2008–2011 Icelandic financial crisis

Default of three major Icelandic banks March 2021 260px|thumb|Prime Minister of Iceland Geir H. Haarde speaks with reporters on 27 October 2008. A major financial crisis took place in Iceland between 2008 and 2010. It involved the default of all three of the country's major privately owned commercial banks in late 2008, following problems in refinancing their short-term debt and a run on deposits in the Netherlands and the United Kingdom. Relative to the size of its economy, Iceland's systemic banking collapse was the largest of any country in economic history.http://www.economist.com/world/europe/displaystory.cfm?story_id=12762027 Cracks in the crust Associated Press The Economist 11 December 2008 4 February 2013 The crisis led to a severe recession and the 2009 Icelandic financial crisis protests.http://www.imf.org/external/pubs/ft/scr/2015/cr1573.pdf Iceland. Selected issues. International Monetary Fund March 2015 9 May 2015Önnudóttir Eva H. Electoral Politics in Crisis After the Great Recession: Politics Transformed? Helgason Agnar Freyr Hardarson Ólafur Th Thórisdóttir Hulda 2021 Routledge 10.4324/9780429436345 978-1-138-34938-4 239677572 en In the years preceding the crisis, three Icelandic banks, Kaupthing, Landsbanki and Glitnir, multiplied in size. This expansion was driven by ready access to credit in international financial markets, in particular money markets. As the 2008 financial crisis unfolded, investors perceived the Icelandic banks to be increasingly risky. Trust in the banks gradually faded, leading to a sharp depreciation of the Icelandic króna in 2008 and increased difficulties for the banks in rolling over their short-term debt. At the end of the second quarter of 2008, Iceland's external debt was 9.553 trillion Icelandic krónur (€50 billion), more than 7 times the GDP of Iceland in 2007. http://www.sedlabanki.is/?pageid=552&itemid=a55be3a0-9943-484e-a8de-46d23f17ba25&nextday=4&nextmonth=12 Central Bank of Iceland 4 September 2008 External debt 11 October 2008 https://web.archive.org/web/20081021220411/http://www.sedlabanki.is/?pageid=552&itemid=a55be3a0-9943-484e-a8de-46d23f17ba25&nextday=4&nextmonth=12 21 October 2008 dead http://www.statice.is/?PageID=444&newsid=2950&highlight=Gross%20Domestic%20Product%202007 Statistics Iceland 11 September 2008 Gross domestic product 2007– Revision 13 October 2008 The assets of the three banks totaled 14.437 trillion krónur at the end of the second quarter 2008,Glitnir ISK 3,863 bn http://www.glitnirbank.com/servlet/file/2quarter_2008.pdf?ITEM_ENT_ID=11447&COLLSPEC_ENT_ID=156 Interim Financial Statement 2008Q2 Glitnir https://web.archive.org/web/20090205091126/http://www.glitnirbank.com/servlet/file/2quarter_2008.pdf?ITEM_ENT_ID=11447&COLLSPEC_ENT_ID=156 5 February 2009 dead 16 October 2008 ; Landsbanki ISK 3,970 bn http://www.landsbanki.is/Uploads/Documents/ArsskyrslurOgUppgjor/landsbanki_consolidated_interim_financial_statements_30-jun-2008.pdf Condensed Consolidated Interim Financial Statements:1 January - 30 June 2008 Landsbanki 7 November 2019; Kaupthing ISK 6,604 bn http://www.kaupthing.com/lisalib/getfile.aspx?itemid=17006 Interim Financial Statement 2008Q2 Kaupthing https://web.archive.org/web/20081114164038/http://www.kaupthing.com/lisalib/getfile.aspx?itemid=17006 14 November 2008 14 November 2008 dead. The borrowings of the three banks at the same date were: Glitnir ISK 2,242 bn; Landsbanki ISK 1,220 bn; Kaupthing ISK 2,883 bn. equal to more than 11 times the national GDP. Due to the huge size of the Icelandic financial system in comparison with the Icelandic economy, the Central Bank of Iceland was unable to act as a lender of last resort during the crisis, further aggravating the mistrust in the banking system. On 29 September 2008, it was announced that Glitnir would be nationalised. However, subsequent efforts to restore faith in the banking system failed. On 6 October, the Icelandic legislature instituted an emergency law which enabled the Financial Supervisory Authority (FME) to take control over financial institutions and made domestic deposits in the banks priority claims. In the following days, new banks were founded to take over the domestic operations of Kaupthing, Landsbanki and Glitnir. The old banks were put into receivership and liquidation, resulting in losses for their shareholders and foreign creditors. Outside Iceland, more than half a million depositors lost access to their accounts in foreign branches of Icelandic banks. This led to the 2008–2013 Icesave dispute, which ended with an EFTA Court ruling that Iceland was not obliged to repay Dutch and British depositors minimum deposit guarantees. In an effort to stabilize the situation, the Icelandic government stated that all domestic deposits in Icelandic banks would be guaranteed, imposed strict capital controls to stabilize the value of the Icelandic króna, and secured a US$5.1bn sovereign debt package from the IMF and the Nordic countries in order to finance a budget deficit and the restoration of the banking system. The international bailout support programme led by IMF officially ended on 31 August 2011, while the capital controls which were imposed in November 2008 were lifted on 14 March 2017.https://www.nytimes.com/2017/03/14/business/iceland-economy-finance-capital-controls.html?_r=0 Iceland, Symbol of Financial Crisis, Finally Lifts Capital Controls The New York Times 14 March 2017 7 November 2019 Alderman Liz The financial crisis had a serious negative impact on the Icelandic economy. The national currency fell sharply in value, foreign currency transactions were virtually suspended for weeks, and the market capitalisation of the Icelandic stock exchange fell by more than 90%. Iceland underwent a severe economic depression. Its gross domestic product dropped by 10% in real terms between the third quarter of 2007 and the third quarter of 2010. Seasonally adjusted quarterly volume growth in GDP 1980–2014 http://www.statice.is/?PageID=1267&src=https://rannsokn.hagstofa.is/pxen/Dialog/varval.asp?ma=THJ01703%26ti=Seasonally+adjusted+quarterly+volume+growth+in+GDP+1980-2014%26path=../Database/thjodhagsreikningar/landsframleidsla_althj/%26lang=1%26units=Percent Statistics Iceland 9 May 2015 A new era with positive GDP growth started in 2011, and has helped foster a gradually declining trend for the unemployment rate. The government budget deficit has declined from 9.7% of GDP in 2009 and 2010 to 0.2% of GDP in 2014;Hagstofa Íslands. Helstu hagstærðir hins opinbera 1980–2014 http://hagstofa.is/?PageID=2602&src=https://rannsokn.hagstofa.is/pxis/Dialog/varval.asp?ma=THJ00511%26ti=Helstu+hagst%E6r%F0ir+hins+opinbera+1980%2D2014++++++++++%26path=../Database/thjodhagsreikningar/fjarmal_opinber/%26lang=3%26units=Millj%F3nir%20Kr%F3na/v%EDsitala/hluthlut Statistics Iceland is 25 May 2015 the central government gross debt-to-GDP ratio was expected to decline to less than 60% in 2018 from a maximum of 85% in 2011.Stefna í lánamálum ríkisins 2015–2018. https://www.fjarmalaraduneyti.is/media/frettatengt2015/Stefna_i_lanamalum_rikisins_2015-2018.pdf