Companies in Iceland Suffer from Credit Crunch Skip to content

Companies in Iceland Suffer from Credit Crunch

Managing director of the Federation of Icelandic Industries (SI) Jón Steindór Valdimarsson said the ongoing shortage of loan capital among many companies in Iceland is causing cancellation of project and may lead to bankruptcy.

“We cannot withstand this situation much longer,” Valdimarsson told Fréttabladid. “The longer this situation lasts the sooner something will give in.”

Valdimarsson said it is important for the government to increase loan capital. “The government has announced that it is working on the problem, but we feel that too long a time has passed. It is time for them to show their cards.”

Valdimarsson said although a few companies have downsized only a handful have undertaken mass layoffs and declared bankruptcy. But companies are about to reach their limits.

Companies have difficulties obtaining loans, both for new and current projects. Therefore operations have come to a halt in many places and new projects have been put on ice.

Valdimarsson said construction companies are having the hardest time because in addition to the credit crunch they have also not been able to sell their apartments because the real estate market has stagnated.

Mest, a company offering various services for construction companies, gave notice to 30 workers at the end of last month.

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