BNP Paribas: Iceland’s Bank System Not Melting Skip to content

BNP Paribas: Iceland’s Bank System Not Melting

According to a new report by French bank BNP Paribas, the market reacted too harshly to concerns about Icelandic investment companies and punished the Icelandic banks following the misfortunes of investment company Gnúpur.

Because of Gnúpur, the banks’ credit default swaps (CDS) increased steadily, which resulted in worse credit terms in international markets. In terms of credit rating, BNP Paribas believes Landsbanki Bank is in the best position, followed by Glitnir and finally Kaupthing, Morgunbladid reports.

The French bank added that despite a high CDS, it has full faith in Kaupthing being able to fulfill its commitments. “Iceland’s bank system is not melting,” BNP Paribas’ report states, admitting the bank had to review its formerly negative attitude towards the Icelandic banks while writing the report.

BNP Paribas’ positive report and increases in foreign stock markets managed to help the Icelandic stock market up from its miserable condition yesterday. All 14 companies belonging to the selected share index of the OMX Nordic Stock Exchange in Iceland rose in value and the index increased by three percent.

Exista, the company that had lost the greatest value since January 1, 2008, took an upwards jump, as did its main assets, including Sampo, up by 7.2 percent, and Storebrand, up by 12.4 percent. The improved situation strengthened the ISK by 1.3 percent.

Click here to read about yesterday’s situation in the Icelandic stock market.

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