Financial Authority Takes over Boards of Banks Skip to content

Financial Authority Takes over Boards of Banks

The Icelandic Financial Supervisory Authority (FME) took over the board of Landsbanki Bank yesterday morning and the board of Glitnir Bank last night on grounds of the emergency law accepted by Iceland’s Althingi Parliament on Monday.

“Glitnir’s board has been suspended,” Glitnir Bank chairman Thorsteinn Már Baldvinsson told Morgunbladid after a board meeting last night.

Committees established by the FME are now in control of both Glitnir and Landsbanki, two of Iceland’s three largest banks.

“I think it is naturally difficult to look back at all the valuables which have been thrown away for the past 24 or 48 hours,” Baldvinsson said.

A letter from the FME states that its committees are responsible for ensuring continued commercial banking operations in Iceland but did not mention foreign commitments. “I wish that the committee cares for the interest of the employees,” Baldvinsson said.

In regards to Landsbanki, the FME commented that taking over its board had been a necessary first step in ensuring natural banking operations in Iceland and secure deposits in the country. The FME had not commented on its move to take over the board of Landsbanki before Morgunbladid was printed last night.

Lárus Welding has agreed to remain CEO of Glitnir Bank. “I’d like to emphasize that the bank’s operations in the following weeks will remain mostly unchanged and all branches will be open,” he said in a letter to his employees while notifying them of the FME’s actions.

“It is difficult to offer solace in this moment but this is a new reality that we have to face. It is important that we work wholeheartedly with the individuals who will take part in controlling the bank to secure the future interests of customers and the bank’s employees,” Welding concluded.

According to Vidskiptabladid, the FME has also requested that Halldór J. Kristjánsson and Sigurjón Th. Árnason continue as the directors of Landsbanki Bank and be responsible for the bank’s daily operations.

“Landsbanki Íslands hf. would like it to be known that the bank has not been taken for bankruptcy proceedings. These current actions are aimed towards protecting the bank temporarily,” reads a statement from Landsbanki, adding that the bank’s operations are already being reorganized.

“The [FME] committee and the board of Landsbanki agree that the bank’s operations should remain as natural as possible in the following days with the goal of protecting Landsbanki’s interest in Iceland and abroad,” the statement continues.

Following FME’s takeover of Landsbanki’s operations, holding company Samson which holds a more than 41 percent stake in the bank, requested a moratorium on its payments, reports.

Samson is owned by billionaire father and son Björgólfur Gudmundsson and Björgólfur Thor Björgólfsson. Their request was accepted this morning by Reykjavík District Court and the moratorium is valid until October 28.

Vidskiptabladid claims that most representatives of the Icelandic banking sector agree that when the state acquired a 75 percent share in Glitnir Bank last week, the market’s faith in both Landsbanki and Kaupthing dwindled and their loan channels were closed off, making them inoperable.

In response to such claims—that the state’s and Central Bank’s actions to save Glitnir Bank had in fact brought the other two largest banks in Iceland to the brink of bankruptcy—chairman of the Central Bank’s board of directors and former Prime Minister Davíd Oddsson said in an interview with RÚV’s news magazine Kastljós last night: “I find it strange that people feel sorry for the arsonists and attack the firefighters.”

Click here to read yesterday’s news of the economic turmoil in Iceland.

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