Supreme Court Ruling Repels Foreign Investors Skip to content

Supreme Court Ruling Repels Foreign Investors

Foreign investors lost interest in acquiring an almost 30 percent share in the bank Íslandsbanki, formerly Glitnir, after the Supreme Court of Iceland ruled that loans indexed in foreign currency were illegal in June.

The Supreme Court of Iceland. Photo by Páll Kjartansson.

The investors had made contact with Swiss bank UBS, which is handling the sale of the share of Glitnir’s resolution committee, and expressed interest in it, Fréttabladid reports.

“It was moving along in the right direction but acquisition plans were automatically canceled after the foreign currency ruling. After the ruling, nothing has happened,” said Árni Tómasson, chairman of Glitnir’s resolution committee who also has a seat on the board of Íslandsbanki representing the share held by claimants.

Tómasson added that the instable financial environment in Iceland repelled the investors and now they are back to square one but wouldn’t make any other comments on the investors.

Íslandsbanki is mostly owned by foreign claimants. Their company, ISB Holding, has a 95 share in the bank. The Icelandic state holds the remaining five percent.

Finnur Oddsson, managing director of the Iceland Chamber of Commerce, said it isn’t surprising that the investors canceled their plans.

He stated that both Icelandic and foreign investors are hesitant as the government’s reactions are unpredictable and their attitude towards foreign investments negative.

“Investors don’t want to be taken by surprise as has often happened in the past months. There are various factors, such as the much debated foreign currency loan ruling, recent ideas on nationalization in the energy sector and changes to the law on takeover obligation which are in fact retroactive,” Oddsson said.

Click here to read more about the foreign currency loans and here to read more about the debate surrounding the energy sector.

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