Ruling by the District Court regarding foreign currency indexed loans

On 23 July 2010, the District Court of Reykjavik made a ruling regarding foreign currency indexed loans, which had been deemed illegal by the Supreme Court last month. The ruling was that the original interest (LIBOR +) should not apply, rather Icelandic interest (non-indexed) issued by the Central Bank of Iceland from the first day of the loan agreement.

The Resolution Committee believes the issue is now moving in the right direction, but the matter has been appealed to the Supreme Court. The Resolution Committee expects a ruling in September this year.

It is the Resolution Committee’s view that, should the Supreme Court not over rule the District Court’s decision, there will be minimal impact on Glitnir and its investment in Islandsbanki.