Statement from Íslandsbanki
The Supreme Court has ruled that hire purchase contracts offered by ERGO (Islandsbanki's asset backed finance) are loan agreements. As a result payments under the agreement are considered illegally FX-linked. ERGO and Íslandsbanki, will now carefully review the ruling and will shortly announce how these recalculations will be conducted.
Íslandsbanki estimates that this outcome has already been financially accounted for in the bank's financial statements and it is expected that there will be limited impact on the bank´s capital ratios. Íslandsbanki's CAD ratio is currently 28%, which is well above the minimum of 16% set by the Financial Supervisory Authority, which puts the bank in a good position to address any potential impact of the ruling.