The bankruptcy of the country’s largest bank triggered a financial crisis in Iceland in 2008.
(Photo: Reuters)
Frankfurt It should now be over three years earlier than planned: The shareholders’ meeting of the insolvent Kaupthing Bank from Iceland decided to close the bank early on October 5th. This increases the pressure on around 5,000 German investors who could still claim interest payments to Kaupthing. You have less than two months left.
According to estimates, the outstanding claims add up to around three million euros. On average, that’s 600 euros per German customer.
14 years have passed since the then largest bank in Iceland went bankrupt. Around 34,000 people from Germany put their money into the fast-growing institute, lured by the high interest rates on savings. The bankruptcy of the Kaupthing plunged Iceland into a financial crisis, so compensation for German investors was initially questionable. Iceland’s President Olafur Ragnar Grimsson initially ruled out compensation for German investors in early 2009.
A few months later, however, the deposits were repaid – according to Icelandic law, however, without interest. A comparison between the bank and the Kaupthing creditors in 2015 enabled them to also reclaim the interest, with a ten-year limitation period.
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Since many investors had not reported in the seven years since then, Kaupthing’s shareholders’ meeting decided at the end of July to close the bank on October 5th. Until then, those affected can still make their demands.
Claims on Kaupthing: what can investors do now?
Investors can submit their claims by letter, which must arrive at Kaupthing Bank’s headquarters in Reykjavik by October 5. This letter must contain the necessary data: name and account number, a copy of your ID and the “claim number” from the list of creditors. Investors are also required to fill out the “Claim Filling Form” from the Kaupthing website.
Another way is to sell the claims to the Austrian financial institution Black Pine Capital. This means less effort for investors – but they only get paid out half of their claims.
Black Pine Capital has already bought more than 500 claims from investors, says Managing Director Manuel Müller. Anyone who wants to go through Black Pine should do so within the next few weeks so that their company has enough time to examine the documents and assert the claims.
Since a major call in May, around 60 investors have contacted Black Pine Capital and sold their claims. So that’s a good one percent of the outstanding receivables. It is quite possible that many of the other demands will remain open.
On November 3, Kaupthing’s Resolution Committee will review the claims received. Thereafter, the remaining interest would go to Kaupthing shareholders. These mainly include banks and hedge funds.
A large part of the German deposits can no longer be reclaimed: According to Black Pine Capital, fewer than 20,000 of the 34,000 German investors had reclaimed their money after the bankruptcy became known and thus made it onto the list of creditors. The other deposits are part of the bankruptcy estate.
More: Former Kaupthing bank boss to face trial