In accordance with IFRS standards the board of directors of Kaupthing Bank decided last year to change the functional currency of the Bank to the euro from the beginning of 2008.
The importance of the euro in the Bank’s operations has increased in recent years and will continue to do so. At present less than 13% of the bank’s total assets and less than 11% of total debt are in ISK.
The board is still determined to change the functional currency to the euro to ensure that the bank’s accounts give at all times a true and fair view of the consolidated financial position of the bank. The application process has however taken more time than expected and at this point, more than two months into the current accounting year, it will be difficult to change the functional currency as of 1 January 2008, also in view of the current market turbulence.
At the Annual General Meeting the board of directors of the bank submitted a proposal which authorises the board of directors to decide to have the bank’s share capital denominated in euros instead of Icelandic krnas. It is expected that settlement of trading with shares denominated in a currency other than the ISK will be possible in Iceland before the end of 2008. The board of directors considers it appropriate to change the functional currency and to denominate the share capital in euros at the same time.
As a result, the bank has decided to postpone the change of the functional currency to the euro until January 2009 and to withdraw the current application.