The Icelandic government has taken a 75 per cent stake in troubled bank Glitnir.
In ancient Norse mythology, Glitnir (meaning shining) is the beautiful palace where Forseti, the God of justice, peace and truth, holds court.
Observe: a heavenly 5 yr sen CDS spread,
The statement (emphasis ours):Press release
Reykjavik, Iceland 29 September, 2008
* The government of Iceland pays 600 million euros for a 75% share
in Glitnir Bank.
* New equity will be issued.
* Customers, bond holders and employees will not be affected.
* The measure strengthens Glitnir’s capital ratio and liquidity.
* Lárus Welding has been asked to continue in his role as CEO and
has agreed to do so.
* The funding position of the bank deteriorated in a few days.
* The Board of Directors and the Bank’s largest shareholders have
accepted the government’s offer. The government of Iceland has announced that it will acquire a 75% stake in Glitnir Bank at the price of 600 million euros. This new equity will be issued today. The Board of Directors and largest shareholders of Glitnir have accepted the offer subject to the
approval of a shareholders’ meeting. Glitnir’s funding has been
successful this year despite very challenging market conditions.
Nonetheless, the events unfolding in international financial markets
in the past two weeks have had unforeseen consequences drastically
changing the conditions of Glitnir’s short-term funding. In light of
this, the Board of Directors of Glitnir Bank had meetings with the
Central Bank of Iceland to discuss possible solutions to the
challenge that the Bank was facing. These discussions led to the
government of Iceland posing an offer to buy a 75% stake for 600
million euros. The government has asked Lárus Welding to remain in
his role as CEO which he has agreed to. The offer was posed late last
night and a Board meeting was called in Glitnir this morning. At that
meeting it was decided to accept the offer, thus securing a very
strong owner and principal shareholder for the bank.
Glitnir’s core operations are solid and the Bank has this year placed
great emphasis on increasing its core earnings this year. Furthermore
this year the Bank has successfully increased efficiency and cut
We are now beginning to see the effects of the interbank lending collapse.
And also, whither Iceland, the economy of which is simply not large enough to deal with the deterioration of both Glitnir and Kaupthing.