16 December 2013

Announcement on arrangements for the listing and sale of ESÍ assets

In the next six months, the Central Bank of Iceland Holding Company ehf. (ESÍ) intends to begin selling indexed bonds. The total amount will be just over 100 billion Icelandic krónur, and the bonds will be sold in stages over the next five years.

In the wake of the shocks that struck the Icelandic financial market in autumn 2008, the Central Bank of Iceland took over various assets that the commercial banks and other financial institutions had submitted as collateral for Central Bank loan facilities. The Bank also acquired general claims against the estates of several financial institutions. In 2009, the Bank established the Central Bank of Iceland Holding Company ehf. (ESÍ) in order to administer these assets and claims.

ESÍ’s objective is to unwind the company and sell the assets. One of its larger asset classes consists of contractual covered bonds originally issued by Kaupthing Bank hf. and later taken over by Arion Bank hf. The bonds are indexed and bear fixed interest. They are backed by a fund managed by Stefnir hf., whose assets consist predominantly of mortgage loans and some deposits. Arion Bank is obliged to keep the fund’s asset portfolio above a specified threshold while the bonds are outstanding.

The bonds in question are in several series, and the calculated present value of ESÍ’s holdings was 103 b.kr. as of 30 November.

ESÍ plans to establish companies (or institutional investment funds) and contribute its holdings in the above-mentioned covered bonds to them. The companies will issue bonds to ESÍ that are to be listed on the NASDAQ OMX Iceland exchange.

ESÍ will own all of the bonds initially but plans to sell them over a period of up to five years, with the first sale taking place within six months. ESÍ plans to sell about one-fifth of the bonds each year, although this plan is subject to change in accordance with market conditions. Final decisions on volume at any given time will be taken upon consultation with the Governor of the Central Bank, in accordance with ESÍ’s owners’ policy.

ESÍ has engaged Summa Rekstrarfélag hf. (www.summa.is) to manage the companies’ assets and undertake other related projects.

The procedure for the sale and further arrangements for the issuance of the bonds will be made public at a later date.

Further information can be obtained from Haukur C. Benediktsson, Managing Director of ESÍ, at tel: +354 568 7744.


No. 43/2013
December 16, 2013