Deka Bank has lost its case against the Icelandic state. The bank had claimed the state was responsible for its loss of €336m, stemming from repo agreements with Glitnir, involving bonds from Kaupthing and Landsbanki. These agreements were made in early 2008, which means the bank at the time was willing to do these highly risky deals.
Deka sued the state for causing the bank’s loss both because of lack of supervision and because of the Emergency Law, passed October 6, 2008. The Reykjavík District Court passed the same judgement last year but Deka appealed. The Icelandic Supreme Court has now confirmed the earlier judgement. Seven judges passed a unanimous judgement. Normally, the judges are three but the fact that seven judges were on the case shows its importance. The judgement sets precedence for other possible claims. In addition, Deka Bank has to pay costs for the state, in total ISK3m, almost €19.000.
The ruling, so far only in Icelandic, gives an interesting insight into the relationship between Deka and Glitnir and the way these deals were done.
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