TVF is obligated to pay depositors / investors:

If a member institution is unable, in the opinion of the Financial Supervisory Authority, to repay a covered deposit, securities or cash held in connection with investment in securities upon a customer’s request in accordance with the applicable terms. The Financial Supervisory Authority's opinion shall be made available no later than three weeks after it first receives confirmation that a member institution has not paid a customer.
If a member institution enters into winding-up proceedings.

Amount to be paid

Payments to depositors from the Deposit Department

In the event that the payment obligation of TVF’s Deposit Department towards customers of member institutions is triggered, the Deposit Department’s repayment to each depositor shall be equal to the total amount that depositor’s eligible deposits with the relevant member institution, but in any event no more than the equivalent of 100,000 euros (EUR) in Icelandic kronas (ISK). In case the Deposit Department’s funds are insufficient to repay the total amount of covered deposits in the relevant member institution, the available funds shall be distributed among the institution’s depositors in such a way that they are compensated proportionately. TVF’s Deposit Department will not be required to subsequently make further payments to depositors, even if depositors’ losses have not been fully compensated. The Deposit Department shall at all times have available funds in the minimum amount of 0.8% of the covered deposits of all credit institutions licensed to operate in Iceland. If the Deposit Department’s funds are insufficient to repay depositors of a failed institution and its board of directors deems necessary, the board of directors is authorised to borrow external funds to repay depositors. In the event of a repayment from TVF’s Deposit Department, TVF subrogates into the rights of the repaid depositors against the failed member institution or its winding-up estate.

Payouts and deadline for payouts:

In the event that TVF’s payment obligation towards depositors is triggered, payment must be made no later than three months after the Financial Supervisory Authority issues its opinion that a member institution is unable to repay a covered deposit, securities or cash upon a customer’s request in accordance with the applicable terms thereof, or a court ruling is rendered regarding the winding-up of a member institution.

If TVF has a payment obligation towards investors which are customers of a member institution in connection with transactions with securities, payment must be made no later than three months after the legitimacy and amount of the claim has been confirmed. The Minister of Finance and Economic Affairs can, in special circumstances, subject to the opinion of the Financial Supervisory Authority, extend the deadlines for payouts three times by up to three months at a time.

What does the Fund guarantee?

The Fund guarantees deposits, securities and cash held in connection with investments in securities.

The term deposit means a credit balance in an account owned by a customer with a credit institution, including accrued interest and indexation, and transfers in normal banking transactions, which the credit institution is required to repay under applicable legal and contractual conditions, and customers’ share in an account of the deposit-division of the custodian of pension savings with a credit institution. Credit institution borrowings, equity accounts, wholesale deposits and nominee accounts, other than the accounts of deposit-divisions of custodians of pension savings, are not considered deposits. The term security means securities that are in the custody, management or administration of a member institution which it is required to repay or return to the customer according to applicable law or contractual terms. Cash refers to cash held by a member institution on behalf of a customer in connection with investments in securities.

Resolution Fund:

A Special financing arrangement called Resolution Fund is operated in accordance with Act no. 70/2020 on the Resolution of Credit Institutions. The Resolution Fund is a department within TVF and TVF’s board of directors administrates the Resolution Fund, while the resolution authority makes decisions about payments from the Resolution Fund. The minimum size of the Resolution Fund must be at least 1% of the amount of covered deposits of all credit institutions licensed to operate in Iceland. The resolution authority can use the Resolution Fund if necessary to ensure the efficient application of resolution tools in accordance with Act no. 70/2020.

The Resolution Fund may be used to:

1. guarantee the assets or the liabilities of the institution under resolution, its subsidiaries, a bridge institution or an asset management vehicle,
2. make loans to the institution under resolution, its subsidiaries, a bridge institution or an asset management vehicle,
3. purchase assets of the institution under resolution
4. make contributions to a bridge institution and an asset management vehicle,
5. pay compensation to shareholders or creditors in accordance with Article 80 of Act no. 70/2020,
6. make a contribution to the institution under resolution in lieu of the write down or conversion of liabilities of certain creditors, when the bail-in tool is applied and the resolution authority decides to exclude certain creditors from the scope of bail-in in accordance with Articles 56 and 57 of Act no. 70/2020,
7. make a contribution to the institution or entity under resolution in accordance with Paragraph 5, Article 57 of Act no. 70/2020, or
8. make compensation to certain types of creditors if certain conditions are met, in accordance with Paragraph 4, Article 75 of Act no. 70/2020.

Participation in the Resolution Fund:

It is up to each credit institution to participate in the Resolution Fund. If the institution does not participate in the Resolution Fund, it will not be allowed to conduct activities in Iceland.

The capital of the Resolution Fund must be at least 0.8% of the covered deposits of all credit institutions licensed to operate in Iceland. The financial contributions of credit institutions to the Resolution Fund shall be in proportion to their covered deposits. The resolution authority can establish special rules on the implementation of financial contributions of credit institutions to the Resolution Fund, including conditions for exemption and reduction of financial contributions to the Resolution Fund, payment terms, the handling of financial contributions and the size of the financial contributions.

Exemption from Resolution Fund obligation:

A credit institution that is not required to participate in the Resolution Fund, may at any time notify the resolution authority of its willingness to participate in the Resolution Fund.

Board of directors of TVF

The board of directors of TVF consists of five persons, appointed by the Minister of Finance and Economic Affairs. Members of the board of directors of TVF shall have the qualifications and experience necessary to ensure that the TVF fulfils its obligations. The members of the board of directors of TVF shall be full-time members of the board of directors and shall not be affiliated with the financial undertakings or authorities that are subject to the Fund’s supervision. A member of the board of directors of TVF may not own or hold shares in a financial undertaking. The board of directors of TVF shall appoint a chairperson and vice-chairperson from among its members. The board of directors of TVF decides on the payment of the payment obligation of the Fund, whether to make use of the Resolution Fund and on all important financial matters.

Payment of the Fund’s claims:

It shall be determined according to the value of the assets and liabilities of the institution under resolution or its remaining assets and liabilities at the time the resolution authority adopts the resolution action. The obligation of the Fund shall be the responsibility of the institution under resolution and the entity that is eligible for compensation. The payment of the Fund’s claims shall be made from the Resolution Fund. The Resolution Fund shall be in priority over the unsecured and uninsured claims of creditors of the institution under resolution. The priority of the Resolution Fund over claims of shareholders and creditors of the institution under resolution is determined in accordance with the provisions of Act no. 70/2020 on the Resolution of Credit Institutions and Regulation no. 1288/2018 on credit institutions and investment firms that are considered to be resolved to the benefit of the Fund and the Resolution Fund. A claim for payment of the Fund’s claims may be made within three months of the date of the resolution action. The Minister of Finance and Economic Affairs may, in special circumstances, subject to the opinion of the resolution authority, extend the deadline for payment by the Fund three times by up to three months at a time. If the payment claim is not submitted within the period mentioned above, the right to payment of the claim shall be lost and shall not be taken into account in the calculation of the value of the claim in accordance with Paragraph 2.

Information on the Fund’s operations:

Information on the operations of the Fund must be communicated to the public and the general public. The information provided by the Fund shall be up-to-date, objective, reliable, clear, simple and easy to understand. The information provided by the Fund shall also be easily accessible and always available.

Borgartún 35 - 105 Reykjavík - Iceland - Phone: +354 591 0500 - Fax: +354 591 0505 - Email: tvf@tvf.is