On 9 October 2008, the Icelandic Financial Supervisory Authority ("FME") appointed a Resolution Committee of Kaupthing Bank hf. (the "Bank"), in accordance with article 5 of legislative act 125/2008 on the Authority for Treasury Disbursements due to Unusual Financial Market Circumstances etc (the"Act"). The Act was passed by Parliament on 6 October 2008, providing the FME with the authority and power to intervene in the operations of financial undertakings with the aim of responding to the unusual circumstances in the Icelandic financial market.

 

According to the Act and the subsequent decision of the FME, the Resolution Committee has all the powers of the Board of Directors of the Bank, pursuant to the Act on Public Limited Companies. In this respect the Resolution Committee undertakes all affairs of the Bank, including supervision of its assets and its business operations.

 

The Resolution Committee focuses on protecting the assets of the Bank as well as maintaining the Bank's basic operations and the integrity of the Icelandic banking system. In order to achieve this, payments of claims other than priority claims have been stopped in order to secure the rights of creditors of the bank and to ensure their equal treatment.

 

On 21 October 2008, the FME decided to transfer a part of the Bank's operations to a New Kaupthing Bank hf. that has been incorporated and which is fully owned by the Icelandic Government. This decision has been made to ensure continued banking operations for Icelandic individuals and businesses. The decision means, inter alia, that the New Kaupthing Bank hf. takes over all of the Bank's deposits in Iceland, and also the bulk of the Bank's assets that relate to its Icelandic operations, such as loans and other claims. In turn the FME has decided that New Kaupthing Bank hf. shall issue a bond to the Bank, equivalent to the surplus of assets over liabilities at fair value (based on a valuation by independent parties, see further details in FME's decision of October 21). Other assets and liabilities will remain in the Bank, which will in turn remain under the control of the Resolution Committee. A final settlement between the New Kaupthing Bank hf. and the Bank will be made within 90 days from the FME's decision. An English translation of the decision can be found on the FME's website at the following address: http://www.fme.is/lisalib/getfile.aspx?itemid=5725

 

The Resolution Committee of the Bank are pleased to announce the appointment of the UK limited liability partnership of Deloitte & Touche LLP ("Deloitte") to assist with the communication and consultation with all remaining creditors of the Bank, including creditors of its international branches.

 

It is the Resolution Committee's intention to provide regular update information to all creditors of the Bank through the website www.kaupthing.com/creditorinformation. Deloitte will be assisting the Bank's Resolution Committee to set up an informal committee of creditors representing a broad cross section of financial institutions, international deposit holders, and other creditors. Subject to the creditors' committee members entering into strict confidentiality undertakings, the Resolution Committee, with the assistance of Deloitte, intend to consult with the creditors' committee on plans for realising the assets of the Bank and making payments to creditors.  In this regard, direct contact will be made with known creditors of the Bank as soon as possible over the course of the next few days.

 

Those creditors of the Bank wishing to register their interest in this regard are invited to contact the Bank through the following email address: creditorcontact@kaupthing.com

 

For and on behalf of

 

The Resolution Committee of the Bank