Prime Minister Katrín Jakobsdóttir says that proceeding with the sale of part of the government’s share of Íslandsbanki is “sensible” provided that the proceeds go towards investment in Icelandic infrastructure, Kjarninn reports. Doing so would free up governmental assets for use in much-needed projects. Discussions about the expected sale have already taken place within the ministerial committee on economic affairs, which Katrín sits on alongside Minister for Finance and Economic Affairs Bjarni Benediktsson and Minister for Education, Science, and Culture Lilja D. Alfreðsdóttir.
Katrín says that emphasis will be placed on making the sale open and transparent. The government will not be involved in the decision about who will be sold up to 25% of its share in the bank. The sale will take place via a listing on the Icelandic Stock Market. “It is important that this is fair for those who are interested,” she noted.
The Icelandic government currently owns all of Íslandbanki’s stocks, as well as the vast majority of Landsbankinn’s. The government has hoped a foreign bank would buy a share in Íslandsbanki, preferably one based in a Nordic country. Thus far, however, no such entity has expressed an interested in doing so.
Unlikely to get full price, but still worth it
The government’s current agreement states that Iceland’s financial system must be stable and serve Icelandic society in a cost-effective and fair manner. It also notes that “[t]he state’s ownership of financial institutions is the most extensive in Europe and the government wants to find ways of reducing this.”
A 2018 white paper outlining a “future vision for the financial system” of Iceland discussed in detail how the proceeds from the sale of shares in state-owned banks should be used. Conducting the sales via stock market listings is meant to restructure ownership of Íslandsbanki and Landsbankinn and ensure that well-distributed and stable ownership of these institutions will be a facet of the financial system in the future.
In an interview with Morgunblaðið on Wednesday, Minister for Finance and Economic Affairs Bjarni Benediktsson noted that given current market valuations, it is unlikely that the government would be able to obtain the full recorded price for the share, which is over ISK 170 billion [€1.2 billion; $1.35 billion]. “It is, nevertheless, right in my opinion that [the government] should give up ownership in stages and a 25% share in the bank is worth tens of billions of krónur,” he concluded. “We could then use that capital toward profitable investments in infrastructure.”
‘The economy is ready’
Bjarni published his views on the potential benefits of the proposed sale of up to 50% of the government’s share in Íslandsbanki in a special Independence Party publication on Thursday entitled “On the Right Track.”
“In recent years, there’s been a lot of talk about tariffs to fund public transportation improvements and that’s understandable,” he wrote, “because we need to speed up construction, but a more convenient way is to [sell] this valuable asset and limit tariffs in the future to larger construction projects on the level with [the tunnels] Sundabraut, Hvalfjarðargöng, and other tunnel construction. This is a good time to consider these kinds of efforts; the economy is ready for public construction.”
Bjarni has been a vocal and repeated advocate for the sale of the government’s shares in Íslandsbanki and Landsbankinn, although he does want the government to retain a minority share in the latter bank.