A Bad Reputation in 2005 Skip to content

A Bad Reputation in 2005

Jón Þ. Sigurgeirsson, the CEO at the offices of the Icelandic Central Bank believes that the Icelandic banks already had a bad reputation for reckless behavior in the international stock exchange in 2005.<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />


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Kaupþing bank. Photo Copyright by the Icelandic Photo Agency.

During the debriefing in the Landsdómur trial on Wednesday, Jón said he had received a message from another banker with whom he had been in contact with on November 14, 2005. The banker told Jón that there was an interest in short-selling the Icelandic banks. Shortly after that, the Icelandic banks were cut off from available funds in the European markets. Therefore, the Icelandic banks looked to the United States for funding.

The Icelandic banks didn’t seem to care on what terms they borrowed money and that they seemed to borrow money regardless of the considerably higher strain of debt than what was available to them previously. The strain of debt increased a great deal in the years to come and it went well over one thousand points for Kaupþing. Then, all of a sudden, this decreased by half. Jón indicated that the heads of Kaupþing had manipulated the loans, just like everything else, Rúv.is reports.

When Jón was asked whether Kaupþing could have moved its headquarters overseas to reduce the size of the bank, he was doubtful. The bank would have been forced to show its portfolio and Jón doubted that it was what the bank wanted or needed. The bank’s portfolio was presumably in a bad state by then. Jón admits to having heard rumors of poor asset position as early as 2005 or 2006.

The appointed District Attorney, Sigríður J. Friðjónsdóttir, asked Jón what he knew about attempts made to transfer the Icesave accounts to a British subsidiary. He responded by saying it was not his place to know. However, he did attend meetings where the matter was discussed. Suspicion rose when the former CEO of the old Landsbanki, Sigurjón Árnason, stated that the Brits did not understand assets in the fishing industry. Jón believed that a bank the size of Landsbanki had assets all over the world.

Yesterday, among those questioned in the trial was former CEO of Kaupþing, Heiðar Már Sigurðsson.

JB

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