Iceland: Extended Purchase Offer for offshore Krónur by the Central Bank of Iceland
Following our Market flash M17018 published 8 May 2017 Clearstream Banking1 would like to inform customers that from
24 May 2017 to 13 June 2017 16:00 CEST
Clearstream Banking1 will support its customers to participate in the Central Bank of Iceland’s (CBI) offer to purchase offshore Króna assets as defined in the Act on the Treatment of Króna-Denominated Assets Subject to Special Restrictions, no. 37/2016 on the treatment of the offshore Króna assets subject to special restrictions (“the Act”), at a fixed exchange rate.
Background
On 12 March 2017, the Central Bank of Iceland offered to repurchase offshore Króna assets as these are defined in the Act, at an exchange rate of 137.5 ISK per EUR (“the Offer”). Furthermore, CBI had extended the Offer to offshore Krónur holders that did not participate in the 12 March 2017 transactions. On 4 April 2017, CBI repeated its invitation with a new deadline for participation of Friday 28 April 2017. For market constraint reasons Clearstream Banking was not able to take an intermediary role during these events.
On 5 May 2017 the Central Bank of Iceland has renewed the participation deadline of the Offer until 15 June 2017 12:00 CEST and have entered into an agreement with Clearstream Banking and Euroclear Bank allowing both ICSDs to act as intermediaries of CBI.
Impact on customers
Clearstream Banking will handle CBI’s purchase offer via a voluntary purchase event. The corporate action event notification will be released to the impacted customers in due course.
Scope of the voluntary purchase event
Assets eligible in the CBI’s auction are offshore Króna assets as defined in “the Act” and that are held under the form of deposits, bills and bonds issued by the Icelandic Treasury or bearing a Treasury guarantee, and Central Bank certificates of deposits (CBI2016) (ISIN IS0000027068). An exhaustive list of the eligible assets is available in the terms and conditions published by CBI and is available via the link at the bottom of this announcement.
All Clearstream Banking customers holding eligible offshore Króna assets are qualified to participate in the CBI purchase offer up to the limit of their available balance2.
The price of offshore Króna assets will be based on the best bid at the close of business on 10 March 2017, as specified in the terms and conditions published by CBI on 19 May 2017, plus accrued interest and adjusted for inflation, at the settlement date.
Clearstream Banking reminds its customers that at this stage all income proceeds due on offshore Króna securities positions held with Clearstream Banking, will continue to be automatically converted into CBI CDs at the rate provided by CBI. The resulting securities positions will be credited within best possible timeframe to the customer account.
Furthermore customers of Clearstream Banking willing to transfer in offshore Króna cash deposits for the purpose of participating to “the Offer” are invited to contact Clearstream Banking Client Services or their Relationship Officer in order to arrange details of transfers.
Participation in CBI foreign exchange transactions
Customers willing to engage in foreign exchange transactions at a fixed rate with the CBI are invited to instruct according to the deadlines and terms that are described in the voluntary purchase event notification that will be released to the impacted customers in due course.
Accepted offers will be exchanged against Euros no later than 30 June 2017 in accordance with the customer’s offer to sell.
Offshore Króna assets that have not been successfully submitted, or that have not been submitted at all remain subject to current capital control restrictions.
Timeline
The CBI foreign exchange offer is available until 15 June 2017 12:00 CEST. To be able to process customers’ instructions properly and in accordance with market requirements, customers of Clearstream Banking must send their participation instructions as soon as possible and no later than 16:00 CEST on 13 June 2017.
Clearstream Banking will not bear any liability should the instruction not be executed on time due to incorrect, late or invalid transaction, or in case of system disturbance.
Disclosure and compliance duty
Encumbered balances are not eligible for “the Offer”. Customers that have encumbered balances of offshore Króna balances that result from a missing disclosure on former event ref 0000000353382315 shall first submit their disclosure file following the procedure in place for that event. Upon validation and processing of submitted disclosure, Clearstream Banking will release the encumbered position. Only then the latter will become eligible for the CBI purchase offer.
Moreover, by instructing and providing the details requested in the corporate action notification, including the identification of the ultimate beneficial owner of the assets subject to the voluntary purchase event, each customer shall be deemed to represent that;
- It is compliant with Financial Action Task Force (“FATF”) Guidance on transparency and beneficial ownership, FATF Recommendations and local regulations preventing money laundering and terrorist financing;
- It is in possession of informationand KYC/Due Diligence relevant documentary evidence concerning the ultimate beneficial owner and the source of the funds which are legitimate and in compliance with the FATF Guidance, FATF Recommendations and the regulations preventing money laundering and terrorist financing that are applicable to it, and that it will provide Clearstream Banking with this information upon first request and no later than within three business days;• The ultimate beneficial owner of the funds is not subject to any sanction pursuant to the Act on Implementation of international sanctions (this refers in particular to sanctions implemented by the European Union (“EU”), The United Nations (“UN”), Her Majesty’s Treasury, The Monetary Authority of Singapore (”MAS”) and the United States (The “Sanctions”));
- It has performed a Due Diligence Analysis as requested by the Central Bank of Iceland.
Participation fees
Clearstream Banking will apply standard custody fees to the event in accordance with the Fee Schedule.
Further information
For further information, please contact the Clearstream Banking Client Services or your Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for CBF customers using CreationOnline), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.
2. Please refer to the “Compliance and Disclosure duty” section.