Ministry of Finance (Iceland) is 25 May 2015 Development Currency thumb|right|300px|The decline of the Icelandic króna against the euro, shown from September to November 2008. The lower solid line (in brown) shows the offshore rate as quoted by the European Central Bank; the higher solid line (in blue) shows the onshore rate as quoted by the Central Bank of Iceland. The two solid lines diverge on 6 October, after Glitnir had defaulted on some wholesale depositors in the UK, although there had been unusually large differences (up to 5%) during the previous week. The lower dashed line (in black) shows the average rate from January to August 2008 (113.31 krónur to the euro, already down from 91.2 krónur to the euro on 31 December 2007), while the upper dashed line shows the long term average from 1999 to 2007 (83.423 krónur to the euro). The Icelandic króna declined more than 35% against the euro from January to September 2008.Central Bank of Iceland Exchange rate http://www.sedlabanki.is/Default.aspx?PageID=183 15 October 2008 https://web.archive.org/web/20081012075147/http://www.sedlabanki.is/Default.aspx?PageID=183 12 October 2008 dead Inflation of consumer prices was running at 14%, Central Bank of Iceland http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6451 Economic Indicators 11 October 2008 September 2008 and Iceland's interest rates had been raised to 15.5% to deal with the high inflation.The policy rate was raised from 13.75 percent to 15 percent on 25 March 2008, and to 15.5 percent on 10 April 2008: Central Bank of Iceland http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6271 Monetary Bulletin Q2 2008 11 October 2008 22 November 2020 https://web.archive.org/web/20201122221035/https://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6271 dead On the night of Wednesday, 8 October 2008, the Central Bank of Iceland abandoned its attempt to peg the Icelandic króna at 131 krónur to the euro after trying to set this peg on 6 October. http://www.sedlabanki.is/?PageID=287&NewsID=1881 Foreign exchange market Central Bank of Iceland 8 October 2008 13 October 2008 https://web.archive.org/web/20081014060946/http://www.sedlabanki.is/?PageID=287&NewsID=1881 14 October 2008 dead By 9 October, the Icelandic króna was trading at 340 to the euro when trading in the currency collapsed due to the FME's takeover of the last major Icelandic bank, and thus the loss of all króna trade 'clearing houses'.https://www.nytimes.com/2008/10/09/business/worldbusiness/09iht-icebank.4.16827672.html Iceland is all but officially bankrupt Pfanner Eric The New York Times 9 October 2008 7 November 2019 The next day, the central bank introduced restrictions on the purchase of foreign currency within Iceland. Temporary modifications in currency outflow http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6493 Central Bank of Iceland 10 October 2008 29 October 2008 From 9 October to 5 November, the European Central Bank quoted a reference rate of 305 krónur to the euro. Euro foreign exchange reference rates http://www.ecb.int/stats/exchange/eurofxref/html/index.en.html European Central Bank 1 December 2008 https://web.archive.org/web/20081201083156/http://www.ecb.int/stats/exchange/eurofxref/html/index.en.html 1 December 2008 live +Iceland's account in 2007 and 2008:Exports (imports) of goodsper month in millions of euros 20072008Sept.204.4(316.3)325.0(323.5)Oct.274.6(370.7)310.8(239.0)Nov.346.4(373.3)250.6(236.7)Goods excluding ships and aircraft. Data from Statistics Iceland and the Central Bank of Iceland: conversion from ISK at Central Bank of Iceland monthly average exchange rates.For comparison, monthly average exports (imports) of services were €139.3M (€185.4M) in Q2/2007; €125.6M (€151.9M) in Q2/2008. The Central Bank of Iceland set up a temporary system of daily currency auctions on 15 October to facilitate international trade. The value of the króna is determined by supply and demand in these auctions.Central Bank of Iceland 15 October 2008 http://www.sedlabanki.is/?PageID=287&NewsID=1913 Temporary foreign exchange arrangements 15 October 2008 https://web.archive.org/web/20090131215904/http://www.sedlabanki.is/?PageID=287&NewsID=1913 31 January 2009 dead The first auction sold €25 million at a rate of 150 krónur to the euro.Central Bank of Iceland Currency auction http://www.sedlabanki.is/?PageID=921 15 October 2008 https://web.archive.org/web/20090131215914/http://www.sedlabanki.is/?PageID=921 31 January 2009 dead Commercial króna trading outside Iceland restarted on 28 October, at an exchange rate of 240 krónur to the euro, after Icelandic interest rates had been raised to 18%. Iceland raises rates to 18pc as part of IMF's £1bn rescue https://www.telegraph.co.uk/finance/financetopics/financialcrisis/3273300/Iceland-raises-rates-to-18pc-as-part-of-IMFs-1bn-rescue.html The Daily Telegraph London Mason, Rowena 28 October 2008 28 October 2008 https://web.archive.org/web/20081101143200/http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3273300/Iceland-raises-rates-to-18pc-as-part-of-IMFs-1bn-rescue.html 1 November 2008 dead The foreign exchange reserves of the Central Bank of Iceland fell by US$289 million during October 2008.Central Bank of Iceland 4 November 2008 http://www.sedlabanki.is/?pageid=552&itemid=6ddfb9f5-9d76-426b-b4f0-7b29d62726e4&nextday=4&nextmonth=12 Balance sheet of the Central Bank 27 November 2008 http://wayback.vefsafn.is/wayback/20081117190258/www.sedlabanki.is/?pageid=552&itemid=6ddfb9f5-9d76-426b-b4f0-7b29d62726e4&nextday=4&nextmonth=12 17 November 2008 dead During November, the real exchange rate (discounting inflation) of the Icelandic króna, as quoted by the Central Bank of Iceland, was roughly one-third lower than the average rate from 1980 to 2008, and 20% lower than the historical lows during the same period.Central Bank of Iceland Monetary policy statement of the Board of Governors of the Central Bank of Iceland: Of vital importance to stabilise the foreign exchange market and strengthen the króna http://www.sedlabanki.is/?PageID=287&NewsID=1983 28 November 2008 1 December 2008 https://web.archive.org/web/20081220063647/http://www.sedlabanki.is/?PageID=287&NewsID=1983 20 December 2008 dead The external rate as quoted by the European Central Bank was lower still. On the last trading day of the month, 28 November, the Central Bank of Iceland was quoting 182.5 krónur to the euro, while the European Central Bank was quoting 280 krónur to the euro. On 28 November, the Central Bank of Iceland and the Minister for Business Affairs agreed on a new set of currency regulations,http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6631 Rules on foreign exchange No. 1082 Central Bank of Iceland 28 November 2008 20 November 2019 replacing the central bank's restrictions imposed early on in the crisis.Central Bank of Iceland 28 November 2008 New foreign exchange regulation http://www.sedlabanki.is/?PageID=287&NewsID=1980 4 December 2008 https://web.archive.org/web/20081220063641/http://www.sedlabanki.is/?PageID=287&NewsID=1980 20 December 2008 dead Movements of capital to and from Iceland