“Easier to Sell Assets During Periods of Economic Growth”
The Governor of Iceland’s Central Bank, Ásgeir Jónsson, expressed skepticism regarding the timing of the State Treasury’s proposed sale of Íslandsbanki in a recent interview with RÚV: “It’s always easier to sell during periods of economic growth. This is a decision that the bank’s owner [the Icelandic State Treasury] must make. When should that capital be allocated for something else,“ Jónsson remarked.
Jónsson’s statement comes on the heels of the Central Bank Monetary Policy Committee’s (MPC) decision to lower interest rates by 0.25 percentage points. As noted in the above article on RÚV, the Icelandic economy is currently in a state of contraction.
“There is significant value wrapped up in the bank’s equity capital. The question is when does the bank’s proprietor want to use these funds. Are the funds to be kept there, or should they be used for something else?“
As reported in September, Icelandic State Financial Investments (ISFI) has prepared a proposal on how to move forward with the sale of Íslandsbanki. ISF is only waiting for a good time to submit the proposal to Parliament.
Minister of Finance Bjarni Benediktsson hopes that it will get done in the coming weeks: “I hope that in the next few weeks, we can see if we get a proposal from ISFI and submit to Parliament a proposal on how to go about it. I think it’s important that we get it done,” Bjarni said on September 26th.
The sale of Íslandsbanki has been linked with the financing of an ambitious transportation plan, which the government and six municipalities recently agreed upon.
Íslandsbanki was established in 1990 (although it traces its roots to the late 19th century) through the merger of Alþýðubanki (Union Bank), Verzlunarbanki (Bank of Commerce), and Iðnaðarbanki (Industrial Bank). Íslandsbanki formerly served as the domestic branch of the bank Glitnir. Following Glitnir’s bankruptcy Íslandsbanki was re-established as an independent bank. Today, the bank is fully owned by the Icelandic State Treasury.