Loans of Former Iceland’s Landsbanki CEO Investigated Skip to content

Loans of Former Iceland’s Landsbanki CEO Investigated

The Landsbanki (NBI) board of directors met on Thursday to discuss high loans granted to the bank’s former CEO Sigurjón Th. Árnason on November 21, 2008. Gunnar Vidar, head of the bank’s legal division, said the bank’s internal accountancy will prepare a report on the loan and then send it to the Financial Supervisory Authority (FME).

Photo by Páll Stefánsson.

“The case would presumably not have been looked into if people didn’t think regulations had been violated,” Haukur Halldórsson, chairman of the board of directors, told Fréttabladid.

According to the newspaper’s sources, Árnason was provided with a loan from the pension fund Fjárvörslureikningur 3 worth ISK 40 million (USD 331,000, EUR 224,000) collateralized with real estate at Granaskjól 28 in Reykjavík. Another loan worth ISK 30 million (USD 224,000, EUR 168,000) was then granted against collateral in different real estate.

The decision to grant the loan was made by Árnason himself and the then director of the pension fund—who has now been suspended temporarily while the case is being investigated—and without consulting Landsbanki’s senior board.

The first loan, a so-called “bullet loan,” is indexed for 20 years and carries annual interests of 3.5 percent; although interest will not be calculated until the loan’s single due date, which is at the end of the period on November 20, 2028.

However, Sigurdur G. Gudjónsson, the lawyer who prepared the mortgage deed, said a new deed had been notarized where this is corrected, assuming interest is calculated from November 20, 2008.

“It is in the hands of the courts to rule whether the content of documents is legal and no one has claimed that it isn’t,” Gudjónsson commented.

Landsbanki explained that this is a case of a mortgage deed taken against special savings owned by Árnason, so the loan is in fact not being granted by the bank. The special savings are owned by Árnason alone and they are regulated by one supervisor only, not an entire board.

According to law, the Ministry of Finance provides operational licenses to pension funds with the condition that a board, a certified accountant and an insurance expert have been chosen.

“I don’t know whether a phenomenon like a private pension fund exists,” said Minister of Finance Steingrímur J. Sigfússon. “It is hardly a pension fund in the understanding of that word. If this is a breach of law we will look into it.”

Fréttabladid was neither able to contact Árnason nor Ásmundur Stefánsson, Landsbanki’s current director. Elín Sigfúsdóttir, who served as Landsbanki’s director in November 2008, would not comment on the story.

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