were banned without a license from the central bank.Central Bank of Iceland 30 November 2008 Questions and answers about foreign exchange matters http://www.sedlabanki.is/?PageID=287&NewsID=1985 4 December 2008 https://web.archive.org/web/20081220063652/http://www.sedlabanki.is/?PageID=287&NewsID=1985 20 December 2008 dead It was estimated at this time that foreign investors held some €2.9 billion in króna-denominated securities, popularly known as "glacier bonds".Floating kronur and flying eggs http://www.icenews.is/index.php/2008/12/03/floating-kronur-and-flying-eggs/ 3 December 2008 IceNews Alëx 20 November 2019 27 October 2012 https://web.archive.org/web/20121027135131/http://www.icenews.is/index.php/2008/12/03/floating-kronur-and-flying-eggs/ dead The foreign exchange rules also oblige Icelandic residents to deposit any new foreign currency they receive with an Icelandic bank. There is anecdotal evidence that some Icelandic exporters had been operating an informal offshore foreign exchange market, Grace under Fire... and Ice http://www.icelandreview.com/icelandreview/daily_life/?cat_id=16571&ew_0_a_id=315319 13 November 2008 Iceland Review Moody Jonas dead https://web.archive.org/web/20090131134155/http://www.icelandreview.com/icelandreview/daily_life/?cat_id=16571&ew_0_a_id=315319 31 January 2009 trading pounds and euros for krónur outside the control of any regulator and starving the onshore market of foreign currency. Hence the Central Bank had to sell €124 million of currency reserves in November 2008 to make up the difference, compared with an estimated trade surplus of €13.9 million. Statistics Iceland External trade, preliminary figures for November 2008 http://www.statice.is/Pages/444?NewsID=2895 3 December 2008 5 December 2008 https://web.archive.org/web/20130521220650/http://www.statice.is/Pages/444?NewsID=2895 21 May 2013 dead The last currency auction was held on 3 December. The domestic interbank foreign exchange market reopened the following day with three market makers, all of them government-owned. Interbank foreign exchange market http://www.sedlabanki.is/?PageID=287&NewsID=1988 Central Bank of Iceland 3 December 2008 4 December 2008 https://web.archive.org/web/20081220064051/http://www.sedlabanki.is/?PageID=287&NewsID=1988 20 December 2008 dead On the first two days of domestic trading, the króna climbed to 153.3 to the euro, up 22% against the last currency auction rate.November 2019 In January 2009, the exchange rate of Icelandic króna against Euro seemed to be more stabilized compared with the situation in October 2008, with the lowest rate at 177.5 krónur per EUR on 1, 3 and 4 January 2009, and the highest at 146.8 on 30 January 2009. Iceland interest rates unchanged BBC News 29 January 2009 8 March 2009 https://news.bbc.co.uk/1/hi/business/7857743.stm https://web.archive.org/web/20090201145034/http://news.bbc.co.uk/2/hi/business/7857743.stm 1 February 2009 live In the meantime, however, Iceland's 12-month inflation in January 2009 climbed to a record high of 18.6%.Iceland's inflation hits record 18.6 percent in Jan FreshPlaza 8 March 2009 http://www.freshplaza.com/news_detail.asp?id=37630 https://web.archive.org/web/20120225023611/http://www.freshplaza.com/news_detail.asp?id=37630 25 February 2012 dead Banks In September 2008, internal documents from Kaupthing, the largest bank in Iceland, were leaked to WikiLeaks.Moody Jonas Report Questions Lending of Iceland Bank Time 10 August 2009 On 29 September 2008, a plan was announced for the bank Glitnir to be nationalised by the Icelandic government with the purchase of a 75% stake for €600 million.http://www.glitnir.is/english/about-glitnir/news/detail/item14983/The_government_of_Iceland_acquires_75_percent_share_in_Glitnir_Bank/ Glitnir The government of Iceland acquires 75 percent share in Glitnir Bank 29 September 2008 30 September 2008 https://web.archive.org/web/20081002023742/http://www.glitnir.is/english/about-glitnir/news/detail/item14983/The_government_of_Iceland_acquires_75_percent_share_in_Glitnir_Bank/ 2 October 2008 deadhttps://eng.forsaetisraduneyti.is/news-and-articles/nr/3016 Prime Minister's Office The Government of Iceland provides Glitnir with new equity 29 September 2008 30 September 2008 The government stated that it did not intend to hold ownership of the bank for a long period, and that the bank was expected to carry on operating as normal. According to the government, the bank "would have ceased to exist" within a few weeks if there had not been intervention.https://news.bbc.co.uk/2/hi/business/7641753.stm Iceland nationalises Glitnir bank BBC News 29 September 2008 30 September 2008 https://web.archive.org/web/20081221113845/http://news.bbc.co.uk/1/hi/business/7641753.stm 21 December 2008 live It later turned out that Glitnir had US$750 million of debt due to mature on 15 October. Sherwood, Joel The Wall Street Journal Iceland Seen Turning to IMF https://www.wsj.com/articles/SB122425739356744673?mod=sphere_ts&mod=sphere_wd 17 October 2008 18 October 2008 However, the nationalization of Glitnir never went through, as it was placed in receivership by the FME before the initial plan of the Icelandic government to purchase a 75% stake had been approved by shareholders. The announced nationalisation of Glitnir came just as the United Kingdom government was forced to nationalise Bradford & Bingley and to sell its retail operations and branch network to Grupo Santander. Over the weekend of 4–5 October, British newspapers carried many articles detailing the nationalisation of Glitnir and the high leverage of Iceland's other banks.The Sunday Times London Goodman, Matthew http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4881378.ece https://web.archive.org/web/20090701113726/http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4881378.ece dead 1 July 2009 An icy blast cuts deep into Iceland 5 October 2008 16 October 2008 Influential BBC business editor Robert Peston published an opinion piece on the banks, stating that debt insurance for Kaupthing required a premium of £625,000 to guarantee the return of £1 million: "the worst case of financial BO I've encountered in some time" was his graphic description.BBC News Peston, Robert Robert Peston https://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/creditors_call_time_on_iceland.html Markets call time on Iceland 4 October 2008 16 October 2008 https://web.archive.org/web/20081007065042/http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/creditors_call_time_on_iceland.html 7 October 2008 live The Guardian said "Iceland is on the brink of collapse. Inflation and interest rates are raging upwards. The krona, Iceland's currency, is in freefall."The Guardian London McVeigh, Tracy https://www.theguardian.com/world/2008/oct/05/iceland.creditcrunch The party's over for Iceland, the island that tried to buy the world 5 October 2008 16 October 2008 https://web.archive.org/web/20081016054307/http://www.guardian.co.uk/world/2008/oct/05/iceland.creditcrunch 16 October 2008 live These articles spooked investors discussing Icesave (the brand name of Landsbanki in the