Arab Investors Declare Intention To Purchase Kaupthing Luxembourg

by Ulrika Lomas, Tax-News.com, Brussels

23 December 2008

It was announced this week that a group of Arab investors have signed a declaration of intent to purchase the local arm of the bankrupt Icelandic bank Kaupthing. They are thought to have offered to inject EUR150m into the bank to secure the deal.

Conclusive talks however have not taken place as Belgium’s parliament must agree to the proceedings, and an agreement must be reached with creditor banks to gain the required liquidity to move forward. Reaching these agreements will allow the bank to begin reimbursing depositors whose funds were frozen on October 9 as a result of the fall of Kaupthing’s Icelandic parent company.

The resignation of Belgium's Prime Minister Leterme’s government however has also held back proceedings as there is no functional parliament in Belgium at present, and thus no-one to sign the required agreement to conclude the deal. Kaupthing Luxembourg holds many Belgian deposits and it is therefore essential to gain the Belgian government's approval. Luxembourg’s government has said that upon achieving a satisfactory agreement with the investors, all Belgium depositors will eventually be reimbursed in full.

In another possible acquisition this week, Finnish bank Alandsbanken has signed a contract to buy Kaupthing's Swedish arm for an undisclosed sum. The deal is expected to complete in early 2009 and includes the purchase of all of the bank's operations except its corporate lending business.

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