News announcement from Landsbanki Íslands hf. - Creditors meeting

A creditors' meeting was held by the Winding-up Board and Resolution Committee of Landsbanki Íslands (LBI) today, 17 November 2011.

LBI's financial situation

Updated information on the estimated value of the bank's asset portfolio as of 30 September 2011 (Q3) was presented by the Resolution Committee to the bank's creditors. The bank has achieved considerable success in boosting recoveries, resulting in a real increase in the estimated value of assets over the previous quarter of over ISK 9 billion.

Calculated at fixed ISK exchange rates as of 22 April 2009, the recoveries are estimated at ISK 1,353 billion, which is some ISK 34 billion more than the total book value of priority claims, which amount to ISK 1,319 billion. On these same premises, the Resolution Committee´s estimated value of the asset portfolio has increased by ISK 249 billion since 30 April 2009.

Cash has grown in accordance with estimates and amounted to ISK 484 billion as of 30 September this year, an increase of over ISK 35 billion in real terms over the previous quarter. If foreign currency exchange rates as of 22 April 2009 are used for conversion, however, cash as of 30 September this year was equivalent to ISK 510 billion. This increase is due primarily to payments on loans. Cash held now amounts to around 37% of the book value of priority claims, estimated returns under the agreement with Landsbankinn hf. (previously NBI hf.) amount to just under 1/3 of priority claims, and loans and other assets close to 1/3.

The Resolution Committee´s estimated value of the bank's 67% holding in the retail chain Iceland Foods was not altered during this period, but the bank's stake, together with the 10% holding of Glitnir hf., or a total of 77%, is in a joint sales process. The process is proceeding satisfactorily and on schedule.

Distributions to creditors

The Supreme Court of Iceland recently upheld a Ruling by the Reykjavík District Court on the priority of deposits and that wholesale deposits were also considered deposits. These disputes concerned claims by the UK and Dutch deposit insurance funds for Icesave deposits and by UK and Dutch local authorities regarding wholesale deposits. In addition to the question of priority, the judgements resolved disputes on interest and costs. In the Windingup Board's estimation, the pronouncement of these judgements means that the principal requirements are satisfied for applying the authorisation to make payments towards finally recognised priority claims.

Preparations for interim distributions are well underway and at the creditors' meeting this morning the Winding-up Board explained its plans as to how this would be arranged. The first payment is to be made in a basket of the main currencies which are held by the bank, i.e. euros, pounds sterling, US dollars and Icelandic krónur. The value of the said currencies towards making payment of the claims will be based on the same exchange rates which were used to convert the claims to ISK, i.e. the exchange rates as of 22 April 2009.

In the estimation of the Winding-up Board, the above-mentioned method is in accordance with the rules of Icelandic law on interim distributions in the winding-up of financial undertakings, in addition to which it is best suited to ensure equal treatment of creditors.

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