The Reykjavik District Court confirmed Thursday that the applications from Kaupthing and Glitnir banks for moratorium extensions has been approved. Read the full story

The administrators of both Kaupthing and Glitnir banks in Iceland have applied to the District Court in Reykjavik for an extension on their payment moratorium.

The two banks have had their current moratoria since the end of November.

The court’s decision is expected in a week or less, RUV.is reports.

PRESS RELEASE FROM THE CENTRAL BANK OF ICELAND:

Due to the extraordinary circumstances in banking today we have a reason to believe that some payments that should be directed from abroad to Icelandic banks are being halted on their way.

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According to IcelandReview.com, the Icelandic state treasury has been granted a ISK 30 billion (EUR 246 million, USD 355 million) loan in foreign currency to sure up the country’s foreign currency reserves and stabilise the economy.

Now standing at ISK 500 billion (EUR 4.1 billion, USD 5.9 billion), Iceland’s foreign currency reserves have increased fivefold in two years.

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The Swedish government minister for financial markets, Mats Odell, said last Friday that there are no problems with liquidity at the major Icelandic banks. His comments come on the back of the recent loan facility offered to Iceland by the central banks of Denmark, Norway and Sweden.

“We have not seen any problems with liquidity when it comes to Icelandic banks,” Odell told a financial conference. “Neither have we (…) discussed the Icelandic banks and their possible problems on a governmental level,” he continued.

The Icelandic central bank has said that the EUR 1.5 billion loan offered by the Nordic central banks was largely a symbolic way of showing confidence in the Icelandic economy, while giving the country concrete proof that it has the means to bail out its commercial banks, should they need it.

The Icelandic Central Bank and the commercial banks have, however, repeatedly stressed that they do not intend to actually use the money, as the banks believe they already have sufficient liquidity to weather the credit crunch.

The minister’s comments were welcomed in Reykjavik as a further sign of a positive shift in Iceland’s financial standing on global markets. Odell’s opinions echo those recently expressed by the Financial Times, the Wall Street Journal, Bear Stearns Bank and Arni Matthiesen, the Icelandic finance minister.