Íslandsbanki Creditors Want To Sell Bank To Icelandic Government

Creditors have submitted a request to sell its shares in Íslandsbanki’s holding company to the Icelandic government. The proposal is already proving to be very divisive.

Íslandsbanki announced yesterday that main changes from the already proposed stability contribution is that “Glitnir will relinquish to the authorities all of its shares in ISB Holding ehf., which owns 95% of shares in Íslandsbanki hf.”

The Ministry of Finance explained in greater detail that “Glitnir creditors propose that Glitnir’s entire holding in Íslandsbanki be transferred to the State, which would then become full owner of the bank.” The Ministry adds furthermore:

“The Task Force for Capital Account Liberalisation is of the view that the measures described in the above-mentioned letter conform to the stability conditions as formulated and that, assuming the measures are carried out, the assessment of the Task Force is that the conditions for an exemption from the capital controls have been met.”

This would put two of Iceland’s banks under the ownership of the government, RÚV reports, and Guðlaugur Þór Þórðarson, the vice chairperson of the Budget Committee, told reporters he was not especially happy about the government owning the bank, but that he believes it may be a necessary step towards lifting capital controls.

Minister of Finance Bjarni Benediktsson is more positive about the idea, saying that it will likely bring more foreign capital into the country. Former Minister of Finance and current Left-Green MP Steingrímur J. Sigfússon was not quite as optimistic, telling listeners of radio station Rás 2 this morning that “we shouldn’t lose the banks to the hands of fools,” saying that Iceland should rather focus on “separating commercial banking from investment banking.”