Íslandsbanki Sale “Did Not Meet Expectations” Of Government, ISFI To Be Shut Down

A statement from the government has been released regarding the sale of the 22.5% share in Íslandsbanki, wherein they say amongst other things that they will call upon Parliament to dissolve Icelandic State Financial Investments (ISFI). The government believes the sale has not gone as planned, and the entire process needs to be re-thought.

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Íslandsbanki has been owned by the Icelandic treasury since the wake of the 2008 financial crash, but Minister of Finance Bjarni Benediktsson has been very keen on selling shares of the bank to private interests again. The most recent sale has caused considerable criticism, not least of all when it was revealed that one of the share buyers in the closed and discounted sale of shares was none other than Bjarni’s father, as well as Samherji CEO Þorsteinn Már Baldvinsson, who used to run Íslandsbanki’s previous incarnation, Glitnir. It later came to light that many of those who bought shares immediately sold them off to other parties.

Criticism of the sale has come from every level of society, from Minister of Culture and Business Affairs Lilja Alfreðsdóttir–a key minister for the Progressive Party, which is one of the parties in the ruling coalition–down to concerted protests in front of Parliament over the Easter holiday.

“Did not meet expectations”

Follow this, the government issued a statement to the press just moments ago announcing a significant about-face in the sale of shares in Íslandsbanki.

“It is clear that the process of the sale did not meet all the expectations of the government, including transparency and clear information,” the statement reads in part. “Questions, indications and criticisms have been raised that are necessary to inform the public of.”

The statement says that both The Icelandic National Audit Office (INAO) and the Central Bank have been investigating the bank sale, and the results so far have indicated that “it is clear that there is a need to review the legal and institutional framework.”

ISFI to close, sale to be postponed

“The government has therefore decided to submit to Parliament that Icelandic State Financial Investments be shut down, and that a new framework be adopted to oversee government ownership shares of financial institutions,” the statement continues. “[The new framework] will emphasise a greater participation of Parliament, and a stronger position that will ensure transparency, equality, and Parliament’s democratic access to information for the public. A bill on this matter will be submitted to Parliament as soon as possible.”

Furthermore, “there will be no further sales of government shares in Íslandsbanki at this time. When new legislation is passed, a decision will then be taken in Parliament on the possible sale of government shares in Íslandsbanki.”

As such, the future sales of more shares in Íslandsbanki is unclear. Of interesting note, however, is the government pointing out that “a great rise in value of financial companies owned by the government in recent years has improved the position of the treasury to do better and invest in the future.”

The statement concludes: “The government has always used as a guiding light that the earnings of state shares in financial companies and their sale serve the public interest. This includes using them to directly benefit the public and improve the position of the treasury to provide important services.”