Ten Percent Of Icelanders Buy A Bank

We’re buying bank shares like it’s 2007

The Icelandic state just sold its remaining shares in Icelandic bank Íslandsbanki, a bank it was forced to take over in 2008 when Iceland’s economy collapsed.

In 2021 and 2022, Katrín Jakobsdóttir’s government sold 35 percent and 22.5 percent of its shares, respectively. The latter sale was contested after the publication of the list of buyers, which included the father of former financial minister Bjarni Benediktsson, Íslandsbanki employees and their partners, and criminals sentenced for financial wrongdoings. Íslandsbanki paid a fine of 1.2 billion ISK — the highest in Icelandic history. The scandal led Íslandsbanki CEO Birna Einarsdóttir and Bjarni Benediktsson to resign their respective positions.

This latest drive to sell off the state’s shares did fare better than the 2022 attempt, with much public discourse about how safe investment in Icelandic bank shares could be. In addition, perception is helped by a generally favourable public disposition towards how the bank sale was to be conducted.
“The shares were sold to the public with a six percent discount.”

The sale of the remaining 45 percent shares in the bank started Tuesday, May 13 and ended on May 15. Originally the state had planned to sell 20 percent of the total shares to the public. However, 31,274 private investors, or 10.3% of all Icelanders above 18 years of age, made a bid for the shares for a total of 88.2 billion ISK. This means that each bidder bid three million ISK on average. This made it possible for the Minister of Finance Daði Már Kristófersson to subsequently decide that almost all of the 45 percent of shares would be sold to the bidders in question, leaving a meagre 2.4 billion ISK worth of shares for professional investors.

It should be noted that the shares were sold to the public with a six percent discount, and no time limits imposed with regards to reselling the shares, making it likely that both long-term and short-term investors saw an opportunity in the sale. The sale has also raised questions about more cooperation between the biggest banks in Iceland, even mergers, which was not considered possible while the Icelandic state was still the biggest shareholder in Íslandsbanki.

It remains to be seen whether investments by the public in Icelandic banks prove to be more advantageous this time around than 20 years ago.