UK and the Netherlands) in online forums and many started moving their savings out of the Internet bank. How Long Can Icelandic Banks Last?, Will all Icelanders go bankrupt? https://www.housepricecrash.co.uk/forum/index.php?showtopic=89949 HousePriceCrash Forums 4–5 October 2008 16 October 2008 Problems with access to the site hinted at a run on savings. On 6 October, a number of private interbank credit facilities to Icelandic banks were shut down. Address to the Nation by H.E. Geir H. Haarde, Prime Minister of Iceland https://eng.forsaetisraduneyti.is/news-and-articles/nr/3035 6 October 2008 17 October 2008 Prime Minister's Office Prime Minister Geir Haarde addressed the nation in a speech that became infamous for its portentous closing words: 'God bless Iceland'. He announced a package of new regulatory measures which were to be put to the Althing, Iceland's parliament, immediately, with the cooperation of the opposition parties. These included the power of the FME to take over the running of Icelandic banks without nationalising them, and preferential treatment for depositors in the event that a bank had to be liquidated.http://www.tryggingarsjodur.is/modules/files/file_group_26/fr%C3%A9ttir/Act_No125-2008.pdf https://wayback.archive-it.org/all/20081217112335/http://www.tryggingarsjodur.is/modules/files/file_group_26/fréttir/Act_No125-2008.pdf dead 17 December 2008 Act No. 125/2008 on the Authority for Treasury Disbursements due to Unusual Financial Market Circumstances etc. 4 February 2010 In a separate measure, retail deposits in Icelandic branches of Icelandic banks were guaranteed in full. Deposit Guarantee https://eng.forsaetisraduneyti.is/news-and-articles/nr/3033 Prime Minister's Office 6 October 2008 18 October 2008 The emergency measures had been deemed unnecessary by the Icelandic government less than 24 hours earlier. That evening, the Guernsey subsidiary of Landsbanki went into voluntary administration with the approval of the Guernsey Financial Services Commission. Guernsey Financial Services Commission http://www.gfsc.gg/Banking/News%5CPages/Landsbanki-Guernsey-Limited-in-.aspx Landsbanki Guernsey Limited in Administration 7 October 2008 14 October 2008 https://web.archive.org/web/20150924022024/http://www.gfsc.gg/Banking/News%5CPages/Landsbanki-Guernsey-Limited-in-.aspx 24 September 2015 live The administrators would later say that "The main reason for the Bank's difficulties has been the placing of funds with its UK fellow subsidiary, Heritable Bank." Landsbanki Guernsey 11 October 2008 14 October 2008 http://www.landsbanki.co.gg/ Further update on Landsbanki Guernsey in administration https://web.archive.org/web/20081013100814/http://www.landsbanki.co.gg/ 13 October 2008 dead Guernsey's Chief Minister stated "the directors of Landsbanki Guernsey took appropriate steps by putting the bank into administration." http://www.gov.gg/ccm/treasury-and-resources/press-releases/2008/chief-minister-statement-on-landsbanki.en Chief Minister Statement on Landsbanki 10 October 2008 https://web.archive.org/web/20110723180035/http://www.gov.gg/ccm/treasury-and-resources/press-releases/2008/chief-minister-statement-on-landsbanki.en 23 July 2011 14 October 2008 The FME placed Landsbanki in receivership early on 7 October.https://www.theguardian.com/business/2008/oct/07/iceland.banking Iceland government seizes control of Landsbanki The Guardian London 7 October 2008 Teather, David 7 October 2008 https://web.archive.org/web/20081008123358/http://www.guardian.co.uk/business/2008/oct/07/iceland.banking 8 October 2008 live http://www.landsbanki.is/english/aboutlandsbanki/pressreleases/?GroupID=720&NewsID=13284&y=0&p=1 http://wayback.vefsafn.is/wayback/20081114214737/http://www.landsbanki.is/english/aboutlandsbanki/pressreleases/?GroupID=720&NewsID=13284&y=0&p=1 dead 14 November 2008 Landsbanki Landsbanki's Operations Continued Under Unchanged Management 7 October 2008 12 October 2008 A press release from the FME stated that all of Landsbanki's domestic branches, call centres, ATMs and internet operations will be open for business as usual, and that all "domestic deposits" were fully guaranteed.http://www.fme.is/?PageID=581&NewsID=331 Financial Supervisory Authority (FME) Based on New Legislation, the Icelandic Financial Supervisory Authority (IFSA) Proceeds to take Control of Landsbanki to ensure Continued Commercial Bank Operations in Iceland 7 October 2008 12 October 2008 https://web.archive.org/web/20081010062539/http://www.fme.is/?PageID=581&NewsID=331 10 October 2008 dead The UK government used the Banking (Special Provisions) Act 2008"Banking (Special Provisions) Act 2008" c. 2. first to transfer retail deposits from Heritable Bank to a Treasury holding company,"The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008" No. 2644. then to sell them to Dutch bank ING Direct for £1 million."The Transfer of Rights and Liabilities to ING Order 2008" No. 2666. The same day, the FME also placed Glitnir into receivership.http://www.fme.is/?PageID=581&NewsID=337 Financial Supervisory Authority (FME) Based on New Legislation, the Icelandic Financial Supervisory Authority (FME) Proceeds to take Control of Glitnir to ensure Continued Commercial Bank Operations in Iceland 8 October 2008 12 October 2008 https://web.archive.org/web/20081016015442/http://www.fme.is/?PageID=581&NewsID=337 16 October 2008 dead http://www.glitnir.is/english/about-glitnir/news/detail/item15927/Glitnir's_Operations_Continued_–_Larus_Welding_to_continue_as_CEO/ Glitnir Glitnir's Operations Continued – Lárus Welding to continue as CEO 8 October 2008 12 October 2008 https://archive.today/20081014121006/http://www.glitnir.is/english/about-glitnir/news/detail/item15927/Glitnir's_Operations_Continued_%E2%80%93_Larus_Welding_to_continue_as_CEO 14 October 2008 dead That afternoon, there was a telephone conversation between Icelandic Finance Minister Árni Mathiesen and UK Chancellor of the Exchequer Alistair Darling. The Darling-Mathiesen Conversation before Britain Used the Anti-Terrorism Legislation against Iceland http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16567&ew_0_a_id=314205 Iceland Review 24 October 2008 26 October 2008 https://web.archive.org/web/20120217174334/http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16567&ew_0_a_id=314205 17 February 2012 dead That evening, one of the governors of the Central Bank of Iceland, Davíð Oddsson, was interviewed on Icelandic public service broadcaster RÚV and stated that "we [the Icelandic State] do not intend to pay the debts of the banks that have been a little heedless". He compared the government's measures to the U.S. intervention at Washington Mutual, and suggested that foreign creditors would "unfortunately only get 5–10–15% of their claims". Darling announced that he was taking steps to freeze the assets of Landsbanki in the UK.HM Treasury http://www.hm-treasury.gov.uk/statement_chx_081008.htm Alistair Darling Statement by the Chancellor on financial stability 18 October 2008 8 October 2008 https://web.archive.org/web/20081011062730/http://www.hm-treasury.gov.uk/statement_chx_081008.htm 