Sigrún Davíðsdóttir's Icelog

Where is the EU consumer protection when it comes to banking, especially in Luxembourg?

with 8 comments

Icelog has earlier told stories of Landsbanki Luxembourg and equity release loans sold by the bank in France and Spain.

The remarkable thing is that although those who bought the product have good reasons to feel that that Landsbanki Luxembourg missold the loans, mismanaged the accompanying investments and miscalculated the loan cover ratio (in early Sept. 2008, a month before the bank collapse), the administrator has not been willing to discuss these matters with the clients. Since no reports regarding the administrator’s work can be found on-line (contrary to ia the operations of winding-up boards of the collapsed banks in Iceland), it’s not clear how and in what way the administrator has fulfilled normal duties to investigate if the bank took any actions before the collapse that might be either illegal or should be repealed.

In addition, the equity release clients have been frustrated by the wholly opaque and, what has at time, seemed arbitrary operations of the administrator. The clients have ia had varying and inconsistent information as to the status of their loans. Yet, no authority in Luxembourg – such as the Luxembourg financial services, CSSF or the Luxembourg Central Bank – seems to have paid any attention of a) what went on in Landsbanki Luxembourg before its demise b) the operations of the administrator. In this tiny country that lives of banking, the authorities don’t show any interest in knowing what really is going on in Luxembourg banks.

As to the assets, the Landsbanki Winding-up Board has now taken them over. The WuB has not been willing to answer questions regarding what they know about the Landsbanki Luxembourg operations before or after the collapse. The unusual position of the Landsbanki Luxembourg estate is that there are essentially only two creditors: the Landsbanki Iceland estate, now run by the Winding-up board and the Luxembourg Central Bank.

As mentioned earlier on Icelog there are two important events concerning Landsbanki Luxembourg: a court case in Spain and actions taken in France by a French judge.

A court in Spain has ruled in one case that the Landsbanki Luxembourg was illegal, awarded the borrow compensation – but because the case is being appealed these borrowers are still kept in agony.

In France, Judge Van Ruymbeke* is investigating the Landsbanki Luxembourg operations and has seized some properties belonging to Landsbanki Luxembourg clients – in order to prevent the Landsbanki Luxembourg administrator from confiscating the properties against loans she claims are in default.

In spring, the Luxembourg State prosecutor took the extraordinary step to issue a press release in support of the said administrator – although a) the prosecutor had not, judging from the press release, investigated the matter b) had not been asked to investigate it and c) had, as far as could be judged from the press release, nothing to rely on but information from the said administrator. Quite extraordinarily, the prosecutor makes the claim that a small number clients, complaining about the operations of the administrator, are only people who are trying to evade repaying their loans.

The fact that a State prosecutor steps forward to defend in this way an administrator of a private company, is I believe unheard of in any country claiming to be run by the rule of law.

What makes this case particularly poignant is that many of these clients, who now have lived with the threats of being evicted from their homes, are elderly people who thought they were securing their later years in a sensible way by taking out these loans. There are many and various European and domestic schemes to protect consumers and bank clients. So far, none of these seem to have worked for the clients of Landsbanki Luxembourg in Spain and France.

*Judge Renaud van Ruymbeke has a formidable track record in investigating huge and high-profile corruption cases. He worked with Eva Joly – who advised the Icelandic Special Prosecutor when the office was set up – on the Elf case where ministers and politicians were convicted to prison sentences and has run big investigations such as the Clearstream 2 case and French investigations into the Madoff fraud. 

Update to clarify the legal standing of an administrator in Luxembourg: a judge appoints an administrator and all actions have to be accepted by this judge. In the case of the Landsbanki Luxembourg administration the presiding judge is Karin GuillaumeAs far as I understand, the judge is therefor also responsible for the actions taken by an administrator appointed by the judge.

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Written by Sigrún Davídsdóttir

October 18th, 2012 at 1:28 pm

Posted in Iceland

8 Responses to 'Where is the EU consumer protection when it comes to banking, especially in Luxembourg?'

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  1. There are so many things that are extra ordinary in this case which makes Luxembourg look so bad.

    It seems amazing that Jean-Claude Juncker has looked the other way, closed his ears and not wanted to discover what in the world is going on with Mme Hamilius, the curator of Landsbanki and the Judge Karin Guillaume who should be supervising and controlling Mme Hamilius, doesn’t it?

