Iceland Secures Deposits in Fallen Straumur-Burdarás Skip to content

Iceland Secures Deposits in Fallen Straumur-Burdarás

Minister of Business Affairs Gylfi Magnússon said in parliament yesterday that deposits in the newly-nationalized investment bank Straumur-Burdarás, worth approximately ISK 60 billion (USD 533 million, EUR 419 million), will likely be secured by the Icelandic state’s deposit insurance fund.

The headquarters of Straumur-Burdarás in Reykjavík. Photo by Eygló Svala Arnarsdóttir.

Although Straumur-Burdarás was primarily an investment bank, it was also licensed to operate as a commercial bank and was therefore covered by the fund, Magnússon explained on RÚV’s news magazine Kastljós last night.

The state-run Housing Financing Fund (HFF) was the largest deposit holder. “I won’t reveal the exact amount, but it is a question of [ISK] billions,” director of the HFF Gudmundur Bjarnason told Morgunbladid.

The state could therefore suffer a considerable loss because of the bank’s collapse if its assets won’t cover the deposits. However, Magnússon is certain that Straumur-Burdarás’s assets will suffice, as he said in an interview with mbl.is.

An Independence Party MP, Sigurdur Kári Kristjánsson, expressed his deep disappointment with the nationalization of Straumur-Burdarás at parliament yesterday, asking Magnússon to what extent the bank’s obligations would become the state’s responsibility, ruv.is reports.

Magnússon pointed out that Straumur-Burdarás had not been operated with a state guarantee beyond one that the deposits were insured.

The minister said he didn’t expect the bank to be operated in the same way as the three commercial banks that have also been nationalized, Íslandsbanki (formerly Glitnir), Landsbanki and Kaupthing, arguing that Straumur-Burdarás’s operations are much less extensive.

Magnússon said in an interview with Rás 2 radio station yesterday afternoon that Straumur-Burdarás had requested assistance from Icelandic authorities, either with a loan or increased equity.

Gunnar Haraldsson, director of the Financial Supervisory Authority (FME), said he has been in touch with his British counterparts and that it is uncertain whether local authorities plan to freeze Straumur-Burdarás’s assets in the UK.

Click here to read yesterday’s news about Straumur-Burdarás and here to read about the bank’s criticism of the FME.

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