11 October 2008 dead The Landsbanki Freezing Order 2008 was passed at 10 am on 8 October 2008 and came into force ten minutes later. Under the order the UK Treasury froze the assets of Landsbanki within the UK, and introduced provisions to prevent the sale or movement of Landsbanki assets within the UK, even if held by the Central Bank of Iceland or the Government of Iceland."The Landsbanki Freezing Order 2008" https://web.archive.org/web/20081212010509/http://www.opsi.gov.uk/si/si2008/uksi_20082668_en_1 12 December 2008 No. 2668. opsi.gov.uk. The freezing order took advantage of provisions in sections 4 and 14 and Schedule 3 of the Anti-terrorism, Crime and Security Act 2001,"Anti-terrorism, Crime and Security Act 2001" c. 24. opsi.gov.uk. and was made "because the Treasury believed that action to the detriment of the UK's economy (or part of it) had been or was likely to be taken by certain persons who are the government of or resident of a country or territory outside the UK".HM Treasury Financial sanctions > Current regimes > Landsbanki http://www.hm-treasury.gov.uk/fin_sanctions_landsbanki.htm 18 October 2008 https://web.archive.org/web/20081021203340/http://www.hm-treasury.gov.uk/fin_sanctions_landsbanki.htm 21 October 2008 dead The UK Prime Minister, Gordon Brown, announced that the UK government would launch legal action against Iceland over concerns with compensation for the estimated 300,000 UK savers.UK govt launching legal action against Iceland Citywire Marshall, Chris Martin, Iain 8 October 2008 8 October 2008 https://www.citywire.co.uk/money/update-uk-govt-launching-legal-action-against-iceland/a316803 Geir Haarde said at a press conference on the following day that the Icelandic government was outraged that the UK government applied provisions of anti-terrorism legislation to it in a move they dubbed an "unfriendly act". 9 October 2008 Mjög óvinveitt aðgerð mbl.is 9 October 2008 https://mbl.is/mm/frettir/innlent/2008/10/09/mjog_ovinveitt_adgerd/ https://web.archive.org/web/20081010173814/http://www.mbl.is/mm/frettir/innlent/2008/10/09/mjog_ovinveitt_adgerd/ 10 October 2008 live is The Chancellor of the Exchequer also said that the UK government would foot the entire bill to compensate UK retail depositors, estimated at £4 billion.Darling's pledge to Icesave savers Press Association 8 October 2008 8 October 2008 http://ukpress.google.com/article/ALeqM5gIrwQn2oxfrbF2Jz4ehKIqmRQJrw https://web.archive.org/web/20081012235908/http://ukpress.google.com/article/ALeqM5gIrwQn2oxfrbF2Jz4ehKIqmRQJrw 12 October 2008 dead8 October 2008 Britain vows to protect savers 8 October 2008 http://www.news.com.au/business/story/0,27753,24467268-31037,00.html Agence France-Presse https://web.archive.org/web/20081010184234/http://www.news.com.au/business/story/0%2C27753%2C24467268-31037%2C00.html 10 October 2008 dead It is reported that more than £4 billion in Icelandic assets in the UK have been frozen by the UK government. 12 October 2008 UK freezes £4bn of Icelandic assets The Daily Telegraph London https://www.telegraph.co.uk/finance/businesslatestnews/3185190/UK-freezes-4bn-of-Icelandic-assets.html 12 October 2008 https://web.archive.org/web/20081015032407/http://www.telegraph.co.uk/finance/businesslatestnews/3185190/UK-freezes-4bn-of-Icelandic-assets.html 15 October 2008 live The UK Financial Services Authority (FSA) also declared Kaupthing Singer & Friedlander, the UK subsidiary of Kaupthing Bank, in default on its obligations, sold Kaupthing Edge, its Internet bank, to ING Direct,"The Kaupthing Singer & Friedlander Limited Transfer of Certain Rights and Liabilities Order 2008" No. 2674. and put Kaupthing Singer & Friedlander into administration. Over £2.5 billion of deposits for 160,000 customers were sold to ING Direct.BBC News 9 October 2008 https://news.bbc.co.uk/2/hi/business/7662000.stm Icelandic compensation to start 12 October 2008 https://web.archive.org/web/20081012100311/http://news.bbc.co.uk/2/hi/business/7662000.stm 12 October 2008 live The scale of the run on Kaupthing Edge deposits had been such that many transactions were not completed until 17 October.October 2020 Although Geir Haarde has described the UK government's actions over Kaupthing Singer & Friedlander as an "abuse of power" Guðmundur Sv. Hermannsson 11 October 2008 http://www.mbl.is/mm/frettir/innlent/2008/10/11/bretar_knesettu_staersta_fyrirtaeki_islendinga_med_/ Bretar knésettu stærsta fyrirtæki Íslendinga með valdníðslu mbl.is 11 October 2008 https://web.archive.org/web/20081014025214/http://www.mbl.is/mm/frettir/innlent/2008/10/11/bretar_knesettu_staersta_fyrirtaeki_islendinga_med_/ 14 October 2008 live is and "unprecedented", Address to the Althing on the economic situation in Iceland by His Excellency the Prime Minister, Mr. Geir H. Haarde https://eng.forsaetisraduneyti.is/news-and-articles/nr/3075 Prime Minister's Office 16 October 2008 18 October 2008 they were the third such actions taken under the Banking (Special Provisions) Act 2008 in less than ten days, after interventions in Bradford & Bingley and Heritable Bank. On the same day, the Sveriges Riksbank, Sweden's central bank, made a credit facility of 5 billion Swedish krona (€520 million) available to Kaupthing Bank Sverige AB, the Swedish subsidiary of Kaupthing. The loan was to pay "depositors and other creditors". Sveriges Riksbank http://www.riksbank.com/templates/Page.aspx?id=29213 Kaupthing Edge is being wound up 9 October 2008 11 October 2008 https://web.archive.org/web/20110927171437/http://www.riksbank.com/templates/Page.aspx?id=29213 27 September 2011 dead On 9 October, Kaupthing was placed into receivership by the FME, following the resignation of the entire board of directors.http://www.fme.is/?PageID=581&NewsID=340 Financial Supervisory Authority (FME) Based on New Legislation, the Icelandic Financial Supervisory Authority (FME) Proceeds to take Control of Kaupþing to ensure Continued Commercial Bank Operations in Iceland 9 October 2008 12 October 2008 https://web.archive.org/web/20081014153056/http://www.fme.is/?PageID=581&NewsID=340 14 October 2008 dead The bank said that it was in technical default on its loan agreements after its UK subsidiary had been placed into administration.Einarsson, Sigurdur Kaupthing http://www.kaupthing.com/pages/164?path=K/133944/PR/200810/1258139.xml Kaupthing Bank turns to the Icelandic FSA 9 October 2008 12 October 2008 https://web.archive.org/web/20081012012716/http://www.kaupthing.com/pages/164?path=K%2F133944%2FPR%2F200810%2F1258139.xml 12 October 2008 dead Kaupthing's Luxembourg subsidiary asked for, and obtained, a suspension of payments (similar to chapter 11 protection) in the Luxembourg District Court. Kaupthing Bank Luxembourg S.A. Communiqué de Presse / Press Release 12 October 2008 13 October 2008 http://www.kaupthing.lu/About-Us/Press-release https://web.archive.org/web/20081212231001/http://www.kaupthing.lu/About-Us/Press-release 12 December 2008 dead Kaupthing's Geneva office, which was a branch of its Luxembourg subsidiary, was prevented from making any payments of more than 5000 Swiss francs by the Swiss