English

Municipality Credit Iceland Plc.

Municipality Credit Iceland Plc. (MCI) is a statutory limited liability company. The company is established on the basis of Act No. 150/2006 on the Incorporation of MCI as a Statutory Limited Liability Company and operates pursuant to Act No. 161/2002 on Financial Undertakings; cf. the Companies Act No. 2/1995 and is supervised by the Icelandic Financial Supervisor, FME. As a credit institution MCI is bound by the regulation of the Central Bank of Iceland regarding minimum reserve requirement, liquidity ratio and foreign exchange balance.

The share capital of the company is ISK 5,000,000,000. Shares may only be owned by Icelandic municipalities and organizations or enterprises which are wholly owned by them. Reykjavik City is the largest shareholder with 17.5% of the total shares.

The principal object of MCI is to secure for the municipalities, their organizations and enterprises loan capital for projects of general economic interest on favourable terms through loans or guarantees. The condition for the granting of loans or guarantees by MCI to municipally-owned enterprises and institutions is that such enterprises and institutions must be wholly owned by municipalities or jointly owned by municipalities and the State Treasury, which will act as guarantors for the loans.

According to the Local Government Act No. 45/1998 a municipality may put up its revenues as security for loans granted by MCI and for guarantees it provides, but for no other loans or guarantees. When granting loans it is the policy of MCI that such security should be provided for by the municipality in question. Income deriving from the State Treasury and Ministry of Social Affairs serves as secure collateral for MCI. Since the start of operations in 1967 MCI has never suffered a loan loss.