    It is as if Mme Hamilius and Judge Commisaire Karin Guillaume were working in tandem to obstruct justice and pay no attention to European Laws nor respect the Judges and laws of other countries.

    If Iceland is getting involved in this Circus, are they aware of all that Landsbanki in administration has done for 4 years?

    Are they aware of the false accounting, manipulation of figures, disappearing money from non-investment personal accounts and the creative accounting of the Security Ratio Cover which Mme Hamilius needed in order to seize homes?

    Is Iceand aware this looks like money laundering or fraud on a ‘Ponzi’-type scale aimed mainly at retired pensioners with mortgage free homes?

    How many have already died? How many have acquired life-threatening illnesses due to intolerable stress, intimidation and serious harassment by Luxembourg?

    Surely Iceland does not want to acquire the terrible reputation Luxembourg is earning across the world, by joining in Mme Hamilius and Judge Karin Guillaume’s mess and manipulation?

    This duo seems to be out of control and it is time Luxembourg woke up.

    In France, as Sigrun says, the Judge Van Rumbeyke has seized the homes of victims and so protect them.

    This paralyses the execution of Civil cases looking simply at recovering a debt conjoured up by the administration of the failed bank, when it is perfectly clear that the sums in so many cases simply do NOT add up and that the Criminal Case in Paris is well justified.

    Victims of this bankruptcy have always been willing to pay back what they took.

    Mme Hamilius has however refused any discussion about the false accounting and the false figures for 4 years now.

    Victims do NOT want to pay for vanishing money on Madame Hamilius’ say-so with no explanation, justification nor proper accounting.

    It is disgraceful and Luxembourg should be ashamed of how the employees of this failed bank were treated and how the clients who believed in Luxembourg, were treated.

    What terrible PR for Luxembourg!

    I do not think Iceland should get into bed with Luxembourg and take on it’s dirty laundry unless they are fully aware of the REAL facts of what has been done to these victims who are in the main, elderly pensioners.

    Iceland surely wants to keep on it’s excellent work which is well respected as the world watches the honourable way this small country has the courage to tackle the crimes and fraud perpertrated by Greedy, irresponsable Bankers and criminals.

    Luxembourg should sink in it’s own mess it has chosen to turn a blind eye to and not bring Iceland into disrepute now they have done so much to clean up and name and shame the guilty.

    Iceland does not deserve to go down again because of Luxembourg’s arrogance in my opinion.


    19 Oct 12 at 10:29 am

  2. I must tell you that even though the Judge Van Rumbeyke is a top Criminal Judge, Mme Hamilius and the new Landsbanki Lawyer Maitre Dartevelle in Paris are paying no attention to his rulings.

    Now at last the elderly couple I know who both have serious conditions and others I do not know have had the Huissier banging on the door. It has not stopped. Pensioners have suffered 4 year of harassment.

    Now this is what they want. They want the whole alledged sum which is invented and not sure to be paid in a escrow account until the end of the Criminal Trial.

    Is this Iceland or is this Luxembourg administration?

    Raymond Randalle

    21 Oct 12 at 2:59 pm

  3. To whom it may concern,

    The judicial anomalies and astounding conflicts of interests around the administration of the liquidation proceedings enforced to Landsbanki Luxembourg are not an isolated case.
    On 9 October 2008, the Luxembourg Court appointed 2 administrators for another local subsidiary of an Icelandic bank in difficulties, i.e. Kaupthing Bank Luxembourg S.A.. The Court appointed PricewaterhouseCoopers sàrl (aka ‘PwC’), represented by Mrs Emmanuelle Caruel-Henniaux, and attorney in law, Mr Franz Fayot, of the local legal firm Elvinger, Hoss & Prussen (aka ‘EHP’).

    Claimants to Landsbanki Luxembourg might be surprised to read that the auditor of Landsbanki Luxembourg, PwC, had been appointed by the Court to such a crucial role, taking into account the interconnections and similarity of risks between the two banks, e.g. among other things the pledge of securities issued by their respective banking group as collateral for loans. In other words, PwC must have found itself confronted in the exertion of its mandate to questionable practices in Kaupthing it might have ignored or neglected to flag in Landsbanki in its auditor’s role, and in some cases probably involving the same beneficial owners.

