Iceland: Update on purchase of offshore Krónur by the Central Bank of Iceland - Update

25.04.2017

Note: This Marketflash, originally published on 20 April 2017, has been updated to provided updated information for the timeline. Changes have been highlighted.

Further to our Marketflashes M17010, dated 13 March 2017 and M17014, dated 5 April 2017, Clearstream Banking would like to inform its customers of the execution details for the ISK offshore purchase offer ongoing in the Icelandic market, hereafter referred to as “The Offer”.

There will be no corporate action event processed by Clearstream Banking.

Instead, customers will be able to tender their securities via trade arrangement with Morgan Stanley followed by standard settlement instructions against Morgan Stanley’s account in Clearstream Banking. All payments on behalf of the Central Bank of Iceland (CBI) will be made through the intermediation of Morgan Stanley in London with settlement occurring as soon as reasonably practicable.

Impact on customers

Customers wishing to engage in foreign exchange transactions at a fixed rate of 137.5 ISK per Euro with the CBI must instruct via Free of Payment deliveries against Morgan Stanley. Please see contacts details below.

Accepted offers will be exchanged against Euros in accordance with terms and deadlines foreseen by Morgan Stanley. The EUR CASH payment is independent of Clearstream Banking and will be made directly from Morgan Stanley to the account of the seller of the ISK. Customers of Clearstream Banking are strongly recommended to liaise as soon as possible with Morgan Stanley to provide their EUR payment instructions.

Offshore Króna assets that have not been successfully exchanged remain subject to current capital control restrictions.

Scope of The Offer

Assets eligible to CBI’s auction are offshore Króna assets as defined in the Act no. 37/2016 (“The Act”) on the treatment of the offshore Króna assets subject to special restrictions, and that are held under the form of deposits, bills and bonds issued by the Treasury or the Housing Financing Fund (HFF), or Central Bank certificates of deposit (CBI2016) (ISIN IS0000027068). However, offshore Króna assets in the form of deposits must be exchanged against Central Bank certificates of deposit prior to the transaction.

The list of eligible ISINs and respective prices is available on the CBI’s website. Note that the price of offshore Króna assets will be based on the best bid at the close of business on 10 March 2017, plus accrued interest at the settlement date , as specified on the CBI’s website.

All customers of Clearstream Banking holding eligible offshore Króna assets are entitled to participate to the CBI purchase offer up to the limit of their available balance (details available below). In addition to this Marketflash a MT564 notification will be sent to all holders via MT564 OTHR event, for information purposes only.

Timeline

The last trading date will be end of day on Friday 28 April 2017.

Clearstream Banking will not bear any liability should the transaction not be executed on time due to incorrect, late or invalid instructions.

Disclosure and compliance duty

Each party trading with Morgan Stanley will need to have KYC arrangements in place with Morgan Stanley. Clearstream Banking invite its customers to make contact with Morgan Stanley as soon as possible to validate the KYC requirements involved.
Please note that customers of Clearstream Banking having encumbered balances of offshore Króna balances that result from missing disclosure on former Mandatory Conversion event (see A16114 last updated 9 September 2016) are not eligible for the above described purchase offer. Customers of Clearstream Banking willing to disclose can still submit their disclosure instruction per procedure in place for above mentioned event. Upon validation and processing of a submitted disclosure Clearstream Banking will release the encumbered position. The latter will therefore become eligible for the CBI purchase offer.

Participation fees

Clearstream Banking will apply to these transactions the settlement fees in accordance with the Fee Schedule.

Further information

For further information, please contact the Clearstream Banking Client Services or your Relationship Officer.

Morgan Stanley’s contact details

This Marketflash is intended to provide customers with general information gathered from different sources that are generally believed to be reliable. Clearstream Banking S.A. does not guarantee the accuracy or completeness of the information and does not undertake to keep it up to date. Use of the information made available in this Marketflash is at the customer’s own risk and Clearstream Banking S.A., its subsidiaries and affiliates expressly disclaim any liability for any errors or omissions reflected herein. The information in this Marketflash does not constitute legal or tax advice.