My word, this is pointless. Even by FSA standards. Click to read.
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My word, this is pointless. Even by FSA standards. Click to read.
Police in Luxembourg have raided premises related to Iceland’s failed Kaupthing Bank in a joint operation with the UK Serious Fraud Office and Icelandic authorities, reports the FT. More than 70 investigators took part in searches of three business premises and two residential addresses in Luxembourg, a key offshore base for Kaupthing before its collapse in 2008. The operation signalled a widening of the international probe into Kaupthing, less than a month after the arrest of Robert and Vincent Tchenguiz, the UK property entrepreneurs, and several others in London. The Tchenguiz brothers were later released without charge. Among premises searched in Luxembourg on Tuesday were the offices of Banque Havilland, owned by Britain’s Rowland family, known for its investments in property, banking and internet ventures as well as for its ties to the UK Conservative party.
You’ve read the story in the FT…
Lawyers acting for the UK arm of the collapsed Icelandic bank Kaupthing, which is at the centre of a fraud probe, have withdrawn a request to retail entrepreneur Kevin Stanford to repay nearly $2m (£1.2m) as part of efforts to recover funds owed to the bank…. Read more
Vincent Tchenguiz, the UK property mogul arrested and released without charge last week as part of the probe into failed Icelandic bank Kaupthing, has begun to restructure more than £2bn of debt backing his business, reports the FT. The entrepreneur last month held a “beauty pageant” of investment banks to advise on plans to either restructure or refinance the debt, which was borrowed from banks including Lloyds, RBS, Allied Irish, Bayerische Landesbank, Citibank, Deutsche Bank and UBS. Lazard was among key names to advise on the process. Tchenguiz told the FT the banks that backed the property business had been given reassurances following his arrest, which could have threatened to derail plans to restructure the loans. He said a UK court decision on Wednesday to allow him to pursue a civil claim against Kaupthing for more than £1bn had helped limit the reputational damage caused by the arrest.
At Vincent Tchenguiz’s Cannes party on Thursday night, sans Vincent Tchenguiz:
Less than 24 hours after being released by UK police, Vincent Tchenguiz, the flamboyant UK property mogul, failed to turn up to host his yacht party as planned in Cannes on Thursday night, reports the FT. Tchenguiz, his brother Robert and five other people were arrested in London on Wednesday in connection with a UK probe into the collapse of Kaupthing, the Icelandic lender. All seven were released without charge. Police in Iceland also arrested two men. The decision to proceed with the party – which coincides with the Mipim property conference – was seen by many in Cannes as a statement by Vincent Tchenguiz that it was business as usual for his Consensus Business Group. The brothers have said they are confident they will be “cleared of any allegation of wrongdoing”.
The UK’s Serious Fraud Office on Wednesday arrested UK property entrepreneurs Robert and Vincent Tchenguiz and seven other people as investigators extended their probe into the 2008 collapse of Kaupthing, the Icelandic bank, reports the FT. More than 130 investigators staged dawn raids on eight homes and two London businesses, including the Mayfair offices of Rotch Property, the brothers’ investment vehicle. In a co-ordinated action, Icelandic police also arrested two men and searched two properties. No charges were filed. In a joint statement, the Tchenguizes said they were confident they would be cleared of any allegation of wrongdoing.” The brothers were released on Wednesday night and were free to travel, their spokesman said. As TheSource notes, “it’s a far cry from the heady days of the property boom” when they were “feted by the property industry as shrewd entrepreneurs”.
Curzon Street in London’s Mayfair, Wednesday morning:
Creditors have taken control of Exista, the investment firm at the centre of the Icelandic banking crisis, in a €2bn ($2.7bn) debt-for-equity swap that marks a big step in restructuring the country’s corporate and financial sectors, reports the FT. Exista was the biggest shareholder in Kaupthing Bank, one of three big Icelandic lenders which collapsed in 2008. The company was controlled by Agust and Lydur Gudmundsson, two tycoons embroiled in the crisis. The Gudmundsson brothers have now seen their shareholding wiped out after an Icelandic court approved the transfer of Exista’s equity to unsecured creditors, including international institutions and hedge funds. While Exista lost its main asset – Kaupthing – in the bank crash, it still owns several key Icelandic businesses, including telecomes operator Siminn, and a minority stake in Bakkavor, the UK-focused food producer.
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.
