Arab Today, arab today iceland bank suffers setback taking over homes for loan repayment
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Iceland bank suffers setback taking over homes for loan repayment

Arab Today, arab today

Arab Today, arab today Iceland bank suffers setback taking over homes for loan repayment

Paris - AFP

A unit of Iceland's Landsbanki has lost an appeal against French authorities which seized the debts of the clients who lost money in a scheme that had them mortgage their homes to bet on the stock market, sources said Thursday. France has been engaged in a legal tussle over the attempts by the Luxembourg branch of Landsbanki to take over homes used as guarantees for the loans to clients, some of whom were French, including singer Enrico Macias. Before the global financial crisis struck, the Luxembourg branch of Landsbanki offered clients the possibility to mortgage their homes for a loan, which the bank invested in then-booming stock markets. However, many clients were ruined when the value of the investments plummeted as stock markets crashed in 2008, which also saw Iceland's top banks including Landsbanki collapse. Luxembourg courts have ordered the borrowers to repay their loans, including Macias, who was ordered in February to reimburse 30 million euros ($40 million) but has appealed. Following complaints by borrowers, some of whom accused the bank of consciously lending to clients without verifying their ability to repay the loans, a French prosecutor opened a criminal probe. Landsbanki's Luxembourg branch plus three of its former staff have been charged with fraud, and in 2011 it was ordered to post a record guarantee of 50 million euros. After Luxembourg opposed the payment of the guarantee, French prosecutors ordered the debts of several borrowers be seized. The liquidator of the Luxembourg branch of Landsbanki appealed that move, but on Thursday it was rejected, according to lawyers and a court source. "Enrico Macias has reason to be calm and have confidence in French authorities," one of his lawyers, Edouard de Lamaze, told AFP. Landsbanki's liquidator is only trying to recover improperly received funds, said its lawyer Bernard Dartevelle, adding that numerous borrowers had accepted deals to repay in exchange for dropping legal action. "This is the first time I've seen a fraud case where it is the 'fraudster' who gets expropriated," he said. The decision may be appealed. In a second decision on Thursday, the appeal court reduced one charge against the bank but kept the fraud charge.

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