Finnish Kaupthing depositors may get money in October

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The Finnish depositors at Kaupthing Bank could get their money out of the Icelandic-owned institution already in October.
      Financial authorities in Finland and Iceland have approved a system in which the deposits that have been frozen at the Finnish branch office of Kaupthing can be paid out. Nordea, the OP-Pohjola Group, and Sampo Bank have given commitments to arrange the financing needed by Kaupthing to pay depositors in Finland their full deposits with interest.
     
The move involves about 10,000 depositors.
      One of the largest to be breathing a sigh of relief at the outcome is the City of Espoo, which has as much as EUR 15 million tied up in Kaupthing accounts.
     
The total amount of funding is EUR 100 million.
      According to the Financial Supervision Authority, the aim of the move is to reduce the harmful effects of the problems in the Icelandic financial sector on Finnish depositors and the Finnish financial market.
      The arrangement is being funded by the Finnish institutions mentioned above, and no money from the State Guarantee Fund will be used.
      OP-Pohjola answers for 40 per cent of the financing. Collateral for the financing is the outstanding loans and assets of the Finnish branch office of Kaupthing Bank.
     
In Finland, the ministerial committee for economic policy backs the arrangement, and a government proposal on the matter is to be given to Parliament.
      The arrangement is to be implemented as soon as Parliament passes the proposal.
      “We have estimated that the deposits could be paid out by the end of October, if Parliament passes this state guarantee”, says Jukka Vesala of the Financial Supervision Authority.
      Sampo Bank CEO Ilkka Hallavo says that the banks want to carry their own share of responsibility for the stability of the Finnish deposit system.
      “The common arrangement of three large banking groups will reinforce stability and secure the operations of the Finnish deposit system. It is important for us that the depositors should be able to have confidence in the present regime”, Hallavo says.
      According to Jukka Vesala, the rescuing banks are also motivated by the hope that the monies withdrawn from Kaupthing accounts may be deposited with them.


Previously in HS International Edition:
  Icelandic banks in Finland report no exodus of depositors (2.10.2008)
  Deposits of over 10,000 Finns stuck in Icelandic bank (10.10.2008)

Links:
  Financial Supervision Authority press release
  Kaupthing

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