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 remains of Kaupthing Singer & Friendlander with loan books worth £2bn have been touted for sale by Ernst & Young, the bank’s administrator, reports the Telegraph. KSF, which collapsed in 2008, had lent a total of £1.2bn to wealthy City individuals. The bank’s £1bn property book, including a £160m loan against London’s Shard tower, now under construction, is likely to appeal most to potential investors. The portfolio first went on the block in November 2008, a month after KSF went into administration.
Police have raided the offices of KPMG and PricewaterhouseCoopers in Reykjavik, seizing documents and computer data as part of a probe into alleged criminal activity at three collapsed Icelandic banks, reports the Daily Telegraph. The targets of the raids were the firms’ banking clients Kaupthing, Glitnir and Landsbanki, but the move is nevertheless likely to cause embarrassment for two of the “big four” accountancy names.
Creditors of Kaupthing, the failed Icelandic bank with a fondness for over-the-top advertising, are unlikely to be having a good week.
As Bloomberg reported on Tuesday, those with claims on the bank will get back about 20 percent of what they are owed, according to Steinar Thor Gudgeirsson, chairman of the bank’s resolution committee. As for the size of those outstanding claims, Gudgeirsson told Bloomberg that debts of “just over 3,000 billion kronur ($24 billion) are left”, from an initial $50bn. Read more
The UK’s Serious Fraud Office is gathering extensive intelligence on the Icelandic banks in the aftermath of last autumn’s crash that left thousands of UK institutions nursing millions of pounds of losses, reports the Daily Telegraph. The agency has intensified its inquiries following the leak of Kaupthing’s loan book on to an internet site, Wikileaks.org, over the weekend, and is understood to be examining the document connected to the failed Icelandic bank, which had a large UK client base. It has also received information relating to the UK operations of the Icelandic banks, apparently from a number of whistleblowers ranging from employees to investors and depositors.
In the same way that glaciers occasionally disgorge relics from earlier times, frozen and perfectly preserved, so the defunct Icelandic bank Kaupthing has thrown up an apparent curiosity – a document detailing who owed the bank serious amounts of money just before it finally imploded.
The document, dated September 28, 2008, and titled Kaupthing Bank – Corporate Credit, Presentation of large exposure > €45 million, is available at Wikileaks, but we should quickly say that someone called Thorarinn Thorgeirsson, a senior director at Kaupthing, has already contacted the web organisation demanding that it be removed from public view. 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’s Financial Services Authority was warned in 2005 not to give the go-ahead for the Icelandic bank Kaupthing’s acquisition of Singer & Friedlander, the British merchant bank, by its then chief executive, reports The Times. Tony Shearer, who ran Singer & Friedlander Group until November 2005, will tell the Treasury Select Committee on Wednesday that he and other executives at the UK-based bank told the FSA that Kaupthing’s management were “not fit and proper” to control a UK bank. In what will raise fresh questions over the robustness of bank regulation, Shearer will claim that “the FSA rushed through the approval of the change of control”.
Britain has fended off the threat of a politically charged London lawsuit over its use of anti-terror powers to freeze billions of an Icelandic bank’s assets. Reykjavik conceded Tuesday that a High Court challenge to the freezing order made against Landsbanki in October stood scant success. But it said it would back a separate legal challenge brought against London related to Kaupthing, one of three Icelandic banks nationalised last year to stave off collapse. Iceland’s decision to refrain from action in London over Landsbanki suggests that Britain’s unprecedented use of the freezing powers in a non-terror case could be hard to challenge domestically, potentially clearing the way for similar action by the Treasury against other failing financial institutions.
Dave Whelan, owner of Wigan Athletic Football Club, is in talks to buy part of JJB Sports for about £100m – a deal in which he would bail out the retailer he founded in 1977. JJB is negotiating to sell its chain of 50 health clubs to Mr Whelan, who bowed out of the retailer last year when he sold his 29% stake to Chris Ronnie, now chief executive. The company’s fortunes have declined and it is in a race for cash to repay a £20m bridge loan to Kaupthing, the failed Icelandic bank, before the end of the year. JJB is trying to sell two small fashion chains, Qube and OSC, to JD Sports Fashion, its smaller but financially stronger rival, and a price of £10m-£20m has been discussed. If a deal with Whelan goes through, it will not only provide a financial lifeline to JJB but also strengthen its negotiating hand as it would no longer be a distressed seller.
