Fjords are not the only things that might be sold following Iceland’s spectacular banking collapse. Assets closer to home (the British High Street) could be flogged too, according to BarCap analysts March Nichol and Hans Vrensen:
Icelandic investor, Baugur, which has been partly reliant on Icelandic bank funding, to feel the knock-on effect. Baugur owns House of Fraser, which has 65 department stores in the UK and a number of other retail fashion chains. Baugur could be forced to sell its interest in these chains as a result of financial problems related to its corporate bank funding. If this happens, it could affect the chain’s short-term ability to operate as there would be uncertainty about the strategic intentions of the new owners.
Not helping matters is this Moody’s report out today, giving European retailers a negative outlook for the next 12 to 18 months. Insurers Euler Hermes and Coface have also withdrawn coverage on a number of retail names, including most Baugur-owned chains, according to BarCap. All of which would make selling a department store stake in the current climate even more difficult.
Related links
The crunch lands on Britain’s high street – FT Alphaville
House of Fraser tries to reassure suppliers over Icelandic links – Independent