone but no one seems to be able to stop them as they have all the power to do anything it seems.

    Everyone is talking about it and yet noone seems to be able to stop them.

    We are desperate and i am trying to help people who are so ill and so vulnerable when I myself do not know whether we will be losing our home on Thursday.
    We were told so many lies.

    I hope this affair will get to see the light of day and not be swept out of sight in Luxembourg.

    Thank you for caring about others and standing up for the vulnerable victims of the greedy and corrupt bankers, Sigrun.
    Apparently TF1 has a programme on the scandal of Landsbanki tonight at 8.00

    Rachael Williams

    24 Oct 11 at 2:11 pm


    This is the link to the TV News clip. Landsbanki Luxembourg corruption and Fraud proceedings are in most French press and News channels. No mention in the UK. Why is that?

    At least Luxembourg has a finger pointed in their direction instead of everything being pinned on Iceland.

    The press has been very timid about mentioning Luxembourg, who allowed and have continued to allow Landsbanki free rein to do as they pleased and loot and terrify vulnerable people in other countries, hasn’t it?

    All the blame was put on Iceland and none on Luxembourg. Is that fair and why is that?

    Has Luxembourg not been helping Landsbanki and are it’s Laws not specifically designed in a timely way, to help the greediest Bankers off the hook?

    Why look only at Iceland?

    Rachael Williams

    25 Oct 11 at 9:35 am

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