Glitner’s Luxembourg operations were suspended in October 2008 following the collapse of its parent company.  In March 2009, Glitner and court-appointed administrator KPMG struck a deal to repay the bank’s approximately €1.3 billion to the BCL, its only remaining creditor in the Grand Duchy.

The five year plan called for repayments to come from Glitner Luxembourg’s loan portfolio, particularly its substantial activities in the European real estate market. “The collateral base has proved to be stronger and more liquid than originally estimated,” the central bank explained in a press statement.

“The full and final settlement of Glitnir Luxembourg’s debt towards BCL, two years ahead of time, proves that we were right to engage into a negotiated work out agreement, which was based on firm principles and strong commitments from all parties,” said Yves Mersch, governor of the BCL (photo).

The central bank stated that Glitner Luxembourg had no further debts locally or internationally.

The Luxembourg operations of two other Icelandic banks, Kaupthing and Landsbanki, were also placed in administration following Iceland’s banking sector meltdown in 2008. Kaupthing’s Luxembourg unit was restructured and sold, while Landsbanki’s is still in liquidation proceedings and facing customer fraud claims.