Íslandsbanki Loses Large Customers Following Scandal Skip to content

Íslandsbanki Loses Large Customers Following Scandal

By Yelena

Photo: Golli. Íslandsbanki.

VR Union, the Icelandic Confederation of Labour (ASÍ), and the Consumers’ Association of Iceland have all discontinued their business with Íslandsbanki as a result of the bank’s mishandling of the sale of public assets last year, Vísir reports. Íslandsbanki admitted to breaching procedure and was sentenced to pay a fine of ISK 1.2 billion [$8.8 million, €8.1 million] the highest of any financial institution in Iceland’s history, for breaking regulations in the sale of a 22.5% stake in the bank in March 2022.

VR and ASÍ each made the decision to leave Íslandsbanki independently, Hjördís Þóra Sigurþórsdóttir, second vice president of ASÍ, told Morgunblaðið. She doubts the bank can make up for the breaches it committed. “We’re talking about public assets in Iceland that are being sold to hand-picked parties for less than they’re worth.”

There have been reports of individual customers also transferring their banking away from Íslandsbanki following the scandal. Íslandsbanki’s new CEO Jón Guðni Ómarsson has stated that he has not noticed a significant drop in the bank’s number of customers.

Background to the sale

In early 2020, Iceland’s government began preparation to sell the state-owned Íslandsbanki in stages. The first partial sale was carried out in June 2021, a successful public stock offering of a 35% stake in the bank. Following that sale, 65% of the bank remained state-owned.

The next stage of the sale took place in March 2022, this time a private stock offering of a 22.5% stake in the bank. Unlike the first offering, it was only open to professional investors. The sale was successful, reducing state ownership in the bank from 65% to 42.5%. The private stock offering was immediately criticised for its lack of transparency and for the discount given to investors despite high demand. As public pressure mounted, the list of investors who took part in the share was published, revealing several who had access to inside information on the sale, such as employees of the consulting company that had been hired to manage the sale as well as the father of Finance Minister Bjarni Benediktsson.

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