22.3.2012

EN

Official Journal of the European Union

L 82/16

(1)

By letter dated 28 September 2007 (Event No 442805), the Authority requested information from the Icelandic authorities regarding State guarantees and the obligation to pay a State guarantee premium under the Icelandic Act on State Guarantees. By letter from the Icelandic Mission to the European Union dated 24 October 2007, forwarding the letter from the Icelandic Ministry of Finance of the same date, received and registered by the Authority on 25 October 2007 (Events No 448739 and No 449598), the Icelandic authorities responded to this request.

(2)

The case was subject to discussions between the representatives of the Authority and the Icelandic Government on 7 September 2007 in Brussels and on 29 October 2007 in Reykjavik as well as between the representatives of the Authority and the Icelandic Financial Services Association in a meeting on 6 March 2008 in Brussels.

(3)

The Authority‘檚 Decision No 406/08/COL of 27 June 2008 to initiate the formal investigation procedure with regard to the relief of the Icelandic Housing Financing Fund from payment of a State guarantee premium was published in the Official Journal of the European Union and in the EEA Supplement to it (3). By means of this Decision, the Authority called on interested parties to submit their comments. The Authority has not received any comments from interested parties. By letter dated 8 September 2008 (Event No 490696), the Icelandic authorities submitted comments on the Authority‘檚 Decision No 406/08/COL.

(4)

In October 2008, the Authority put the case on hold due to the collapse of the Icelandic banking sector. However, some discussions concerning this case took place at a Package Meeting in Reykjavik on 4-5 November 2009. Following this meeting, on 16 November 2009, a letter was sent by the Authority with a reminder to submit information concerning compatibility assessment of the measure under investigation. A reply was provided by the Icelandic authorities by letter dated 7 December 2009 (Event No 539538).

(5)

In a parallel investigation concerning State aid measures granted to the Icelandic Housing Financing Fund, the Authority concluded in its Decision No 405/08/COL of 27 June 2008 (4) that the State guarantee granted to HFF constitutes an existing aid measure. Subsequently, on 18 July 2011, the Authority adopted Decision No 247/11/COL on a proposal for appropriate measures in the financing of the Icelandic Housing Financing Fund 脥b煤冒al谩nasj贸冒ur (HFF) (5), inter alia, in the form of the State guarantee.

(6)

The Housing Financing Fund 脥b煤冒al谩nasj贸冒ur (HFF) is a State-owned institution, which operates on an arms-length basis under the Icelandic Housing Act No 44/1998 (l枚g um h煤sn忙冒ism谩l) (6). HFF is managed by a board of directors within the administrative purview of the Minister of Welfare. The purpose of HFF is to promote security of, and equal rights to, housing. This is done through the granting of mortgages to individuals and loans to entities that provide rental accommodation, and through general organisation of matters relating to housing. Funding is provided for the specific purpose of increasing people‘檚 prospects of acquiring or renting housing on manageable terms (cf. Article 1 of the Housing Act).

(7)

HFF is not directly funded by the State, but is financed through returns on its own equity (i.e. instalments, interest and price indexation payments on extended loans), through interests paid on issuing and sale of HFF bonds (铆b煤冒arbréf) which are listed on the Icelandic Stock Exchange, and through service fees from its customers. HFF also benefits from a State guarantee which follows from the State‘檚 unlimited liability for the HFF‘檚 debts as its owner (7). Furthermore, HFF receives interest support directly from the State budget to cover losses resulting from lending below market rates to entities that construct and provide rental housing.

(8)

For a more detailed description of the HFF system under the Housing Act, reference is made to the Authority‘檚 Decision No 405/08/COL.

(9)

HFF is a State institution governed by public law (cf. Article 4 of the Housing Act) and as such, under the general unwritten rules of Icelandic public law applicable to State institutions, it enjoys a State guarantee on all its obligations. The guarantee is applicable to all State institutions, regardless of when they were established or the type of their activities. As mentioned above, such guarantee follows from the State‘檚 unlimited liability for the HFF‘檚 debts as its owner. That means that the State is liable for the entirety of the HFF‘檚 obligations, since the guarantee is neither linked to any specific financial transaction of the HFF, nor limited to any fixed maximum amount. This is also reflected in paragraph 3 of Article 5 of the Insolvency Act No 21/1991 (l枚g um gjald镁rotaskipti o.fl.) which rules out the applicability of bankruptcy or other insolvency procedures to institutions such as the HFF.

(10)

In the preamble to the bill which became Act No 121/1997 on State Guarantees (l枚g um r铆kis谩byrg冒ir) the following was stated:

‘楾his is based on the unequivocal rule of Icelandic law that the State is liable for the obligations of its institutions and undertakings, unless the guarantee is limited by an explicit legal provision [‘ or the liability of the State in a limited liability company is limited to the share capital contribution.‘�a href="#ntr8-L_2012082EN.01001601-E0008" id="ntc8-L_2012082EN.01001601-E0008" shape="rect"> (8)