Iceland’s Cost of Glitnir Bank’s Acquisition Rising Skip to content

Iceland’s Cost of Glitnir Bank’s Acquisition Rising

The refinancing of Glitnir Bank’s debt in the next seven months amounts to EUR 1,500 million (USD 2,100 million) considering the current rate of the euro compared to the Icelandic króna. The ISK took another dive yesterday and last night EUR 1 was ISK 153.

In light of the free-fall of the ISK since the nationalization of Glitnir Bank was announced on Monday, the EUR 600 million for which the state acquired a 75 percent stake in the bank no longer costs ISK 84 billion but ISK 92 billion, Morgunbladid reports.

The government has yet to announce how the now state-run Glitnir Bank will refinance its debts. According to Morgunbladid’s sources, the bank’s total debts now amount to ISK 260 billion (USD 2.4 billion, EUR 1.7 billion), of which ISK 130 billion (USD 1.2 billion, EUR 850 million) are short-term.

Prime Minister Geir H. Haarde has however pointed out that by providing share capital, Glitnir’s equity ratio was strengthened enough for the bank to continue operations and the state treasury will then sell its 75 percent stake in the bank for a profit, to the benefit of taxpayers, when the economic situation calms down.

Yesterday, for the first time in the history of the Icelandic króna, the currency rate index surpassed 200 points. USD 1 is currently ISK 109.37, GBP 1 is currently ISK 194.57 and DKK 1 is currently ISK 20.60.

Click here to read more about the nationalization of Glitnir Bank and here to read more about the development of the ISK.

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