Landsbanki Islands hf. granted a moratorium
Landsbanki Islands hf. ("Landsbanki") is currently being controlled by a Resolution Committee appointed by the Icelandic Finance Supervisory Authority (the "FME") under emergency legislation passed at the beginning of October. The bank is not in any form of administration or liquidation process.
The Resolution Committee will continue to run the operations of Landsbanki Islands hf. with the aim of maximizing the value of the assets for all creditors (irrespective of their jurisdiction of residence). To enable Landsbanki to continue to be operated over the medium term, Landsbanki has sought and obtained a Moratorium under Icelandic Act No. 161/2002 on Financial Undertakings (which it is expected will be recognised throughout the member states of the European Union and the European Economic Area (the "EEA") under the provisions of the European Directive on Reorganisation and Winding Up of Credit Institutions). The main effect of the moratorium will be that creditors will be prevented from bringing enforcement proceedings against Landsbanki. The court has appointed Mr. Kristinn Bjarnason, a Supreme Court attorney to act as the assistant in relation to the Moratorium.
Additional information regarding the recently passed Icelandic legislation (including an English translation) is available on the FME's website at www.fme.is. In relation to jurisdictions outside the EEA where it has material assets, Landsbanki will take whatever action it can to seek recognition of the Moratorium. This includes filing for Chapter 15 protection in the United States.
In relation to the London branch, this is not a separate legal entity but is a division of Landsbanki. The current operations of the London branch and the powers given to local management of the branch to deal with its customers and vendors will remain in effect following the Moratorium. Assets of Landsbanki in the UK are subject to a freezing order from HM Treasury but the London branch has subsequently been granted licenses to operate its business by HM Treasury. Neither the freezing order nor such licenses will be affected by the Moratorium and the London branch will continue to be able operate in the ordinary course of its current business under such licenses in the same way it did prior to the Moratorium.
None of these developments have any impact on the current operations of Landsbanki. During the Moratorium, which may continue for a period of up to 24 months, the Resolution Committee of Landsbanki will continue to operate as it has been and will endeavor to protect and maximize the value of the bank's assets and evaluate restructuring alternatives that will further the Resolution Committee's objectives.
For the avoidance of doubt, the Moratorium has no effect on NBI hf. which assumed the domestic Icelandic operations of Landsbanki on October 9, 2008.