Iceland’s Tycoons in a Tight Spot Skip to content

Iceland’s Tycoons in a Tight Spot

The personal liability of former chairman of Landsbanki Björgólfur Gudmundsson in the bank amounts to ISK 58 billion (USD 457 million, EUR 341 million), but he expects that these debts can partly be covered by his assets which are not serving as collateral with other loan institutions, at least ISK 12 billion (USD 94 million, EUR 71 million).

Björgólfur Gudmundsson. Copyright: Icelandic Photo Agency.

“The situation is naturally very bad,” Gudmundsson told Morgunbladid. “I have everything on the line; personal liability extends to all of my assets.” The largest part of this liability was taken because of loans held by investment company Grettir before Gudmundsson acquired the majority of its stakes.

“At that time my assets were in some of the most solid corporations and companies in the country,” Gudmundsson stated, adding that he had not hesitated to take on that personal risk.

Gudmundsson released a statement to the media yesterday, explaining his situation. “I’m left with the question, what is my position? I must admit that I’m a little lost,” he told Fréttabladid.

When asked whether he will lose everything, including his home on Vesturbrún 22 in Reykjavík, Gudmundsson replied, “I just don’t know what I will be able to keep.”

In addition to providing information on his personal liability towards Landsbanki, Gudmundsson revealed that his assets had depreciated by ISK 116 billion to 128 billion (USD 910 million to 1.0 billion, EUR 680 to 750 million) since the beginning of 2008.

The estate of Magnús Thorsteinsson, a long-term business partner of Gudmundsson, was yesterday brought into bankruptcy proceedings, according to the demand of investment bank Straumur-Burdarás, Morgunbladid reports.

The bank’s claim on Thorsteinsson amounts to approximately ISK 1 billion (USD 7.9 million, EUR 5.9 million).

The loan was granted to Thorsteinsson’s holding company Fjárfestingar ehf. in 2005 and was originally supposed to be paid back in 2007, but the terms were later changed. In January 2008, Thorsteinsson assumed the loan on his personal guarantee.

Fréttabladid explained that Thorsteinsson laid the basis for his empire in Russia with Gudmundsson and Gudmundsson’s son Björgólfur Thor Björgólfsson and bought Landsbanki with them in 2002.

In mid-2007, Thorsteinsson’s assets were estimated at ISK 20 billion (USD 157 million, EUR 118 million). He has served as chairman of the board of Avion Group/Eimskipafélagid and as a board member of Icelandic Group.

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