Kaupþing Loan in Breach of Lending Rules

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Kaupþing Loan in Breach of Lending Rules

Former governor of the Central Bank of Iceland Davíð Oddsson and former Prime Minister Geir Haarde knew about the condition of the now defunct bank Kaupþing and granted a EUR 500 million (ISK 82 billion, USD 650 million) loan without sufficient guarantees, as revealed in a report by the parliamentary Budget Committee on Saturday.

kaupthinghead_ipa-sjo

The headquarters of the now defunct Kaupþing's. Photo: Copyright Icelandic Photo Agency.

The Central Bank provided the loan to Kaupþing on October 6, 2008, despite having information on the grave financial state of the bank, visir.is reports.

With the loan, the largest part of Iceland’s foreign-currency reserves was handed over to the bank , which, three days later, was taken over by the Financial Supervisory Authority (FME)

According to the report, the granting of the loan was in breach of the Central Bank’s lending rules.

ZR