From Iceland — Two Banks Instead of Three

Two Banks Instead of Three

Published March 24, 2009

Reorganization of the Icelandic banking system will in all likelihood result in two banks instead of three.
The move is expected to take place over the next week to months, with discussions ongoing at Finance and Business Ministry and the Central Bank.
According to Morgunblaðið, it is believed that Íslandsbanki and NBI, which was formed for the old Landsbanki, will be merged. At the same time, the old Kaupþing, with Deutsche Bank as the largest owning partner, will take over the new Kaupþing, or at least a majority position of it.
The motivation behind the idea is to allow the banking system to operate with greater speed and flexibility in addressing the needs of clients at home and abroad.
The banking system has lately been going through a tremendous overhaul, with the Icelandic government formally taking over saving banks SPRON and Sparisjóðurinn after the declared bankruptcy of Baugur Group – arguable Iceland’s largest corporate entity, to whom SPRON and Sparisjóðurinn had lent considerable sums of money. The government takeover could cost as much as an estimated 180 billion ISK.

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