Pension Funds Offer to Help Save Economy Skip to content

Pension Funds Offer to Help Save Economy

By Iceland Review

The Icelandic pension funds offered on Saturday to relocate part of their assets to Iceland to increase the flow of foreign currency to the country, provided that Icelandic banks, financial institutes and investment companies do the same.

The pension funds also want to know exactly what the state intends to do with their assets and in what ways they will be useful for the state treasury before the decision is made, Fréttabladid reports.

“Everyone has to participate in this rescue mission: the government, the Central Bank, the commercial banks, investment companies and those involved in the labor market. Otherwise it cannot be done,” said chairman of the board of the National Association of Pension Funds (LL) Arnar Sigmundsson.

CEO of Kaupthing Bank Hreidar Már Sigurdsson would not comment directly on the pension funds’ demands, but agreed that everyone had to cooperate to solve the economic problem. “I think it cannot be solved unless everyone takes a seat at the table. We are prepared to do what we can.”

According to Morgunbladid, Kaupthing and Landsbanki bank reached an agreement yesterday on how the two banks, in cooperation with the government and the Central Bank, can ensure economic stability in the country.

The banks suggested in the case of Glitinir Bank, for example, that the government take a similar approach as that undertaken in the US when JP Morgan bought up parts of the assets of Washington Mutual, the largest loan and savings bank of the country, when it went bankrupt in the end of September.

Prime Minister Geir H. Haarde has not commented on the ideas proposed and he is not prepared to discuss possible strategies for solving the economic problem with the media, apart from saying, “We have had meetings all day with various individuals but it is not time to announce specific actions. We still have to clarify certain things.”

Haarde felt however that it was important to emphasize that the public’s savings would be secured. “Deposits in bank accounts in Icelandic banks and savings banks in Iceland will be secured fully. The state treasury will take care of it.”

The prime minister also said that the government’s work during the weekend had been successful and shortly before midnight he announced, “There is very good will at the banks to sell their assets abroad and I think that is necessary.”

Ögmundur Jónasson, chairman of the Federation of State and Municipal Employees (BSRB) and MP for the Left-Greens, has also called for the sale of banks’ and financial institutions’ assets, as he told Fréttabladid.

Eiríkur Jónsson, chairman of the Icelandic Teachers’ Union, told Fréttabladid that he expects trade unions to wait with their demands for better wages. Now is not the time to request higher salaries.

According to information from the Central Bank, experts on behalf of the bank and its directors have been negotiating with the central banks in Denmark, Sweden and Norway the entire weekend, trying among other things to activate the currency swap agreements Iceland has with the Scandinavian central banks, Morgunbladid reports.

Click here to read more about the economic situation in Iceland.

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