Federal Banking Commission. http://www.ebk.admin.ch/e/aktuell/index.html Swiss Federal Banking Commission SFBC takes measures to protect investors of the Swiss Branch of Kaupthing Bank 9 October 2008 13 October 2008 https://web.archive.org/web/20081025000405/http://www.ebk.admin.ch/e/aktuell/index.html 25 October 2008 dead The directors of Kaupthing's subsidiary on the Isle of Man decided to wind up the company after consultation with the Manx authorities. Isle of Man Financial Supervision Commission Kaupthing Singer & Friedlander (Isle of Man) Ltd 9 October 2008 http://www.gov.im/lib/docs/fsc/PressReleases/ksfpressrelease091008.pdf 18 October 2008 https://web.archive.org/web/20081029195828/http://www.gov.im/lib/docs/fsc/PressReleases/ksfpressrelease091008.pdf 29 October 2008 live The Finnish Financial Supervision Authority, Rahoitustarkastus, announced having taken control of Kaupthing's Helsinki branch already on 6th, to prevent money from being sent back to Iceland. Rajat suljettiin islantilaispankeilta http://www.kauppalehti.fi/5/i/talous/uutiset/etusivu/uutinen.jsp?oid=2008/10/15271 Kauppalehti 9 October 2008 11 January 2010 fi https://web.archive.org/web/20131215142712/http://www.kauppalehti.fi/5/i/talous/uutiset/etusivu/uutinen.jsp?oid=2008%2F10%2F15271 15 December 2013 dead On the same day, the UK Treasury issued a licence under the Landsbanki Freezing Order 2008 to allow the London branch of Landsbanki to continue some business."The Landsbanki Freezing Order 2008 (General Licence)" https://web.archive.org/web/20081029195831/http://www.hm-treasury.gov.uk/d/finsanc_landsbanki_general_091008.pdf 29 October 2008 . A second licence was issued on 13 October,"The Landsbanki Freezing Order 2008 (General Licence) (L2)" https://web.archive.org/web/20081029195828/http://www.hm-treasury.gov.uk/d/finsanc_landsbanki_l2_131008.pdf 29 October 2008 . when the Bank of England provided a £100 million secured loan to Landsbanki "to help maximise the returns to UK creditors".The Guardian London Jones, Sam Landsbanki gets £100m loan to pay UK depositors https://www.theguardian.com/money/2008/oct/14/savings-banking 14 October 2008 15 October 2008 https://web.archive.org/web/20081015023159/http://www.guardian.co.uk/money/2008/oct/14/savings-banking 15 October 2008 live On 12 October the Norwegian government took control of Kaupthing's Norwegian operations, including "all of the bank's assets and liabilities in Norway". 12 October 2008 Norway takes charge of Kaupthing's Norwegian arm Reuters 12 October 2008 https://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSOSL00845120081012 John Acher On 21 October, the Central Bank of Iceland asked the remaining independent financial institutions for new collateral against their loans. This was to replace the shares in Glitnir, Landsbanki and Kaupthing which had been pledged as collateral previously and which were now of much lower value, if not worthless. Iceland Review Central Bank Calls for Increased Collateral http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=314005 21 October 2008 26 October 2008 https://web.archive.org/web/20120217174410/http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=314005 17 February 2012 dead The value of the collateral was estimated at 300 billion krónur (€2 billion). One of the banks, Sparisjóðabanki (SPB, also known as Icebank), stated the next day that it could not provide new collateral for its 68 billion krónur (€451 million) loan, and would have to turn to the government for help. "This problem won't be solved in any other way," said CEO Agnar Hansson. Iceland Review Financial Companies Get Seven-Day Extension http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16567&ew_0_a_id=314064 22 October 2008 26 October 2008 https://web.archive.org/web/20120217174449/http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16567&ew_0_a_id=314064 17 February 2012 dead On 24 October, it emerged that a Norwegian export credit company (Export Finance Norway Eksportfinansiering no Eksportfinansiering Norge) had made a complaint to Norwegian police concerning the alleged embezzlement of 415 million Norwegian kroner (€47 million) by Glitnir since 2006. The Icelandic bank had acted as an agent for Eksportfinans, administering loans to several companies: however Eksportfinans alleges that, when the loans were paid off early by borrowers, Glitnir kept the cash and merely continued with the regular payments to Eksportfinans, effectively taking an unauthorized loan itself.Aftenposten http://www.aftenposten.no/english/local/article2727423.ece 24 October 2008 24 October 2008 Norway sends aid team to crisis-hit Iceland Berglund, Nina https://web.archive.org/web/20081024033357/http://www.aftenposten.no/english/local/article2727423.ece 24 October 2008 dead Stock market thumb|right|300px|The value of the OMX Iceland 15 from January 1998 to October 2008 thumb|300px|OMX Iceland 15 closing prices during the five trading weeks from 29 September 2008 to 31 October 2008 Trading in shares of six financial companies on the OMX Nordic Iceland Exchange was suspended on 6 October by order of the FME.Financial Supervisory Agency (FME) Temporary suspension from trading http://www.fme.is/?PageID=581&NewsID=328 6 October 2008 15 October 2008 dead https://web.archive.org/web/20081211141800/http://www.fme.is/?PageID=581&NewsID=328 11 December 2008 On Thursday 9 October, all trading on the exchange was frozen for two days by the government "in an attempt to prevent further panic spreading throughout the country's financial markets". The decision was made to do so due to "unusual market conditions",9 October 2008 Iceland halts all share trading BBC News 9 October 2008 https://news.bbc.co.uk/2/hi/business/7660511.stm https://web.archive.org/web/20081012095326/http://news.bbc.co.uk/1/hi/business/7660511.stm 12 October 2008 live with share prices having fallen 30% since the start of the month. Icelandic stock market crashes on reopening Thompson, James 15 October 2008 https://www.independent.co.uk/news/business/news/icelandic-stock-market-crashes-on-reopening-961419.html The Independent London 15 October 2008 The closure was extended through Monday 13 October due to continuing "unusual market conditions".BBC News Iceland stock market to stay shut https://news.bbc.co.uk/2/hi/business/7666498.stm 13 October 2008 13 October 2008 https://web.archive.org/web/20081015202503/http://news.bbc.co.uk/2/hi/business/7666498.stm 15 October 2008 live The market reopened on 14 October with the main index, the OMX Iceland 15, at 678.4, which corresponds to a plunge of about 77% compared with 3,004.6 before the closure. This reflects the fact that the value of the three big banks, which form 73.2% of the value of the OMX Iceland 15, OMX Nordic Exchange https://newsclient.