The Fund is obliged to render payments to customers of a bank of the value of the deposit, if :

· a bank is unable, in the opinion of the Icelandic Financial Supervisory Authority, to remit payment, immediately or in the near future, of the value of deposits that a customer has demanded from the bank in accordance with the applicable terms and conditions. The opinion of the Financial Supervisory Authority shall be made available no later than three weeks after the Authority first obtains confirmation that the relevant bank has not rendered payment to its customer in accordance with its obligations.

· the estate of a bank is sent into receivership.

Amounts paya ble:

The minimum deposit guarantee in Iceland equals EUR 20,887. In the event that the assets of either department of the Fund are insufficient to pay the total amount of guaranteed deposits, securities and cash in the Member Companies concerned,payments from each Department shall be divided among the claimants as follows: each claim up to EUR 20.887 shall be paid in full, and any amount in excess of that shall be paid in equal proportions depending on the extent of each Department's assets. No further claims can be made against the Fund at a later stage even if losses suffered by the claimants have not been compensated in full. Should the total assets of the Fund prove insufficient, the Board of Directors may, if it sees compelling reasons to do so, take out a loan in order to compensate losses suffered by claimants. In the event that payment is effected from the Fund, the claims made on the relevant Member Company or bankruptcy estate will be taken over by the Fund.

The claim shall be calculated based on the assets of the member undertaking’s customers on the date that the Financial Supervisory Authority publishes its opinion or the date that a ruling is rendered on sending the estate of the member undertaking into receivership, whichever is earlier. The Fund is authorised to deduct the relevant member undertaking’s claims against a customer from the payment of the customer’s deposit balance.

Payments

If the Fund is obligated to remit payment to deposit owners, payment shall be made no later than three months after the date the Financial Supervisory Authority opinion was published, or the date that a ruling was rendered on sending the estate of the member undertaking into receivership. If the Fund is obligated to remit payment to customers of a member undertaking in connection with securities transactions, payment must be made no later than three moths after the lawfulness and the amount of the claim have been established. Under special circumstances, the Minister of Commerce may, upon obtaining the opinion of the Financial Supervisory Authority, grant the Fund an additional extension of up to three months beyond the deadline. Upon obtaining the opinion of the Financial Supervisory Authority, the Minister of Commerce is authorised to grant the Fund one or two additional extensions of a maximum of three months each.

Limitations on payments:

The Fund is authorised to reimburse the value of deposits from its Deposit Division and to remit such payments in accordance with the terms applying to the deposit or securities; for example, as regards tied periods, termination, and the like. It shall always be permissible to reimburse the value of deposits, securities, or cash in Icelandic krónur, even though the original transactions may have been in another currency. The Fund is authorised to setoff the financial undertaking’s claims against a customer’s claim of disbursement.

What does the fund guarantee:

The fund guarantees deposits, securities and cash. Deposit refers to any credit balance resulting from financial deposits or transfers in normal banking transactions, which a commercial bank or savings bank is under obligation to refund under existing legal or contractual terms. However, this guarantee does not extend to bonds, bills of exchange, or other claims issued by a commercial bank or savings bank in the form of securities. Securities refers to securities that are either in the custody or under the administration or supervision of a Member Company, which is under obligation to effect refunding or return thereof in accordance with existing laws or contracts.The word cash refers to cash deposited by an investor with a Member Company in connection with securities trading.

Deposits, securities and cash owned by member undertakings, their parent and subsidiary companies for their own account, and deposits, securities and cash connected with convictions of money laundering are not covered by the guarantee.

In cases of deposits in cross border branches, the schemes involved will cooperate fully to ensure that depositors receive compensation promptly and in the correct amount. To facilitate such cooperation, Memorandum of Understanding has been agreed on by the Icelandic Scheme and several other Deposit Schemes.


Application for compensation (24kb)