Hundreds Protest Sale of Íslandsbanki Shares

Several hundred people gathered in Austurvöllur square on Friday to protest the government’s recent sale of shares in Íslandsbanki bank, and the way the sales were handled. Pirate Party MP Halldóra Mogensen was among the speakers at the protests and called on Minister of Finance Bjarni Benediktsson to resign. RÚV reported first.

The protest was co-organized by ASÍ-UNG, the youth branch of the Icelandic Confederation of Labour, which works to ensure that the interest of young people remain priorities on the trade union association’s agenda. They were joined by activist group Jæja, the Young Pirates, the Young Social Democrats, and the Young Socialists.

See Also: Many Íslandsbanki Buyers Have Already Sold for Profit

Íslandsbanki was fully owned by the government until last year, when it sold a 35% stake in the bank, something that had been on the government agenda for years. While that first offering was open to the public, last month’s offering was solely open to professional investors. The second sale was successful, reducing the government’s stake in the bank from 65% to 42.5%. The government has been criticised for the latter share offering’s lack of transparency, and for the 5% discount buyers received on the shares’ market value.

Of the 207 investors who purchased shares in Íslandsbanki bank in a private share offering last month, 132 have already sold some or all of their stake in the formerly state-owned bank, Kjarninn reports. The sellers have made a cumulative profit of ISK 1.6-2.1 billion [$12.3-16.2 million; €11.4-15 million]. Finance Minister Bjarni Benediktsson had previously stated that the aim of the share offering was to acquire long-term investors in the bank.

Screenshot, Vísir

See Also: Central Bank of Iceland Investigating Íslandsbanki Sale

The Central Bank of Iceland confirmed to Stundin that it has opened an investigation into the government’s March 22 sale of a 22.5% stake in Íslandsbanki bank. However, what specific matters about the sale are under investigation is not clear.

‘Out with the oligarchs, out with corruption’

Vísir reports that Professor Þorvaldur Gylfason, chair of the VR trade union Ragnar Þór Ingólfsson, People’s Party MP Ásta Lóa Þórsdóttir, and Socialist MP Gunnar Smári Egilsson were also speakers at the protest.

“We’re protesting the sale of Íslandsbanki and how it was handled. Who was allowed to buy shares,” said Gunnar Smári.

“We are protesting a corrupt government that is incompetent and tiresome,” said Atli Gíslason, chair of the Young Socialists. His colleague Kristbjörg Eva Andersen Ramos added:

“Out with the oligarchs, out with corruption. We want a just society.”

Many Íslandsbanki Buyers Have Already Sold for Profit

Minister of Finance Bjarni Benediktsson

Of the 207 investors who purchased shares in Íslandsbanki bank in a private share offering last month, 132 have already sold some or all of their stake in the formerly state-owned bank, Kjarninn reports. The sellers have made a cumulative profit of ISK 1.6-2.1 billion [$12.3-16.2 million; €11.4-15 million]. Finance Minister Bjarni Benediktsson had previously stated that the aim of the share offering was to acquire long-term investors in the bank.

Íslandsbanki was fully owned by the government until last year, when it sold a 35% stake in the bank, something that had been on the government agenda for years. While that first offering was open to the public, last month’s offering was solely open to professional investors. The second sale was successful, reducing the government’s stake in the bank from 65% to 42.5%. The government has been criticised for the latter share offering’s lack of transparency, and for the 5% discount buyers received on the shares’ market value.

Foreign purchasers sold within days

Notably, six foreign investment funds that were invited to take part in the offering sold all of their purchased shares in the bank within three days of listing, at a significant profit. These funds also participated in last year’s public share offering, meaning they have turned quick profits on the sale of the bank’s shares for a second time. Those funds include Silver Point Capital, Fiera Capital, Lansdowne Partners, and Key Square Partners.

According to the shareholder lists Kjarninn has in its possession, most of the “smaller” investors that took part in last month’s share offering have already sold their shares in the Íslandsbanki. In total, 59 investors were permitted to buy shares for under ISK 30 million and another 79 for under ISK 50 million. Among the purchasers who are no longer listed as shareholders of Íslandsbanki are employees and owners of the consulting company that was hired to manage the stock offering.

Some larger investors who took part in the offering, who bought shares worth several hundred million ISK, have also sold their stake in the bank. This includes Steinn Holding Company, owned by Samherji seafood company CEO Þorsteinn Már Baldvinsson and his ex-wife.