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=190910 Definitive list of constituents in OMXI15 index 30 June 2008 25 March 2010 had been set to zero. http://www.omxnordicexchange.com/ Equities resume trading in Iceland OMX Nordic Exchange 14 October 2008 https://web.archive.org/web/20081009131035/http://www.omxnordicexchange.com/ 9 October 2008 live The values of other equities varied from +8% to −15%. Stock exchange update http://www.icenews.is/index.php/2008/10/14/stock-exchange-update/ 14 October 2008 IceNews 15 October 2008 https://web.archive.org/web/20081016083028/http://www.icenews.is/index.php/2008/10/14/stock-exchange-update/ 16 October 2008 live Trading in shares of Exista, SPRON and Straumur-Burðarás (13.66% of the OMX Iceland 15) remains suspended. After a week of very thin trading, the OMX Iceland 15 closed on 17 October at 643.1, down 93% in króna terms and 96% in euro terms from its historic high of 9016 (18 July 2007). Trading in the shares of two financial services companies, Straumur–Burðarás and Exista, resumed on 9 December: together the companies account for 12.04% of the OMX Iceland 15. The values of the shares in both companies dropped sharply, and the index closed at 394.88, down by 40.17% on the day. Trading in shares in SPRON and Kaupthing remains suspended, at prices of 1.90 krónur and 694.00 krónur respectively.http://www.nasdaqomxnordic.com/indexes/index_info/?Instrument=ICEIS0000004380 Index info Nasdaqomxnordic.com 11 November 2009 Sovereign debt + Ratings of Icelandic sovereign debt(long-term foreign currency)Agency29 Sep 200810 Oct 2008FitchA+BBB–Moody'sAa1A1R&IAABBB–S&PA–BBB The four credit rating agencies which monitor Iceland's sovereign debt all lowered their ratings during the crisis, and their outlook for future ratings changes became negative. Central Bank of Iceland http://www.sedlabanki.is/?PageID=789 The Republic of Iceland's sovereign credit rating 11 October 2008 https://web.archive.org/web/20081009223338/http://www.sedlabanki.is/?PageID=789 9 October 2008 dead The Icelandic government had a relatively healthy balance, with sovereign debt of 28% of GDP and a budget surplus of 6% of GDP (2007). Fitch Ratings http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6475 International Credit Update – Republic of Iceland 6 October 2008 11 October 2008 21 November 2017 https://web.archive.org/web/20171121204556/https://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6475 dead More recently, the estimated 2011 debt was 130% of GDP with a budget deficit of 6% of GDP.https://www.cia.gov/the-world-factbook/countries/iceland/ https://web.archive.org/web/20210109214652/https://www.cia.gov/the-world-factbook/countries/iceland dead 9 January 2021 CIA – The World Factbook Cia.gov 30 May 2012 In addition, the value of foreign currency bonds which matured in the remainder of 2008 was only $600 million, and foreign currency debt service in 2009 was only $215 million, Fitch Ratings http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6487 Fitch downgrades Iceland to 'BBB-'; remains on Rating watch Negative 8 October 2008 11 October 2008 well within the government's ability to pay. However the agencies believed that the government would have to issue more foreign currency bonds, both to cover losses as the banks' overseas operations are liquidation and also to stimulate demand in the domestic economy as Iceland goes into recession. Moody's http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6483 Moody's downgrades Iceland's ratings to A1 from Aa1; review continues 8 October 2008 11 October 2008 A team of experts from the International Monetary Fund (IMF) arrived in Iceland at the start of October 2008 for talks with the government. Industry Minister Össur Skarphéðinsson was said to be "favourable" to help from the IMF to stabilise the króna and to allow interest rates to be lowered. Iceland Minister Says IMF Aid Needed to Attract Foreign Loans Brogger, Tasneem Einarsdottir, Helga Kristin 12 October 2008 12 October 2008 Bloomberg https://www.bloomberg.com/apps/news?pid=20601085&sid=ajdlxBMwjMMU&refer=europe On 7 October, the central bank of Iceland announced that they had been in talks with the Russian ambassador to Iceland, Victor I. Tatarintsev, over a €4 billion loan from Russia. The loan would be given across three or four years, with an interest rate of 30 to 50 basis points (0.3% to 0.5%) above LIBOR.Russia Grants Iceland Giant Loan in Euros Iceland Review 7 October 2008 11 October 2008 http://www.icelandreview.com/icelandreview/daily_news/?cat_id=28304&ew_0_a_id=313200 https://web.archive.org/web/20120217172915/http://www.icelandreview.com/icelandreview/daily_news/?cat_id=28304&ew_0_a_id=313200 17 February 2012 dead Central Bank of Iceland governor Davíð Oddsson later clarified that the loan was still being negotiated. https://www.bloomberg.com/apps/news?pid=20601087&sid=aV.chNI42D8o&refer=home Iceland Seeks Loan From Russia, Pegs Currency Brogger Tasneem Bloomberg L.P. 7 October 2008 12 October 2008 According to RÚV, prime minister Geir Haarde had been investigating the possibility of a Russian loan since the mid-summer. 7 October 2008 Ísland fær risalán frá Rússlandi RÚV 11 October 2008 http://ruv.is/heim/frettir/frett/store64/item229999/ https://web.archive.org/web/20081010123149/http://ruv.is/heim/frettir/frett/store64/item229999/ 10 October 2008 dead is When questioned on the matter in a press conference, Geir Haarde said: "We have not received the kind of support that we were requesting from our friends. So in a situation like that one has to look for new friends." http://www.businessweek.com/globalbiz/content/oct2008/gb2008109_947306.htm?campaign_id=rss_daily The Stunning Collapse of Iceland Business Week Capell, Kerry 15 October 2008 9 October 2008 https://web.archive.org/web/20081012034450/http://www.businessweek.com/globalbiz/content/oct2008/gb2008109_947306.htm?campaign_id=rss_daily 12 October 2008 dead A team of Icelandic negotiators arrived in Moscow on 14 October to discuss the possible loan. Russian deputy finance minister Dmitri Pankin said that "The meeting took place in a friendly atmosphere.... We are working thoroughly on the issue to take a final decision". 15 October 2008 Lannin, Patrick Valdimarsson, Omar Iceland slashes rates, Russia studies loan request https://www.reuters.com/article/bondsNews/idUSLF14318220081015?sp=true Reuters 15 October 2008 On the same day, the Central Bank of Iceland drew on its swap facilities with the central banks of Denmark and Norway for €200 million each. Iceland has swap facilities with the other Nordic countries for a total of €1.5 billion. Central Bank of Iceland http://www.omxnordicexchange.com/newsandstatistics/companynotices/IFrameCNSMessage//?node=https%3A//newsclient.omxgroup.com/cdsPublic/viewDisclosure.action%3FdisclosureId%3D293561%26messageId%3D346338 The Central Bank of Iceland draws on swap facility arrangements 14 October 2008 15 October 2008 Iceland also sought assistance from the European Central Bank (ECB); there was some precedent for the move at the time, as the ECB already had currency swap arrangements with Switzerland, another non-member of the European Union. Bloomberg 16 October 2008 18 October 2008 https://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahVJCzeiIPhs ECB Power Grows Beyond Borders as Neighbors Seek Aid Kennedy, Simon On 24 October, the IMF tentatively agreed to lend €1.58 