Third Executive to Leave Íslandsbanki Since Last Week

Atli Rafn Björnsson, director of business consulting at Íslandsbanki bank has left his position at the bank, RÚV reports. He is the third executive at the bank to leave his post since the middle of last week. Íslandsbanki was fined around ISK 1.2 billion last month due to breaching regulations in the sale of 22.5% of the bank last year. It is the highest fine on a financial institution in Iceland’s history.

Atli Rafn had been in his position since 2019, and will be replaced by Ellert Hlöðversson. Ásmundur Tryggvason, who was CEO of Íslandsbanki’s Business and Investment Division, also left his position last weekend, and the bank’s CEO Birna Einarsdóttir resigned last week. She was replaced by Jón Guðni Ómarsson, who stated that his priority was to restore trust in the bank following the poorly-handled private stock offering of last year.

Background to the sale

In early 2020, Iceland’s government began preparation to sell the state-owned Íslandsbanki in stages. The first partial sale was carried out in June 2021, a successful public stock offering of a 35% stake in the bank. Following that sale, 65% of the bank remained state-owned.

The next stage of the sale took place in March 2022, this time a private stock offering of a 22.5% stake in the bank. Unlike the first offering, it was only open to professional investors. The sale was successful, reducing state ownership in the bank from 65% to 42.5%. The private stock offering was immediately criticised for its lack of transparency and for the discount given to investors despite high demand. As public pressure mounted, the list of investors who took part in the share was published, revealing several who had access to inside information on the sale, such as employees of the consulting company that had been hired to manage the sale as well as the father of Finance Minister Bjarni Benediktsson.

Read More: Íslandsbanki Private Stock Offering

Left-Green Movement MP Bjarkey Olsen Gunnarsdóttir who also chairs the parliamentary Budget Committee, has demanded Íslandsbanki publish the employment termination agreement made with former CEO Birna Einarsdóttir. The chairperson of the Íslandsbanki board says the board has not discussed Bjarkey’s demand, but that it will do so. The bank has called a shareholders’ meeting for July 28.

Íslandsbanki CEO Jón Guðni Ómarsson stated that those in charge of the private share offering had now shouldered responsibility by leaving their positions and that there would be no further resignations or layoffs of executives at the bank for the time being.

Speaker’s Committee Must Publish Contested Report

Alþingi parliament of Iceland

A report related to the sale of public assets that has been shrouded in secrecy will now likely be made public, thanks to a two-year-old legal opinion, RÚV reports. The Speaker’s Committee of Parliament is required to hand over a report made by the Auditor General in 2018 on the dealings of Lindarhvoll ehf., a private limited company created to sell public assets acquired by the state in the aftermath of the banking collapse. An ongoing lawsuit asserts Lindarhvoll did not get the best possible price for the public assets it sold.

Report’s author calls for its publication

The legal opinion in question was carried out for the Speaker’s Committee over two years ago by law firm Magna but was only made public last week. According to RÚV, the committee decided to make the 2018 report public in April of last year, but Speaker of Parliament and Independence Party MP Birgir Ármannsson has stood in the way. Birgir asserts that the articles pertaining to freedom of information do not apply to the report as it is an internal document that was never meant for the public.

The report’s author, then-Auditor General Sigurður Þórðarson, has called for it to be made public. Opposition MPs have also called for its publication.

Committee members never received copy of report

Lindarhvoll was founded by the Finance Ministry in 2016 to handle assets acquired by the government after Iceland’s banking collapse, worth up to ISK 100 billion [$708 million, €664 million]. In 2018, when the assets had been sold, Lindarhvoll was dissolved and Sigurður’s report was submitted to the Speaker’s Committee. Nevertheless, committee members never received a copy of the report and were only permitted to look at it in a closed room, without their phones or any writing implements.

Lawsuit against Lindarhvoll ongoing

In 2020, Frigus II ehf. sued Lindarhvoll and the Icelandic state for ISK 651 million [$4.6 million, €4.3 million] due to the sale of Klakka ehf. (previous called Exista) to another company. According to Frigus, the company’s purchase offer for Klakka ehf. was rejected in favour of an offer that did not fulfil the conditions of the sale. If that assertion proves true, it would mean Lindarhvoll did not necessarily act in the public’s best interest in the sale of public assets. Other internal documents from Lindarhvoll have been handed over to Frigus II in the ongoing case.

The ties between Frigus and Klakka go beyond the sale that is the lawsuit’s focus. Frigus II is owned by Sigurður Valtýsson, who is the former CEO of Exista, as well as brothers Ágúst and Lýður Guðmundsson, who had a 45% stake in Exista before the banking collapse through their company Bakkavör.

Whether and when the 2018 report on Lindarhvoll will be published has yet to be determined.