Sigrún Davíðsdóttir's Icelog

This morning, the Reykjavik County Court ruled in nine cases regarding wholesale deposits, seven in Landsbanki, two in Glitnir. In each of the cases there tens of entities involved. The crux of the cases was the status of the wholesale deposits as claims, if they are a priority claim or not. Landsbanki had defined these deposits as a priority claim, Glitnir hadn’t. The Court has now defined them as priority claims. That puts them first in the queue to be paid out. Others, with general claims, will loose out.

This means that the many institutions – councils, universities, banks and others, in the UK and elsewhere – who had their money as wholesale deposits with the Icelandic banks will recover a larger percentage of their deposits with the collapsed banks. However, these rulings will no doubt be appealed to the Supreme Court so it’s still too early for the wholesale depositors to celebrate.

Part of the emergency measures on October 6, when the Icelandic banking system was about to collapse was to define deposits as priority claims in order to safeguard the interest of ordinary deposit holders. The government then went a step further, guaranteeing all deposits in the banks in Iceland but not abroad. Thus, the Icesave affair – but that’s another saga.

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