Ministers Oppose Writing off Billionaire Kaupthing Debt Skip to content

Ministers Oppose Writing off Billionaire Kaupthing Debt

In response to a request from Björgólfur Gudmundsson and Björgólfur Thor Björgólfsson that Kaupthing bank write off a loan used to acquire a controlling share in Landsbanki bank, Finance Minister Steingrímur J. Sigfússon says that he cannot comment in his role as minister, but that he condemns the proposal as a citizen.

Photo by Páll Stefánsson.

“I don’t know anything about this case and am not involved in any way. Being in charge of the bank’s ownership, I’m in a sensitive situation about expressing my views regarding it,” Sigfússon told Fréttabladid. Kaupthing is one of the banks that was nationalized last fall.

“But as any other citizen of this country I can say the following: I think this is about the last loan under the sun that should be written off, until every last attempt at collecting has been exhausted,” the minister added.

Gudmundsson and Björgólfsson have offered to pay 40 to 50 percent of their ISK 6 billion (USD 47 million, EUR 34 million) debt to Kaupthing, but would like the bank to write off ISK 3 billion (USD 23 million, EUR 17 million).

“I’d like to point out that I’m expressing my views on this matter as any other resident of this country, not as a finance minister, who has not had and should not have any involvement in the matter,” Sigfússon reiterated.

Minister of Business Affairs Gylfi Magnússon said it may very well be that it is justifiable to write off parts of a debt in some instances. “But I almost choked when I saw that the write-off in question concerns debt carried by the Björgólfur father and son due to their acquisition of Landsbanki.”

The loan was originally made to Gudmundsson’s and Björgólfsson’s holding company Samson to finance a 45.8 percent share in Landsbanki when it was privatized by the state in 2003. The father and son are personally liable for the loan.

“This loan has quite a unique position in Iceland’s history. Like probably most of my countrymen, I would have trouble swallowing it if the write-off were approved,” Magnússon added.

Kaupthing’s claim against Samson is ISK 4.9 billion (USD 38 million, EUR 27 million) without penal interests, while the claims against Samson’s bankrupt estate with penal interests and other added costs amounts to ISK 5.9 billion (USD 46 million, EUR 33 million).

Kaupthing issued a statement yesterday emphasizing that no decision has been made to write off the debt. The bank saw reason to release the statement after some of its employees, including CEO Finnur Sveinbjörnsson, received threats.

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