Kaupthing Bank

Kaupthing Bank
legal form	Corporation
founding	February 22, 1982
resolution	November 21, 2009
Reason for dissolution	Insolvency
Seat	Reykjavík , Iceland
management	Sigurdur Einarsson
Number of employees	3,207 (June 30, 2008)
Branch	Credit institution
Website	www.kaupthing.com

The Kaupthing Bank was the largest Icelandic bank and the sixth largest in the Nordic countries. In her home country she performed as Kaupþing Banki hf. [ ˈKʰœ͡yb̥θɪŋg̥ ] (hf. = Hlutafélag = stock corporation ). The company had agencies in Great Britain, Sweden, Denmark, Finland, the Netherlands, Luxembourg, Switzerland, Germany, Austria as well as in the USA and the Middle East. The bank was headquartered in Reykjavík and employed around 3,200 people. Most of the foreign representations went bankrupt or were closed. Kaupthing Edge Germany was subject to a moratorium from October 9, 2008 to June 22, 2009. On November 19, 2009, the German branch was finally closed and the bank's presence in Germany ended.

On October 9, 2008, Kaupthing was placed under state control. On October 31, the Icelandic financial supervisory authority FME determined the insolvency of Kaupthing Bank and thus the claim for compensation.

On November 21, 2009, New Kaupþing Bank with its domestic customers and activities in Iceland was spun off from the assets of Kaup Kaing Bank and renamed Arion Bank .

history

Kaupþing Bank was founded in 1982. Four years later, she was one of the founding companies of the Icelandic Stock Exchange (Iceland Stock Exchange). In 2003 the bank was merged with Búnaðarbanki Íslands , founded in 1930 , and went public. Kaupthing Bank was listed on the Icelandic and Stockholm stock exchanges. On October 9, 2008, the bank was placed under state control on the basis of the Emergency Act passed a few days earlier.

On October 9th, the Kaupthing Bank stopped all payments to its customers and the liquidity supply for its branches abroad. Also on October 9, 2008, the Icelandic Financial Supervisory Authority (FME) announced that the business of the bank, Kaupthing, would be continued by an administration committee, the "Resolution Committee". The main task of this body was to realize the bank's assets in the best possible way for the benefit of the creditors. The administrators 'committee reported on its interim results at regular intervals to a creditors' committee, the "ICC".

On October 22, 2008, New Kaupthing was founded to maintain Icelandic payment transactions. All foreign activities of the bank were brought together in the Old-Kaupthing - a kind of bad bank.

On November 24, 2008, the Reykjavík District Court granted the bank a moratorium on bankruptcy protection, which was extended to November 13, 2009. Olafur Gardarsson, Agent for the Supreme Court, monitors compliance with the moratorium and works with the Bank's Management Committee.

On February 5, the bank's administrators' committee presented creditors with the first comprehensive report on the bank's financial condition. In this interim balance, assets of around 1,200 billion ISK were compared to debts of 2,400 billion ISK. Kaupthing hf publishes further interim reports. at monthly intervals on the homepage.

On May 25, 2009, the Kaupthing management committee announced an imminent liquidation procedure for the first time.

According to reports from the radio station RUV in Reykjavík, Hreidar Már Sigurdsson, the former head of the former Kaupthing bank, will be brought before a judge on May 7, 2010. He is accused of embezzlement and violations of the German Stock Corporation Act. Magnus Gudmundsson, the former head of Kaupthing's Luxembourg office, was also arrested.

Companies

Kaupthing Bank headquarters in Reykjavík

Kaupþing Bank hf. was a universal bank and offered companies and individuals financial services ranging from business-related services to capital market services to asset management as well as private banking and investment banking .

In August 2007, NIBC Bank , based in The Hague, and Kaupthing Bank announced that Kaupthing would take over NIBC for 2.99 billion euros - with the exception of NIBC's loss-making investments in the US subprime mortgage market. Due to the financial crisis that began in 2007 , the takeover negotiations finally failed in January 2008.

Since the outbreak of the international credit crisis in the summer of 2007 and a 35 percent decline in the value of the Icelandic krona within a few months, Icelandic banks have been viewed as particularly exposed. The international rating agencies therefore lowered the credit ratings for Kaupthing Bank several times. After the nationalization of Kaupthing Bank and the freezing of foreign customer accounts, Fitch Ratings lowered the rating to D on October 9, 2008 (payment default). Moody’s , who rated Kaupthing Bank as A1 on October 8, 2008 despite the known difficulties, lowered the rating on October 10, 2008 to Caa1 or to C (in arrears) for the subordinated debt .

