Deadlock at Íslandsbanki? Skip to content

Deadlock at Íslandsbanki?

Einar Sveinsson, chairman of Íslandsbanki, does not think that Burðarás’s purchase of an additional 4.11 per cent of Íslandsbanki changes the balance of power at the bank, according to an interview with Morgunblaðið yesterday.

(See also Iceland Review, Daily News, June 9, “Changes at the helm of Íslandsbanki?”)

In the same report, Burðarás CEO Friðrik Jóhansson claimed that Burðarás paid an acceptable price for the shares. “We have not decided if we will buy more or sell any shares,” he said.

Kaupthing Bank said in its daily bulletin on Wednesday, June 8, that the position of the parties affiliated with Landsbanki (Burðarás and Straumur) had strengthened in wake of the transaction. “It is not unlikely that there will be more news shortly,” said Kaupthing.

Left-Green leader Steingrímur J. Sigfússon said on TV-station Stöð 2 on Wednesday that a merger of Landsbanki and Íslandsbanki would constitute a “dangerous consolidation” in the financial sector. He also advocated looking into the possibility of passing special legislation about bank ownership and the separation of investment and retail banking.

Yesterday, the Minister of Trade and Industry, Valgerður Sverrisdóttir of the Progressive Party, expressed to Iceland State Radio, RÚV, her view that it did not appeal to the Icelandic nation that father and son, Björgólfur Guðmundsson and Björgólfur Thor Björgólfsson, were coveting “anything and everything in the market.” In her view, it would be “undesirable” if they acquired Íslandsbanki.

Björgólfur Guðmundsson is the chairman of Landsbanki. His son, Björgólfur Thor Björgólfsson, is the chairman of Burðarás. Their investment company, Samson, owns 44.8 per cent of Landsbanki, Landsbanki is the second largest shareholder with 6.0 per cent of its own shares. Landsbanki and subsidiaries in turn hold 51.1 per cent of Burðarás, and the second largest shareholder of Burðarás is Burðarás with 4.0 per cent.

(See Iceland Review, Daily News, May 31, “Privatization of banks draws heavy fire.”)

On Iceland State Television, RÚV, Valgerður added that she found the extent of the power that the two Björgólfs wield in Iceland “disgusting”. She also expressed her doubts concerning the legality of any merger between Landsbanki and Íslandsbanki.

In his response to her criticism, Björgólfur senior speculated that the minister must have been having a “bad day” and added, “I do not covet everything.” He further hypothesized that the minister could have misunderstood for it was Burðarás that had purchased the shares in Íslandsbanki and Burðarás and Landsbanki counted between the two companies 35 thousand shareholders, each and everyone free to sell. He believed that more shareholders had been buying into the companies recently, so the minister was wrong to think that it was just one or two persons acting, it was 35 thousand. In reference to a recent opinion poll showing Progressive support at an all time low (Iceland Review, Daily News, June 2, “Support for Progressive Party at all time low”), he said he did not recollect how many had voted for the Progressives in the last election but that the number of Progressive voters had “not increased” since then.

RÚV claims that the Björgólfs intend to merge Landsbanki, Íslandsbanki, investment bank Straumur and investment company Burðarás into one company in order to pursue further acquisitions abroad.

The chairman of Íslandsbanki, Einar Sveinsson, reiterated to RÚV his view that he did not believe any balance of power at Íslandsbanki had changed. He furthermore voiced his doubt that a merger between Íslandsbanki and Landsbanki would be approved by competition authorities. Einar also added that staff reductions at the banks in the wake of a merger would probably turn into a “bloodbath”.

Iceland State Radio, RÚV, quoted an anonymous “expert in competition law” who said he thought any approval of a merger of Landsbanki and Íslandsbanki “unlikely”.

The “Insider” column of Morgunblaðið’s weekly business section writes yesterday, “It is difficult to see how the government and parliament can remain idle and silent if a party that controls Landsbanki also exerts great influence at Íslandsbanki at the same time as they are two of Iceland’s three largest banks.”

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