Finance Minister’s father still a shareholder

One particularly controversial buyer in the offering was the company Hafsilfur, owned by Benedikt Sveinsson, the father of Finance Minister Bjarni Benediktsson. The Finance Minister is responsible for the sale of Íslandsbanki, according to law. Hafsilfur is still listed as a shareholder in Íslandsbanki, and its shares have increased in value by around ISK 5 million since the share offering.

Pension funds and other institutional investors have bought up a large part of the shares that smaller investors have sold at profit since the share offering. It was previously reported that pension funds requested to were allotted fewer shares in the offering than they had requested.

The Central Bank of Iceland has stated it is investigating the sale.

Legal Obstacles to Revealing Íslandsbanki Buyers

Icelandic State Financial Investments (ISFI) has stated it is not able to publish the data on who purchased shares in Íslandsbanki during last month’s stock offering. The government has been criticised for the share offering’s lack of transparency, and for the 5% discount buyers received on the shares’ market value. Prime Minister Katrín Jakobsdóttir has previously stated that if the ISFI is not able to publish information then the Icelandic Parliament should amend legislation to make it possible.

Íslandsbanki was fully owned by the government until last year, when it sold a 35% stake in the bank, something that had been on the government agenda for years. While that first offering was open to the public, last month’s offering was solely open to professional investors. The second sale was successful, reducing the government’s stake in the bank from 65% to 42.5%.

Buyers’ identity likely falls under bank secrecy

Minister of Finance Bjarni Benediktsson stated yesterday that the information on who the buyers were would be published, if permitted by law. In an interview this morning, Chairman of ISFI’s board Lárus Blöndal stated that ISFI does not consider itself able to publish the data, as it is likely the buyers’ identity falls under bank secrecy regulations. He added that it is virtually unheard of for buyers to be publicly identified when such offerings are conducted abroad.

A total of 209 parties bought shares in the March offering. The Finance Minister has previously stated that Icelandic pension funds were the main purchasers. Lárus stated that all of the buyers could be legally classified as professional investors.

Prime Minister suggests legal amendments

Prime Minister Katrín Jakobsdóttir has argued that when state property is sold, the Icelandic public is entitled to know who the buyers are. During Alþingi’s question period on Monday, she stated that “If any technical factors cause ISFI to consider ifself unable to publish that information, I believe it is right for Alþingi to make appropriate changes to the legal framework so that it can be published, anything else is unacceptable.”

Read more about the sale of state-owned banks in Iceland.

Up to 35% of State-Owned Íslandsbanki For Sale

Icelandic state-owned bank Íslandsbanki launched its share offering at 9.00am this morning. The bank will sell up to 35% of its share capital in the initiative, which stands until June 15, following which all its shares will be listed on Nasdaq Iceland (the Icelandic stock exchange). Two foreign investment companies and two local pension funds are said to be the cornerstone investors in the initiative. RÚV reported first.

Government Moves to Reduce State Ownership

Of Iceland’s three largest banks, just one (Arion Bank) is privately owned. The other two are in state ownership (Íslandsbanki, currently at 100% and Landsbankinn at 98.2% state ownership). Iceland’s current governing coalition prioritised reducing state ownership of financial institutions in the government agreement made at the beginning of its term. A sale of part of Íslandsbanki was discussed earlier in the term but side-lined during the pandemic as conditions for the sale were not considered favourable. Government officials have argued that the sale could free up funds for investment in essential infrastructure.

Read More: Sale of State-Owned Banks

A notice on Íslandsbanki’s website states that the bank’s estimated market value following the offering is ISK 150 billion ($1.24 billion/€1 billion). The aim is to sell over 636 million shares, the suggested retail price of which is between ISK 71 and 79 per share. The offering will take place both through a public offering of shares to institutional investors and retail investors in Iceland and through a private placement to specific institutional investors in various other jurisdictions.

Four Key Investors

Foreign investment funds have already committed to buying in the bank, according to Íslandsbanki. Funds managed by Capital World Investors have committed to purchasing nearly 77 million shares while RWC Asset Management LLP has committed to purchasing nearly 31 million shares. Icelandic pension funds Gildi-lífeyrissjóður and Lífeyrissjóður verzlunarmanna have also committed to buying more than 46 million shares each. These four parties are said to be the cornerstone investors in the offering.