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Iceland's creditworthiness is not affected by British and Dutch efforts Featured

Moody's, credit rating agency Moody's, credit rating agency

Moody‘s has issued a Comment stating that the British and Dutch governments´ recently filed claim via their deposit insurance funds against the Icelandic Deposit Insurance Fund (TIF) has no effect on the creditworthiness of the government of Iceland (Baa3, stable). 

The Comment refers to EFTA Court ruling from the year 2013 that there is no payment obligation for the sovereign.

The press release from Moody's for example reads:

"The FSCS and DNB in 2008 compensated Icesave deposit holders in their countries. The TIF [the deposit insurance fund in Iceland] estimates that including unpaid interest and cost, the renewed claim could amount to around ISK 1 trillion."

"The lawsuit resurrects the Icesave dispute in which British and Dutch authorities had originally demanded payment from the government of Iceland, claiming that maintaining an adequately funded deposit insurance fund was a sovereign obligation and therefore the government was liable for TIF’s payment obligations. However, TIF is a private company responsible for collecting fees from financial institutions in Iceland so as to provide protection for deposit holders in Iceland. The TIF has ISK 18 billion at its disposal, a fraction of the claims. The UK and the Netherlands have already received around 60% of their claims via recoveries from the Landsbanki estate."

"Whatever the outcome of this latest dispute may be, there is no direct effect on the Icelandic government because the EFTA Court ruling unequivocally established that there is no payment obligation for the sovereign. At the same time, it is clear that the TIF would be unable to fulfil its purpose if it was ordered to pay the full amount claimed by the FSCS and the DNB. The claim was filed in November 2013; however, it is unclear when the court will rule in the case."

Moody´s press release can be approached here. (PDF)

 

Last modified onWednesday, 19 February 2014 20:57
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