Iceland’s Arion Bank is in the process of voluntarily amending foreign-currency loans taken out with the bank by businesses and individuals before the financial crisis of 2008.
A statement from the bank says that although recent Supreme Court of Iceland rulings have not directly affected Arion’s loan book, they do set a clear precedent that affects some 2,000 of the bank’s loans. The matter started when the court decided that ‘basket of currencies’ car loans in the boom years had been illegal; because although loaning in foreign currencies is allowed, the car loans were charged as if they were in foreign currencies, but paid out to customers in Icelandic kronur. The court found that this had been illegal. There is now another case in which a company is trying to claim that foreign currency loans to businesses should also be declared illegal.
In its latest move, Arion Bank appears to be trying to beat the trend and reorganise loans at its leisure and avoid being forced to make the changes at a later date.
According to RUV, there is also uncertainty over the legality of a further 2-300 Arion loans, and the bank wants to remove the uncertainty as soon as possible. The bank plans to complete the reorganisation of the loans in October and until then affected customers can choose whether to carry on paying as normal, or to pay a symbolic monthly sum of ISK 10,000 (EUR 60) for every million (EUR 6,000) in outstanding debt.