Icelandic FSA Takes Over VBS Bank Skip to content

Icelandic FSA Takes Over VBS Bank

By Iceland Review

The Icelandic Financial Supervisory Authority took over the operations of the investment bank VBS yesterday and appointed a new temporary board at the request of the bank’s executives.

VBS owes ISK 39 billion (USD 305 million, EUR 223 million). Photo by Páll Stefánsson.

“The bank’s financial situation is tight and has been for a long time,” CEO of VBS Jón Thórisson told Fréttabladid.

However, the settlement of accounts from last year is not finished, Thórisson said, and the bank’s equity ratio is above the required minimum of eight percent.

The bank’s financial reorganization has been worked on for some time and Thórisson said he considers the FSA’s takeover as a certain stage in the reorganization process, reasoning that it will increase its credibility.

Less than 12 months ago the Central Bank of Iceland granted a loan for seven years worth ISK 26 billion (USD 203 million, EUR 149 million) to VBS to refinance its debts. Thórisson said yesterday’s events won’t affect the repayment of the loan.

Gunnar Andersen, director of the FSA, said VBS owes ISK 39 billion (USD 305 million, EUR 223 million) in total and that the bank’s earnings are not high enough to pay back the loan to the Central Bank.

The temporary board, which will operate for three months at the most, will decide what to do next, whether VBS will continue operations after financial reorganization or whether other solutions must be sought.

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