Financial Supervisory Authority Investigates Banks Skip to content

Financial Supervisory Authority Investigates Banks

The Icelandic Financial Supervisory Authority (FME) is currently investigating whether the fallen banks, Glitnir, Landsbanki and Kaupthing, systematically tried to maintain the price of their own shares before the collapse of the banking system last year and in doing so sent misguiding messages to the market.

The headquarters of Kaupthing in Reykjavík. Copyright: Icelandic Photo Agency.

According to Morgunbladid’s sources, the investigation, which has been ongoing for a few years, is the furthest ahead in the case of Kaupthing. The bank is suspected of having controlled the price of its own shares by constantly creating demand for shares.

There are allegedly many cases where Kaupthing granted loans to holding companies where the loans were used to buy shares in the bank, with no collateral apart from the shares themselves.

One such case are the loans granted to Holt Investments Ltd., a holding company owned by Skúli Thorvaldsson, where the only purpose of the loan seems to have been to purchase shares in Kaupthing.

Another such example are the loans granted to Kevin Stanford, who used to be the fourth largest shareholder in Kaupthing.

The loans to Stanford amounted to EUR 374.8 million (USD 554 million), 45 percent of which was used for buying shares in Kaupthing with a large part of the collateral being the shares themselves.

Click here to read more about the cases of Thorvaldsson and Stanford.

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