    Despite the administrators’ presence during the extensive receivership period granted to Kaupthing Bank Luxembourg (i.e. until restructuring in July 2009), there has been hardly any evidence of any judicial procedure or inquiry undertaken by Luxembourg authorities during that period. Yet several of the bank’s transactions were later to catch the attention of British SFO and Icelandic OSP, i.e. these inquiries were initiated by foreign authorities after the restructuration deal obtained by Banque Havilland. The deal is publicly admitted to have benefitted, inter alia, from the support of public funds by the Governments of Belgium and Luxembourg, requiring EC approval. It is hard to conceive that none of these transactions were noticed by the Court-appointed administrators and their teams during their 9-month tenure and that they did not report anything suspicious to Court or other authorities.

    Yet Banque Havilland elected to maintain the majority of Kaupthing Bank Luxembourg’s managers with the blessing of Finance Minister Luc Frieden, a rather remarkable and unique decision in the annals of bank bailouts in general, and, in this specific bailout, a rather optimistic assessment of their integrity given the controversial circumstances of the then already much debated failure of Kaupthing. (We invite interested readers to consult press releases of Banque Havilland’s opening ceremony of 28th September 2009, including excerpts from the speech given by proudly re-installed CEO Magnus Gudmundsson in presence of Mr Frieden himself. These press releases are publicly available, including on the bank’s website,
    Less known, but not less surprising, is that both PwC and EHP started to become service providers to Banque Havilland as soon as the restructuration deal was inked in July 2009:
    i. PwC was appointed as auditor of Banque Havilland and seems to have retained that position since (we invite readers to inquire directly with Banque Havilland for a copy of their latest annual report).
    ii. EHP became the trusty counsel of Banque Havilland in different legal matters, including matters dealt directly by attorney Franz Fayot in person. (we invite readers to cross-check the names and references on different legal pages, such as or inquire directly to EHP).

    Both administrators Caruel-Henniaux and Fayot were ‘Partners’ of their respective firm at the time, i.e. they shared management responsibilities in these firms and presumably had direct or indirect financial interests in nailing these service agreements with Banque Havilland and its ex-Kaupthing management.

    Such professional conduct is highly questionable from the perspective of independence and the absence of conflict of interests required from court-appointed administrators in a receivership or bankruptcy situation, let alone in the case of the failure of a regulated financial entity, a fortiori if it is to be resurrected with public financing. In many other European jurisdictions, such arrangements would have encountered disapproval from authorities and probably warranted a fraud investigation, but apparently not in Luxembourg so far.

    J. Olafssen

    J. Olafssen

    11 Nov 12 at 7:54 pm

  4. There seem to be too many cases where regulators have aided and abbeted fraud , where ignorance should not be allowed as an excuse (for example “derivatives”) it is their job to know and they
    should suffer consequenses for allowing investors to be steered the wrong way .

    Alexander Edwards

    12 Nov 12 at 3:04 pm


    I might suggest you read this article from Herman Berge who has first hand experience of this corruption and also the fear that it gives.

    Nina Foster

    21 Nov 12 at 1:43 pm

  6. […] At a press conference today, a group of almost 200 clients of Landsbanki Luxembourg in Spain and France raised complaints against the bank, because of its equity release lons and its administrator, Yvette Hamilius, for not investigating what went on in the bank prior to its default. A Brussel-based lawyer, Bernard Maingain, discussed the complaints, most of which Icelog has already written about earlier. […]

  7. […] *Here is one log on Landsbanki Luxembourg; here are logs related to “equity release” loans, which are at the core of the Landsbanki Luxembourg saga. A log on the CSSF and the Icelandic banks. […]

  8. Herman Berge does not tell the whole truth about his experiences with the banking system in Luxembourg. He was condemned in Norway for fraud and fled to what he hoped would be a safe haven for him : Luxembourg. Norwegian Revenue Service as well as other private creditors were after him and the villa he had purchased was seized. He then fled to the Tonga Islands. Herman Berge made every effort in trying to justify the legal consequences of his own illegal actions the result of a “conspiracy” against him


    25 Oct 13 at 10:18 pm

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