Kaupthing Bank refinanced itself more than through direct customer deposits, however, mainly through issuing bonds on the international financial markets and taking out loans in the interbank market. Kaupthing Bank last signed a loan agreement with RZB, Bank of America, BayernLB and Lloyds TSB in June 2008 for a loan of 275 million euros. According to the semi-annual report for 2008, the Kaupthing Bank had outstanding loans totaling 2,883 billion crowns as of mid-2008, of which 1,898 billion crowns in the form of bonds, as well as customer deposits of 1,848 billion crowns. As of October 2008, Kaupthing hf. according to its own information abroad via branches in:

Germany (Kaupthing Edge Germany)
Austria (Kaupthing Edge Austria)
Finland (Kaupthing Bank Finland)
Norway (Kaupthing Bank Norway)
Dubai (Kaupthing Bank Dubai and Qatar)

as well as daughters in:

Great Britain (Kaupthing Singer & Friedlander Limited)
Isle of Man (Kaupthing Singer & Friedlander (Isle of Man) Limited)
Luxembourg (Kaupthing Bank Luxembourg and Belgium) with branches in Belgium (Kaupthing Bank Belgium) and Geneva (Kaupthing Bank Geneva)
Denmark (FIH)
Sweden (Kaupthing Bank Sweden)
USA (Kaupthing Bank US)
Japan
Hong Kong

Kaupthing Edge

Under the Kaupthing Edge brand , Kaupthing Bank operated as an online bank in several European countries until October 8, 2008, offering a call money account and various fixed-term accounts. It presented itself as a direct bank with a higher interest rate compared to other banks and direct banks. In the first half of the year, the bank won 140,000 new customers in Germany, England, Austria, Switzerland and Scandinavia with deposits of over EUR 2.7 billion.

Deposit insurance

The bank was affiliated with the Icelandic Deposit Insurance Fund. According to the bank, this fund protects the deposits of every individual customer - including in Germany - up to an amount of EUR 20,887, this amount is guaranteed by the Icelandic state and is independent of the exchange rate of the krona. The Icelandic state has to step in if the money in the fund is insufficient, but has taken the position of only paying to Icelandic citizens, since the foreign liabilities are so large that they would lead to the bankruptcy of Iceland if they are serviced would have to. The main problem here, however, is that foreign customers claim their total deposits via the guaranteed deposit insurance. Since October 10, 2008, the Kaupthing Edge has been linked to the Icelandic deposit insurance fund on its website. The Icelandic deposit insurance (TIF) confirmed on October 13th that it was responsible for investors in the German Kaupthing Edge, which it had correctly pointed out in the terms and conditions and FAQs published on its website. In Switzerland, Kaupthing was part of the Swiss deposit insurance scheme.

Germany

The Icelandic parent company Kaupthing Bank hf. has had a branch in Frankfurt am Main since March 2008 . By the beginning of October, the bank had 50,000 German customers with deposits of 500 million euros, according to FTD.

Since October 8, 2008, 4:40:10 p.m., no customer has been able to dispose of his money, as DZ-Bank had the credit balance of 55 million euros in the Kaupthing Edge Germany clearing account on that day, due to its own risky nature Engagements in Iceland, had seized. On October 9, 2008, the Icelandic Financial Supervisory Authority FME ( Fjármálaeftirlitið ) took over control of the bank instead of the shareholders at the request of the bank. The Federal Financial Supervisory Authority (BaFin) imposed on the same day a moratorium , a payment and prohibition to sell on the German branch of Kaupthing Bank to prevent a hasty, disorderly withdrawal of deposits. According to BaFin, assets of 30,800 Germans with a total amount of 308 million euros were affected. These numbers were later revised upwards. Accordingly, around 34,000 customers were affected. On October 31, the Icelandic Deposit Protection Fund established that Kaupthing Bank was insolvent with retroactive effect from October 9, 2008. This means that the bank's German customers are entitled to compensation which, according to Icelandic regulations, is limited to € 20,887. The German government's state guarantee, presented by Chancellor Angela Merkel on October 5, 2008, did not take effect, according to the Federal Ministry of Finance. According to BaFin, no German deposit insurance is liable for the money. On November 22, 2008, Finance Minister Peer Steinbrück announced that all German customers of the Kaupthing Bank would have their deposits reimbursed. Together with Great Britain and the Netherlands, whose claims are partially disputed by Iceland, the federal government offered the Icelandic deposit insurance a special-purpose loan in the amount of the German deposits, but this offer was not accepted.

