Creditors Meeting February 2010

Detailed information

The accompanying documentation, that is published on our homepage under Creditor´s meetings, includes substantially more information on the activities and financial affairs of Landsbanki Íslands hf. (LBI) than have been previously available, together with a more detailed analysis of them. In providing this, the bank aims to respond to requests for increased information disclosure and transparency in the work of Resolution Committees and Winding-up Boards.

Assets and liabilities

LBI's Resolution Committee has updated to year-end 2009 its assessment of the bank's assets from last September. According to the updated estimate, prepared by the bank's experts, an estimated ISK 1,172 billion is expected to be recovered to pay claims against the bank. The book value of deposit claims against the bank amounts to ISK 1,319 billion, the great majority of which result from deposit accounts in the UK and the Netherlands. Based on the above figures, dispositions are estimated to be equivalent to 89% of priority claims, or about one percentage point more than the estimate following the last valuation of assets. It should be pointed out that the final amount of claims and their priority will be determined by the Winding-up Board and, as the case may be, by the verdicts of the courts. Attention is also drawn to the bank's monetary assets, which amounted to ISK 194 billion at year-end 2009 and are expected to increase by ISK 126 billion this year. The bank's total monetary assets are therefore expected to amount to ISK 320-330 billion by the end of this year.

Asset valuation subject to uncertainty

The valuation assumes that none of LBI's assets will be disposed of for a residual value and that loans in its portfolio, which comprise by far the greatest share of the bank's assets, will be held to maturity, to the extent the payment capacity of the debtor/payer and collateral provided is sufficient. Special attention is drawn to the fact that the final value of the bank's assets is subject to high uncertainty, in part due to the unpredictability of economic developments both domestically and abroad, which may affect the future value of the underlying assets.

Cost of the bank's activities

Emphasis has been placed on providing a breakdown of and explaining costs incurred in LBI's activities. The total cost of the bank's operations last year amounted to ISK 12 billion. By far the largest cost components are salaries and related expenses, which amount to almost ISK 3.5 billion, and legal and other consultancy costs, which are just over ISK 5.1 billion. A breakdown of the cost components shows that the cost of LBI's activities in Iceland amounts to around ISK 5 billion; of this, over ISK 1 billion is recognised in Iceland due to the cost of foreign experts assisting in collecting on major assets abroad. The bank's overall cost is explained in part by its extensive activities abroad, in the UK especially but also in the Netherlands and Canada.

Decisions on claims lodged

LBI's Winding-up Board presented its decisions on around 1,400 claims at the creditors' meeting today. Previously, decisions had been presented on 1,175 claims, including the majority of the claims lodged for deposits in the UK and the Netherlands. The Winding-up Board has concluded most decisions on claims lodged with priority. The next creditors' meeting to discuss decisions on claims lodged has been scheduled for 27 May this year and the Winding-up Board aims to have concluded taking decisions on all claims by the end of 2010.

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