Bank Restoration Won’t Cost Iceland as Much as Feared Skip to content

Bank Restoration Won’t Cost Iceland as Much as Feared

Minister of Finance Steingrímur J. Sigfússon announced yesterday that it is likely that the restoration of the three banks that collapsed one year ago will be completed by November 1. It appears that the restoration won’t cost the Icelandic state as much as expected.

Minister of Finance Steingrímur J. Sigfússon. Photo by Páll Kjartansson.

Originally, the state had been expected to contribute ISK 385 billion (USD 3.1 billion, EUR 1.9 billion) to the restoration of the banks but now it appears as if half of that amount will suffice, Morgunbladid reports.

Minister of Business Affairs Gylfi Magnússon said that if Íslandsbanki (formerly Glitnir) and Kaupthing will primarily be owned by claimants after the restoration, it will be as successful as he could have hoped for.

“Everything is indicating that the state’s financial commitment because of the banks’ restoration will be considerably lower than expected and that, in fact, also applies to the savings banks,” Magnússon said.

“If we manage to make claimants large shareholders in two out of three banks, we are restoring the banking system in a sensible way in my view. It could create problems if the state is the owner of all of the country’s three largest banks,” the minister added.

Glitnir’s claimants have until Thursday to decide whether they want to acquire 95 percent in Íslandsbanki and Kaupthing’s claimants until October 31 to decide whether they want to acquire 87 percent of shares in New Kaupthing.

An agreement with Landsbanki on the settlement of accounts was signed yesterday. The resolution committee of the old bank will hold 20 percent of shares and the Icelandic state the remaining shares in exchange for an ISK 127 billion (USD 1 billion, EUR 630 million).

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