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Three requirements for Schemes of arrangement

The Winding-up boards of the three largest banks is Iceland that all defaulted in 2008 are still negotiating with creditors about Schemes of arrangement. The Central Bank of Iceland, CBI, sets three requirements that must be met by Glitnir bank and Kaupthing bank before the schemes can be approved. Mr. Mar Gudmundsson the governor of the central bank says that it is impossible to know when this process is over.

The CBI has to give Glitnir bank and Kaupthing bank exemptions from the Capital controls so that they can finish the Schemes of arrangement. Mr. Mar Gudmundsson says that these exemptions will not be given unless that it is absolutely clear that the Schemes to not threaten the stability in Iceland, and preferably that the Schemes assist in lifting the capital controls.

The CBI sets the three following requirements:

"It has to be clear that there is some kind of aggreement on payments from Iceland to foreign parties, how the ownership of the banks is handled must be clear and to some extent how the banks will handle foreign currency claims on Icelandic parties." says Mr. Gudmundsson.

He calls for an all around solution that guarantees that payments from the defaulted banks to creditors wont depreciate the Icelandic krona nor that they threaten financial stability in Iceland.

 

"Because of our demands it is not possible to finish the Schemes of Arrangement until this all around solution has been made" says Mr Gudmundsson.

"Time will tell how long time this will take", he adds.

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