Minister criticizes excessive pay of Icelandic bank managers Skip to content

Minister criticizes excessive pay of Icelandic bank managers

By Iceland Review

The Minister of Agriculture, Gudni Ágústsson, criticized the high salaries of Icelandic banking managers at a public political meeting in Reykjadalur near Lake Mývatn yesterday. “It is greed to ration yourself a yearly salary equal to the lifetime earnings of a diligent married couple,” said Gudni.

News station NFS reported last month that the salaries of Icelandic bank CEOs increased 60% between 2003 and 2004. Hreidar Már Sigurdsson CEO of Kaupthing (KB-Bank) was the best paid Icelandic bank CEO last year with more than ISK 8 million per month.

The Minister of Agriculture continued: “I have to say, if there is any change that has disgusted me in the past few years, then it is not in the least the self-dealing, the enormously high salaries, that they say are caused by globalization, but I say is caused by greed; excess that is unsustainable in a society that they want to live in. It is nothing but excess when some young men, that are just out of school, and even barely so, try to claim, in one year, that they need to serve themselves the lifetime salary of a diligent couple, ISK 200 – 250 million. We all need to slow down a little to preserve that which is most valuable to us, the stability, and we need to protect the equality which has characterized Icelandic society through the ages.”

Gudni Ágústsson’s political party, the Progressive Party, has been criticized for “giving the banks away” in 2002 when it intervened in the ongoing privatization process of the then two state banks, Búnadarbanki and Landsbanki and sold controlling stakes in them to business cliques linked to the ruling Progressive and Independence Parties, respectively. Prime Minister Halldor Ásgrímsson, Foreign Minister Geir Haarde, Minister of Industry and Trade, Valgerdur Sverrisdóttir and former Prime Minister Davíd Oddsson formed an ad-hoc ministerial committee which took control of the process out of the hands of the Executive Committee on Privatization.

A controlling stake of 45.8% in Landsbanki of was sold to investment company Samson for ISK 12.3 billion (USD 145 million at the time) in spite of Samson offering the lowest price for Landsbanki of the three final bidders. Samson later received an additional discount of ISK 700 million. Today, Landsbanki is valued at ISK 290 billion. After the privitatization, Björgolfur Thor Björgólfsson, one of Samson’s three owners, became Iceland’s first USD billionaire. He was recently ranked number 350 on the Forbes list.

Vilhjálmur Bjarnason, adjunct professor of business at the University of Iceland, says Icelanders were deceived when the so-called S-Group purchased a controlling stake in Búnadarbanki, now part of Kaupthing (KB-Bank). One of the arguments used to support the S-Group’s purchase of Búnadarbanki was the participation of German bank Hauck und Aufhauser, but Vilhjálmur claims that Hauck und Aufhauser’s statements reveal that it could not have participated the transaction.

The salaries of prominent Icelanders are published in the August issue of Icelandic business magazine Free Trade, Frjáls Verslun (an Iceland Review sister publication).

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