Info on subsidiaries
According to the Icelandic legislative act 125/2008, deposits to private individuals and corporates are priority claims. Whether the legislation applies to depositors depends on which entity of the Kaupthing Group they were customers with. The legislation only applies to Icelandic financial undertakings. The Resolution Committee of Kaupthing Bank anticipates that Kaupthing Bank will be able to pay back its deposits which have been defined as priority claims, made at the headquarters and in branches belonging to the headquarters.
Subsidiaries of Kaupthing Bank hf. and their branches are directly responsible for the deposits made with them. Therefore, if a depositor banked with a subsidiary of Kaupthing Bank or a branch of a subsidiary, the relevant entity should be contacted directly. The rights of depositors regarding deposits made with a subsidiary of Kaupthing Bank hf. will be determined by the law applicable to the subsidiary or the branch of the subsidiary.
Further information on the subsidiaries can be found in chapter 2.4 Overview of the Bank’s branches and subsidiaries in the Creditors’ Report.
Arion Bank, a commercial bank with operations in Iceland is a subsidiary of the Bank. On 6 October 2008 the Disbursement Act was passed by the Icelandic parliament, providing the FME with the authority and power to intervene in the operations of financial undertakings in order to respond to the unusual circumstances in the Icelandic financial sector. On 9 October 2008, in accordance with the same act, the FME appointed the ResCom to take control of the Bank. On 21 October 2008, the FME issued the Transfer Decision, by which it determined that certain specific assets of the Bank and certain specific obligations of the Bank were transferred to Arion Bank. According to the FME, these actions were taken to secure the continuation of vitally important domestic banking and payment services.
Under the Transfer Decision, Arion Bank took over the entire Bank's deposit liabilities in Iceland, and also the bulk of the Bank's assets that relate to its Icelandic operations, such as loans and other claims. Other assets and liabilities remained in the Bank and therefore under the control of the ResCom. The FME appointed Deloitte to prepare an independent net asset valuation for Arion Bank and Oliver Wyman was appointed to co-ordinate the valuation process and review the valuation. The valuation of the net assets by Deloitte and the review of the valuation by Oliver Wyman took longer than initially envisaged but was completed towards the end of April 2009.
ResCom with its financial advisor, Morgan Stanley and creditors’ representatives, negotiated with the Government during the summer 2009 on the disposition of the assets and liabilities taken over by Arion Bank in October 2008. ResCom entered into a Heads of Terms Agreement with the Government on 17 July 2009 and signed binding agreements on 3 September 2009.
On 1 December ResCom announced its decision regarding Arion Bank. ResCom, in consultation with the creditors and supported by its financial advisor throughout the process, decided that the Bank and thereby its creditors acquires 87% of common equity in Arion Bank. The Government will continue to own 13% of common equity. ResCom believes that active ownership of Arion Bank will maximize the value of assets which were transferred between the banks. As part of the agreement ResCom contributed ISK 66 billion to the capitalization.
Further information on Arion Bank can be found at www.arionbanki.is.
FIH is a subsidiary wholly owned by the Bank. It is a Danish full service corporate & investment bank focussing on lending to Danish companies. The entity was acquired by the Bank in 2004. The entity is regulated by Danish Banking legislation and supervised by the Danish FSA. The Bank remains the sole shareholder of FIH and two representatives of the ResCom. Steinar Thor Gudgeirsson and Ragnar Arnason, professor at the University of Iceland are board members. The ICB holds the entity's shares of the Bank as pledge against a EUR 500m loan. The board of directors of FIH has adopted a plan to adjust and focus FIH's future activities to meet the current market situation of the financial sector. As part of this adjustment, FIH has closed down the equities trading, research and wealth management department. These business areas were not expected to contribute positively to FIH's earnings on a short-term or a medium-term basis. In the future, FIH will focus on the core business areas: loans to corporate customers supplemented by two advisory units: Corporate Finance (FIH Partners) and Financial Solutions (advisory related to strategic risk management and liability management).
Further information on this entity can be found at www.fih.dk.
Kaupthing Mortgage Institutional Investor Fund is an operational subsidiary 100% owned by the Bank. The fund was established in 2006 with the sole purpose of issuing covered bonds to fund Kaupthing´s mortgages portfolio. The fund is performing and services all outstanding debt. The underlying mortgages are serviced by Arion Bank and the covered bonds are serviced by Stefnir, a subsidiary of Arion Bank. All board members are appointed by Stefnir and are independent from the Bank.
Norvestia is a Finnish publicly listed Investment Company. The Bank owns 32.7% of the outstanding shares and holds 56% of the voting rights. ResCom has two representatives on the board: Steinar Thor Gudgeirsson and Hilmar Thor Kristinsson. Initially, the ResCom received offers for the Bank's shares in Norvestia which were about 40% lower than the net asset value at that time. The ResCom concluded that the offered price was unacceptable and decided to hold on to the shares. Since then, the Bank has received in total EUR 3.76m dividend payments in 2009 and 2010. At year-end 2009 the share price has risen approximately 44% from October 2008. Furthermore, more feasible offers have been received, indicating that the value of the Bank’s stake has increased by approx. EUR 25m.
Further information on this entity can be found at www.norvestia.fi.
NBS Diversified Credit Fund is Irish open-ended investment entity and is wholly owned by the Bank. The entity was established in 2006 in co-operation with New Bond Street Asset Management and invested in bonds and CDSs. All positions have been sold or wound down. The only asset in the entity is cash. The cash, EUR 35m, is on deposit with five banks. The entity is in a redemption process. The ResCom has no board members.
Kaupthing Bank Sweden was an operational subsidiary 100% owned by the Bank. After 9 October 2008, ResCom managed to keep the entity operational. Without ResCom's co-operation with Riksbanken, the Swedish Central Bank, and the Swedish Financial Authorities (Finansinspektionen), the entity would most likely have been closed down and the assets sold at a fire sale to cover the liabilities. Instead the ResCom managed to dispose of certain assets after a structured sales process while other assets were transferred to the Bank.
The Res Com has one representative on the board: Orn Gudmundsson, Deputy Managing Director of the Nordic asset management team.
Further information on this entity can be found at www.kaupthing.se.
Kirna is an Icelandic holding company and is wholly owned by the Bank. The entity was established 1990 and owns 100% of outstanding shares in four companies; Aircraft Financing, Haukthing, ISIS Investments and Kaupthing fjarmognun. The ResCom has all representatives on the board in these companies.
Other subsidiaries are all wholly owned by the Bank. All are in the process of being wound down. Total net asset value of these entities is ISK 3.576m according to the Bank’s Financial Information as at 31 December 2009.