The Icelandic President Ólafur Ragnar Grímsson said after the unrest over the bankruptcy in an interview with the Financial Times Deutschland on February 10th, 2009 that Icelandic taxpayers could not be conveyed that they would now have to pay for the losses of German savers. Foreign investors could not expect Iceland to bear the full burden of the financial crisis. On April 17, 2009, Icelandic Prime Minister Jóhanna Sigurðardóttir said that Kaupthing Bank had enough assets to pay out German savers. This was also published on the Kaupthing Edge Bank website on the same day. While the management committee of the Icelandic Kaupthing already published in its 1st report of February 10th that Kaupthing itself had 80% of the necessary funds for repayment and wanted to repay it, 100% of the necessary sum was made available in April 2009.

On May 22, 2009, the bank began the repayment procedure by sending form letters requesting confirmation of the customer data and authorization for payment. The repayment of the balance started on June 22nd, 2009. With regard to the interest, the bank announced: “Investors who want to assert their interest claims against Kaupthing Bank will be able to do so as soon as the formal procedure on this matter has been initiated will. ”On July 10, 2009, Kaupthing Bank had already paid back most of the deposits to around 34,000 savers. For the time being, no interest was paid if it had not been credited before October 8, 2008. On July 23, 2009, the Federal Ministry of Finance reported that the technical processing was delaying the repayment.

The repayment of the DZ Bank was considerably delayed because Kaupthing Edge Germany had to look for a new settlement center. In addition, according to information from the Federal Ministry of Finance, there was a risk that further payments by Kaupthing Bank to Germany would also have been seized. The German Bundesbank was commissioned to execute the repayment transfers after about 6 months. The money thus flowed from the Icelandic central bank via the Bundesbank to the savers. The repayment took place in different payout rounds. Payment dates were: June 25, 2009 with approx. 20,000 payments, July 2, 2009 approx. 10,000, July 9, 2009 approx. 200, July 15, 2009 approx. 50-100 and July 22, 2009 with approx. 500-1000 payments . The numbers were estimated based on media reports and Internet surveys of victims. The managing director of the German Kaupthing branch announced that all customers who had not received any payment by July 2, 2009 were problematic cases. However, it was unclear why customers who had multiple accounts at Kaupthing and one account had already been paid out or whose data had not changed received no repayment before July 22, 2009.

Luxembourg

In accordance with a restructuring plan, the Luxembourg branch was converted into Banque Havilland SA , which opened its doors at the previous location on July 13, 2009. The official inauguration took place on September 28, 2009. Magnus Gudmundsson participated as CEO of the new bank.

With its deposit protection scheme, the Grand Duchy of Luxembourg is liable for Banque Havilland SA, which is new in the Grand Duchy of Luxembourg

Magnus Gudmundsson was arrested on May 7, 2010 in connection with the collapse of the former Kaupthing Bank. On May 11, 2010, two other former bank managers living in Luxembourg were arrested in Iceland.

As a result of these events, it comes to light that at the same time that Bank Havilland was founded, Hreiðar Már Sigurðsson had relocated his consulting firm Consolium from Iceland to Luxembourg.

In July 2014 a criminal complaint was filed against the board of directors of the Luxembourg financial regulator CSSF .

Great Britain, Sweden, Netherlands

In Great Britain, in the case of Icesave , a branch of the Icelandic Landsbanki , similar to Kaupthing, the government decided to secure the deposits of the injured British investors by granting loans to Iceland. A loan of around 3 billion pounds (around 3.8 billion euros) has been granted to Iceland so that British savers can receive compensation for their balances at the Icelandic Icesave bank.

Sweden and the Netherlands also granted special-purpose loans to Iceland to prevent their savers from losing their deposits with Icelandic banks.

Austria

The Icelandic parent company Kaupthing Bank hf. had a branch in Vienna since September 4th, 2008 .

On October 9, 2008, the Austrian Financial Market Authority (FMA) prohibited the Austrian branch from accepting customer funds with immediate effect and frozen all savings deposits in this bank's Austrian accounts.

Beginning on October 29, 2008, the deposits including interest were transferred to the Austrian customers' reference accounts. On December 31, 2008, the Austrian branch ceased all of its activities.

Switzerland

Kaupthing Bank has been active in Switzerland since June 2008 through its Luxembourg subsidiary Kaupthing Bank Luxembourg SA. This had a branch in Geneva .

Around 1,700 savers in Switzerland with deposits totaling 35 million Swiss francs were affected by the access block. The Federal Banking Commission appointed two investigators to clarify the financial situation of the institute. In addition, to protect savers, it has forbidden the bank to make any payments over 5,000 francs. As part of Swiss depositor protection at the end of October 2008, customers who submitted a corresponding application were paid the maximum amount of 30,000 francs that had been set. The payment of deposits of more than 30,000 francs, including interest, depends on the development of the situation in Iceland, the outcome of the discussions between Luxembourg, Belgium and Iceland and the outcome of the ongoing proceedings at the head office, according to the information provided by the SFBC and the investigating officers the bank in Luxembourg.