Tanzanian Association Oslo

State fund to cover

Kaupthing Bank's

deposits

Norway's bank deposit insurance fund will need to shell out NOK 1 billion of its reserves to cover deposits in the failed Icelandic bank Kaupthing. For the first time since World War II, some depositors will lose some of their money.

Kaupthing Bank in Norway can't meet its depositors' demands. PHOTO: SCANPIX

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Around 1,000 customers whose accounts have been frozen are expected to get their money back within two weeks. Norway's bank deposit insurance fund covers deposits up to a total of NOK 2 million (about USD 300,000) per person per bank, meaning that Kaupthing depositors who had more than NOK 2 million in the bank will lose the excess amount.

Since Kaupthing has operated as a branch of a foreign bank in Norway, state regulators can still claim that no bank customer has ever lost deposits in a Norwegian bank. Friday was nonetheless a bleak day for the regulators and the fund.

Kaupthing Bank in Norway is now being liquidated and Norwegian regulators determined that it can't meet depositors' demands itself. Around 60 persons are believed to have had deposits exceeding NOK 2 million.

Norway's deposit insurance fund has reserves of around NOK 18 billion. Member banks have paid in arund NOK 460 million in premiums this year along. Those premiums are expected to triple next year.

Aftenposten English Web Desk
Nina Berglund/NTB