Remuneration. The remuneration paid by the banks to HFF, is also an important element of burden sharing. The Authority recalls that, as noted in Annex 4 to the IAG, it is necessary for EFTA States to ensure that ‘any pricing of asset relief must include remuneration for the State that adequately takes account of the risks of future losses exceeding those that are projected in determination of the “real economic value” and any additional risk stemming from a transfer value above the real economic value’. The IAG suggest that such remuneration may be provided by setting the transfer price of assets to a sufficient extent below the ‘real economic value’ so as to provide for adequate compensation for the risk in the form of a commensurate upside, or by adapting the guarantee fee accordingly. Any pricing system would have to ensure that the overall contribution of beneficiary banks reduces the extent of net State intervention to the minimum necessary (i.e. burden sharing). However, as the Icelandic authorities has provided the Authority neither with an assessment of the real economic value of the mortgage loans pools, nor a real economic value of the HFF bonds used as payment, it is at this stage difficult to assess if the Icelandic authorities have complied with the remuneration requirement. The IAG further suggest that identifying the necessary target return could be ‘inspired’ by the remuneration that would have been required for recapitalisation measures. This should be in line with the chapter on recapitalisation of banks of the Authority’s State Aid Guidelines, while taking into account the specific features of asset-relief measures and particularly the fact that they may involve higher exposure than capital injections. The Guidelines refer to the Recommendations of the Governing Council of the European Central Bank on the pricing of recapitalisations, which prescribes the following: ‘As a lower bond, the required rate of return on subordinated debt should be the sum of the government bond yield of the country where the bank is domiciled, the issuing bank’s five-year CDS spread on subordinated debt (1), and an add-on fee of 200 basis points per annum to cover operational costs and provide banks with adequate incentives. As an upper bond, the required rate of return on ordinary shares would be determined as the sum of the government bond yield of the country where the bank is domiciled, an equity risk premium of 500 basis points per annum (2), and an add-on fee of 100 b...
Remuneration. 5.1 Rental is charged for the hire object on each hire occasion according to the supplier’s price list as valid at any time.
5.2 Consumable accessories as well as repairs and breakdown of machinery caused by the hirer are charged to the hirer.
5.3 The supplier is not responsible for any costs associated with any downtime due to for example delay in supply, interruptions to operation, mechanical faults etc. These costs are covered by the hirer alone regardless of cause.
5.4 The hirer is responsible for the cost if the hire object must undergo repairs or must be exchanged because of the negligence of the hirer. Hire is not debited for downtime due to repairs not caused by the hirer. The supplier is entitled to decide if the hire object should be exchanged or repaired and when this is to take place.
5.5 Invoicing takes place at the end of each month or at the end of the hire period. Payment must be made at the latest within 30 days of the invoice, unless otherwise agreed.