Iceland has appointed two women to help rebuild its financial system after the banking empire built by its young, male-dominated elite collapsed. Elín Sigfúsdóttir and Birna Einarsdóttir are set to become chief executives of New Landsbanki and New Glitnir respectively, the nationalised banks created in the wake of the crisis. Their appointments are an effort to signal a new culture within the banking system, said a government minister. Landsbanki, Glitnir and Kaupthing – infamous for their aggressive international expansion – collapsed last week under massive debts, bringing Iceland’s economy to the brink of bankruptcy and triggering recriminations, with the UK a popular target. But many have also criticised a culture driven by young, male bankers. The banks’ new chief executives were promoted from within the ranks of the failed banks: Sigfúsdóttir has headed corporate banking at Landsbanki since 2003 and Einarsdóttir became head of domestic commercial banking at Glitnir last summer. The nationalised banks will focus solely on domestic operations. Their first task is to restart trading of the Icelandic krona, which all but ceased last week, leaving most Icelandic groups unable to pay suppliers. A New Kaupthing bank is also planned.
Tensions between Britain and Iceland soared Thursday night after the nationalisation of the Nordic country’s largest banks put close to £800m of local authority money at risk and prompted Gordon Brown to threaten to seize the assets of Icelandic companies. On Thursday, Iceland was forced to nationalise Kaupthing, its biggest and last major bank, a move that Geir Haarde, prime minister, blamed partly on the actions of the UK government. Haarde also criticised the UK for using anti-terror laws to freeze £4bn of bank assets. The unprecedented move – slammed by legal experts as a distortion of the law’s intent – was used to protect the deposits of British account holders. The action took place on Wednesday to freeze assets of Iceland’s second-biggest bank, Landsbanki, which went into receivership this week. Meanwhile, the impact of the Icelandic banking crisis continued to jolt the British corporate world. Baugur, the Icelandic retail group, was on Thursday trying to find out the fate of its holdings in British retailers (see separate post). Kaupthing and Landsbanki are two of its financial backers. Iceland’s stock exchange on Thursday suspended all trading after Kaupthing joined Landsbanki and Glitnir in enforced nationalisation.
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.
Robert Tchenguiz, the UK-based property entrepreneur, lost £1bn in just 24 hours after being forced to offload his stakes in J Sainsbury and Mitchells & Butlers as the fallout of the Icelandic banking crisis hit corporate UK. Tchenguiz lost up to £600m on the sale of a 10% holding in the UK’s third-biggest supermarket chain and about another £400m on his exit from the pub company. Tchenguiz was forced to sell down a 25.7% stake in M&B on Tuesday night as his financial backer, investment bank Kaupthing Singer & Friedlander, scrambled to sell assets and scale back its loan exposures. Kaupthing, which had bankrolled Tchenguiz’s move this year to turn his derivatives holding in the pub chain into shares, called in the loan. It was unclear whether he had sold the shares on to another party or whether his holding had been caught up in the administration process for KSF, an arm of Icelandic bank Kaupthing. KSF, now under Ernst & Young’s control, spent much of Wednesday morning attempting to place 180m Sainsbury shares for 250p with institutional shareholders. It was unclear whether this had been successful.
What to do when your country’s banking sector and exchange rate look like this?
UK-based property tycoon Robert Tchenguiz has sold his 25% stake in UK pub group Mitchells & Butlers, illustrating how the financial crisis in Iceland is hitting UK companies. Some 101m shares in the group changed hands on Tuesday night after the formal close of business in London at 130p apiece, compared with a market price of 163p, which had already fallen 12% during the day. Although the stake is understood to belong to Tchenguiz, the actual seller was Iceland’s Kaupthing, which was holding the shares as collateral. The Icelandic bank is one of Tchenguiz’s financial backers and bankrolled his move in July to convert his derivatives holding of 25% into shares in order to stop it being lent to those betting on price falls. But with Icelandic banks being forced to deleverage, Kaupthing has called back the loan it gave to Tchenguiz, who was forced to liquidate his position to raise money. The buyer of the stake was not immediately clear. Shares in M&B are down 74% over the past 12 months and have fallen 25% in the past week. Following Tuesday night’s transaction, Tchenguiz still retains an economic interest of 4.8% in M&B through contracts for differences. More detail on FT Alphaville.