Íslandsbanki to Pay ISK 1.2 Billion in Fines Skip to content
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Photo: Golli. Íslandsbanki headquarters in Reykjavík.

Íslandsbanki to Pay ISK 1.2 Billion in Fines

Íslandsbanki has admitted to not fully adhering to proper and sound business practices and procedures in securities trading due to the execution of the offering of a 22.5% stake of the government in the bank, which took place in March last year. The bank has agreed to pay a fine of 1.2 billion Icelandic krónur [$8.8 million, €8.1 million], reports Morgunblaðið.

According to the Financial Supervisory Authority of the Central Bank (FME), the relevant legal requirements were disregarded during the March 2022 sell-off of 22.5% of Íslandsbanki shares. FME also identified inadequate separation of functions and the trading activities of employees as problematic.

In Focus: Íslandsbanki Private Stock Offering

Despite the controversy, Vísir reports that Birna Einarsdóttir, the CEO of Íslandsbanki, is not considering resigning. It is the largest-ever fine imposed on an Icelandic financial institution.

In a statement released yesterday evening, the bank announced that its board had decided to accept the settlement. “There has been talk of potential conflicts of interest that the bank could have addressed more thoroughly, which likely would have resulted in employees not making purchases or certain transactions not being allowed. There is mention of customer classification, risk assessment, and other matters related to this particular project,” stated Birna.

She likewise stated: “We all bear responsibility for our daily tasks. But of course, it is the board, the directors, and the CEO who bear significant responsibility for the bank’s daily operations […] By offering the bank a settlement, the Central Bank is showing us, the board and the CEO, the trust that we will comply with the improvements outlined in the settlement. We wholeheartedly embrace this task and are fully committed to it.”

Read more: FME Believes Íslandsbanki Broke the Law

The press release admits that “in the preparation and execution of the offer, [Íslandsbanki] did not comply with the certain applicable legal requirements and internal rules of the bank on the provision of investment services, particularly in relation to recording of telephone communications, disclosures made to purchasers of shares in the offer, investor classification requirements, and measures to prevent conflicts of interest e.g., segregation of duties and employees transactions […] [I]n executing the offer the bank did not, in all respects, satisfy its obligation to act honestly, fairly and professionally and to promote market integrity […] The bank’s execution of the offer includes serious violations of the relevant laws.”

Íslandsbanki previously recorded a charge of ISK 300 million this year related to the matter and will record a further charge of ISK 860 million this year, for a total of some ISK 1.2 billion.

Íslandsbanki expects its profits during the second quarter of 2023 to be between ISK 5.8 and 6.5 billion [$42-48 million, €39-44 million].

 

 

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