Iceland Presents Plan to Save Companies Skip to content

Iceland Presents Plan to Save Companies

Leaders of Iceland’s government, Prime Minister Geir H. Haarde and Foreign Minister Ingibjörg Sólrún Gísladóttir, presented a 12-step plan to help companies cope with the economic crisis at a press conference yesterday.

Prime Minister Geir H. Haarde (left) and Foreign Minister Ingibjörg Sólrún Gísladóttir at a press conference in October. Copyright: Icelandic Photo Agency.

According to the government’s plan, the boards of the new banks will have extensive responsibilities. They are to establish clear and transparent criteria on how to undertake extension of loan periods and change the compositions of loans, reduce loans and merge companies, Morgunbladid reports.

The board of the banks will also be responsible for increasing supervision with the banks’ operations, encouraging competition while reorganizing companies and administrating assets of companies where debts have been changed into equity.

The 12-step plan is as follows:

1. The board of the new banks will establish clear and transparent guideline regulations on financial service to local companies.

2. Special asset administration associations on behalf of the banks will be founded to administer assets in companies where debts have been changed into equity.

3. An independent representative for each customer will be appointed in each of the banks.

4. While reorganizing companies, competition will be encouraged and restricted as little as possible.

5. The government will support the establishment of a powerful resuscitation fund for the economy with participation of pension funds, banks and other investors.

6. The resuscitation fund will be managed well and in such a way that the sociological responsibility of companies is considered.

7. The government declares intent to ease the settlement of debt with foreign claimants by offering them shares in the new banks.

8. Companies will be permitted to settle their annual accounts in a foreign currency as of January 1, 2008.

9. The pension funds are permitted to own real estate for which they have provided long-term loans and which they rent.

10. Special emphasis will be put on creating labor-demanding employment in cooperation with municipalities.

11. The government will have certain provisions of laws regarding limited companies, taxations and other laws reviewed.

12. The government will in cooperation with labor unions and employer associations reconsider recently-established regulations on currency restrictions.

Jón Steindór Valdimarsson, managing director of the Federation of Icelandic Industries (SI), said it appears as if only those companies which fulfill certain regulations can settle their accounts for 2008 in euros.

However, there are many good ideas in the government’s 12-step plan, Valdimarsson said, although information on when they will be executed is lacking.

Chairman of the Association of Local Authorities in Iceland, Halldór Halldórsson, is satisfied with the government’s plans to create labor-demanding employment in cooperation with municipalities.

“I consider it a declaration on that if some municipalities are not capable of launching such operations the state will emphasize operations in these areas,” Halldórsson said, proposing harbor construction projects, road constructions and construction of avalanche levees. “All of these operations are very labor demanding.”

Valdimarsson would like the government to explain what kind of operations they have in mind. “Calling for labor-demanding operations without revealing their nature does not help the contractor who is thinking of selling his heavy machinery in the country and lay off his staff.”

Click here to read about the government’s plan to help homeowners in Iceland cope with the economic crisis.

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