Whatever it is that Iceland gains from winning this EFTA court case on the Icesave deposits…
Britain and the Netherlands have vowed to take Iceland to court over €4bn ($5.8bn) lost in the failed Icesave bank after a deal to repay the money was rejected for a second time by Icelandic voters in a referendum, the FT reports. The result represented an act of defiance by Iceland’s crisis-hit electorate, with nearly 60 per cent voting against the deal in spite of warnings that a No vote could disrupt the country’s economic recovery and scupper its bid to join the European Union. The British and Dutch governments made clear there was no room for further negotiation with Reykjavik, setting the stage for an international court to decide who is responsible for foreign deposits lost when Iceland’s banking sector collapsed in 2008. The dispute involves money deposited by British and Dutch customers in the Icesave unit of bankrupt Landsbanki. They were reimbursed by domestic deposit insurance schemes, leaving the UK and Dutch treasuries out of pocket. Read more
Iceland is finalising a new deal with Britain and the Netherlands over €3.8bn lost in the Icesave online bank, eight months after an earlier agreement was rejected in a national referendum, reports the FT. Reykjavik said it hoped to sign an accord within weeks, citing progress in talks between the three countries. The UK and Dutch governments have been trying for more than two years to reclaim money lost by British and Dutch depositors in Icesave when Iceland’s banking sector collapsed in 2008. Resolution of the Icesave dispute is crucial to Iceland’s hopes of joining the EU and a condition for parts of its IMF bail-out programme. Read more
Continuing its coverage of the Icelandic parliament’s report into the country’s banking collapse, FT Alphaville moves from dodgy loan quality to a broader question: were Icelandic banks even solvent when they were finally taken over? Read more
Iceland’s parliament has released its vast investigative report into the collapse of the country’s banking system in 2008. Its damning account of Icelandic banks’ loan improprieties leaves FT Alphaville to ask: why didn’t more people see the collapse coming? Read more
An official report on Monday accused the Icelandic government and regulators of “extreme negligence” in the run-up to the country’s 2008 banking crisis, the FT says. Former prime ministers and a central bank governor, were among those blamed for the crash. The commission created by parliament to investigate the crisis also pointed to possible illegality within the banks, including share price manipulation and exaggeration of asset values. FT Alphaville presents Iceland’s Theatre of Financial Horror. Read more
Is this the most boring theatrical production in the world?, FT Alphaville asks of an artistic bid to ‘perform’ a 2,000-page report on Iceland’s 2008 banking collapse, which is due to be released on Monday. It depends how bleak the report’s findings will be. Read more
The prospects for Iceland were looking slightly bleaker on Tuesday, as Moody’s downgraded the country’s ratings to negative from stable on “uncertainty over external liquidity”.
Moody’s said the country’s recovery was also threatened by delays in the resolution of the country’s Icesave dispute. Read more
Iceland on Sunday was scrambling for a last-ditch solution to the Icesave debt dispute, ahead of a referendum next Saturday on a deal to repay to Britain and the Netherlands €3.9bn ($5.3bn) lost in the failed online bank. Officials said “informal” exchanges took place at the weekend after negotiations with the UK and Dutch governments broke down on Thursday. Both sides played down prospects for a deal before next Saturday’s plebiscite, in which Icelanders are expected to reject a repayment plan agreed by the three sides last year. Read more
Talks have collapsed between the UK, the Netherlands and Iceland about repayment of £3.4bn lost by depositors in the failed online bank Icesave, raising fears that the country will fail to meet its obligations. Iceland on Monday rejected an offer to soften repayment terms, British officials said, dashing hopes of avoiding a March 6 referendum in which Icelanders are expected to reject the original repayment plan. A ‘no’ vote would plunge Iceland into fresh turmoil. Read more
An Icelandic delegation headed to London on Monday in a bid to persuade Britain and the Netherlands to reopen negotiations over a controversial €3.9bn ($5.3bn) debt repayment deal, after the Icelandic government reached agreement with opposition parties on a potential compromise. Reykjavik is scrambling to find a solution to the dispute over money lost in the failed Icesave online bank after a previous repayment deal was blocked by Olafur Ragnar Grimsson, Iceland’s president, last month amid fierce public opposition. Read more
Iceland’s president blocked a deal to repay Britain and the Netherlands almost €4bn ($5.7bn, £3.6bn) lost in the Icesave division of failed Icelandic bank Landsbanki. The British and Dutch governments condemned the decision by Ólafur Ragnar Grímsson and hinted at repercussions. Fitch, the credit rating agency, warned of “a renewed wave of domestic political, economic and financial uncertainty” for Iceland and downgraded the country’s main sovereign rating to junk status. Read more
Iceland’s plan to save its banks looks good on the surface, but there are at least three problems with it.
First, the agreement to compensate British and Dutch retail savers the $5.5bn they deposited in internet bank Icesave requires parliament’s approval. That will be a contentious vote given the number of angry locals wearing “Iceslave” t-shirts. Second, the creditor workout at the old “international” banks is yet to begin; with liabilities of around $60bn, claimants will form the usual disorderly queue. Finally, the new local banks’ assets are unlikely to be as white as the driven snow, so further restructuring of dud domestic loans will be needed. Read more
The UK and Iceland are hoping to agree a loan this week to cover up to 300,000 British depositors in Icesave, the online banking unit of Landsbanki, the collapsed Icelandic bank. A delegation from the Treasury and the Bank of England will visit Reykjavik to try and “wrap up” the terms of the loan, according to officials. The precise size of the loan remains unknown, but it is expected to be up to £3bn, or about 30 per cent of Iceland’s GDP. The loan would mean the Icelandic government would be able to meet its share of compensation payments to depositers, with the remainder covered by the UK. Read more
Part of Icelandic bank Kaupthing’s UK operations were placed in administration on Wednesday as the last big Icelandic bank teetered on the verge of collapse, forcing clients such as financier Robert Tchenguiz to sell positions. Alistair Darling, UK chancellor, placed Kaupthing Singer & Friedlander in administration as the bank attempted to sell assets and loans around the world to stay in business. But Kaupthing’s UK capital markets and investment management units were independent and still operating, said UK regulators. The UK government has pledged legal action against Iceland to recoup some savings of British customers in Icesave, an internet bank owned by Landsbanki, which was seized by the Icelandic regulators this week. Kaupthing earlier agreed to sell its own Kaupthing Edge deposit business to Dutch bank ING, and had been approached with offers for Kaupthing Singer & Friedlander Capital Markets, which is 30% owned by staff. The Treasury emphasised that “savers’ money is safe and secure”. The future of Kaupthing looks bleak even though Geir Haarde, Iceland’s prime minister, said Wednesday night it was “unlikely” the government would seize Kaupthing as it had Landsbanki and Glitnir. Read more
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