Coordination Committee publishes its first report


The Coordination Committee which has the overall responsibility of developing, implementing and communicating a comprehensive strategy for bank restructuring published its first report today at a press seminar. Mats Josefsson, the Swedish expert hired to assist the government in addressing the banking problems, is chairing the Coordination Committee, The Committee consists of representatives from all relevant parties involved in dealing with banking issues.

The Key issues to be addressed by the government has been identified in a Strategy Note supported by all members of the Coordination Committee. The Note states that the problems that materialized in the banking sector in early October 2008 have affected every sector of the economy and that the problems will continue to affect the economy. On specific issues the following recommendations were made:

* that operating banks have to be operationally and financially restructured by the government
* supporting the corporate sector by establishing an Asset Management Company, in charge of restructuring larger companies of strategic importance to the Icelandic economy
* that the government takes on its role as the owner of banks and let the banks know it is no longer business as usual
* that banks should recognize the new environment and contribute and support the government in implementing its policy for economic recovery
* the set up of the legal and procedural framework for the resolution of the old banks
* to distribute the proceeds from the asset sales to the creditors in a fair, equitable and transparent manner
* to consider the set up of an independent holding company to manage the shares held by the government in financial institutions
* to develop a policy on future ownership of financial institutions, including a possible divestment of shares
* to have a regulatory and supervisory framework in line with best international practice

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