billion.http://www.iceland.org/info/iceland-imf-program/ Iceland set for $2.1bn IMF help Icelandic Government 19 October 2008 24 October 2008 dead https://web.archive.org/web/20090131060539/http://www.iceland.org/info/iceland-imf-program/ 31 January 2009 https://news.bbc.co.uk/2/hi/business/7689633.stm Iceland set for $2.1bn IMF help BBC.co.uk 19 October 2008 4 February 2013 However the loan had still not been approved by the executive board of the IMF on 13 November. Transcript of Regular Press Briefing by David Hawley, Senior Advisor, External Relations Department International Monetary Fund 13 November 2008 http://www.imf.org/external/np/tr/2008/tr111308.htm 15 November 2008 Due to the delay Iceland found itself caught in a classic catch-22 situation, loans from other countries could not be secured until the IMF program had been approved. The Icelandic government spoke of a $500M (€376M) gap in the funding plans. Dutch finance minister Wouter Bos stated that the Netherlands would oppose the loan unless agreement was reached over deposit insurance for Landsbanki customers in the Netherlands. Ibison, David Iceland's rescue package flounders https://www.ft.com/content/ed069984-b022-11dd-a795-0000779fd18c Financial Times 11 November 2008 15 November 2008 https://web.archive.org/web/20081112005002/http://www.ft.com/cms/s/0/ed069984-b022-11dd-a795-0000779fd18c.html 12 November 2008 live The IMF-led package of $4.6bn was finally agreed on 19 November, with the IMF loaning $2.1bn and another $2.5bn of loans and currency swaps from Norway, Sweden, Finland and Denmark. In addition, Poland offered to lend $200M and the Faroe Islands also offered $50M, about 3% of the Faroese GDP. Bloomberg Brogger, Tasneem Einarsdottir, Helga Kristin Iceland Gets $4.6 Billion Bailout From IMF, Nordics https://www.bloomberg.com/apps/news?pid=20601085&sid=a3Zf1f9IBUWg&refer=europe 20 November 2008 20 November 2008 The Icelandic government reported that Russia offered to lend $500M, and Poland, $200M.Background information on Nordic loans to Iceland 3 July 2009 Ministry of Finance, Reykjavik, Iceland, Committee for Bilateral Loan Negotiations http://eng.fjarmalaraduneyti.is/publications/news/nr/12286 https://web.archive.org/web/20110720192703/http://eng.fjarmalaraduneyti.is/publications/news/nr/12286 20 July 2011 4 February 2013 The next day, Germany, the Netherlands and the United Kingdom announced a joint loan of $6.3bn (€5bn), related to the deposit insurance dispute. https://www.dutchnews.nl/news/archives/2008/11/dutch_13bn_loan_to_iceland_agr.php Dutch €1.3bn loan to Iceland agreed 20 November 2008 21 November 2008 DutchNewsThe Daily Telegraph London 20 November 2008 21 November 2008 https://www.telegraph.co.uk/finance/financetopics/financialcrisis/3491442/UK-Treasury-lends-Iceland-2.2bn-to-compensate-Icesave-customers.html UK Treasury lends Iceland £2.2bn to compensate Icesave customers Mason, Rowena https://web.archive.org/web/20081203171411/http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3491442/UK-Treasury-lends-Iceland-2.2bn-to-compensate-Icesave-customers.html 3 December 2008 dead Causes thumb|350px|Iceland bonds had an Inverted yield curve in 2008 #02529C solid 3px 10 year bonds #DC1E35 solid 3px 5 year bonds #929292 solid 3px 2 year bonds 300px|thumb|Economic growth in Iceland, Denmark, Norway and Sweden from 2000 to 2007. Iceland is in red. In 2001, banks were deregulated in Iceland.Financial Times Robert Jackson The Big Chill 15 November 2008 This set the stage for banks to upload debts when foreign companies were accumulated. The crisis unfolded when these banks became unable to refinance their debts. It is estimated that the three major banks held foreign debt in excess of €50 billion, or about €160,000 per Icelandic resident, compared with Iceland's gross domestic product of €8.5 billion.For the purposes of comparison, both the external debt of Icelandic banks and the Icelandic GDP have been converted at an approximate exchange rate of ISK 150 = 1 EUR. As early as March 2008, the cost of private deposit insurance for deposits in Landsbanki and Kaupthing was already far higher (6–8 1 2% of the sum deposited) than for other European banks.October 2020 The króna, which was ranked by The Economist in early 2007 as the most overvalued currency in the world (based on the Big Mac Index), The Big Mac index The Economist 11 October 2008 1 February 2007 http://www.economist.com/markets/indicators/displaystory.cfm?story_id=8649005 https://web.archive.org/web/20080930005545/http://www.economist.com/markets/indicators/displaystory.cfm?story_id=8649005 30 September 2008 live has further suffered from the effects of carry trading.https://news.yahoo.com/s/ap/20081007/ap_on_re_eu/eu_iceland_meltdown Wardell, Jane Iceland teeters on the brink of bankruptcy Associated Press 7 October 2008 8 October 2008 https://web.archive.org/web/20081011122649/http://news.yahoo.com/s/ap/20081007/ap_on_re_eu/eu_iceland_meltdown 11 October 2008 live Coming from a small domestic market, Iceland's banks have financed their expansion with loans on the interbank lending market and, more recently, by deposits from outside Iceland (which are also a form of external debt). Households also took on a large amount of debt, equivalent to 213% of disposable income, which led to inflation. Kreppanomics The Economist 9 October 2008 10 October 2008 http://www.economist.com/finance/displaystory.cfm?story_id=12382011 https://web.archive.org/web/20081012020021/http://www.economist.com/finance/displaystory.cfm?story_id=12382011 12 October 2008 live This inflation was exacerbated by the practice of the Central Bank of Iceland issuing liquidity loans to banks on the basis of newly issued, uncovered bondsPara. 19, "Letter of Intent to the International Monetary Fund" (PDF). 3 November 2008. – effectively, printing money on demand. In response to the rise in prices – 14% in the twelve months to September 2008, compared with a target of 2.5% – the Central Bank of Iceland held interest rates high (15.5%). Such high interest rates, compared with 5.5% in the United Kingdom or 4% in the eurozone for example, encouraged overseas investors to hold deposits in Icelandic krónur, leading to monetary inflation: the Icelandic money supply (M3) grew 56.5% in the twelve months to September 2008, compared with 5.0% GDP growth.http://www.sedlabanki.is/lisalib/getfile.aspx?itemid=6628 Economic Indicators Central Bank of Iceland November 2008 https://web.archive.org/web/20101218013836/http://sedlabanki.is/lisalib/getfile.aspx?itemid=6628 18 December 2010 4 February 2013 GDP growth is for the second quarter 2008 (annualised); Q3 growth was −0.8% (annualised). The situation was effectively an economic bubble, with investors overestimating the true value of the króna. As with many banks around the world, the Icelandic banks found it increasingly difficult or impossible to roll over their loans in the interbank market, their creditors insisting on payment while no other banks were willing to make fresh loans. In such a situation, a bank would normally have to ask for a loan from the central bank as the lender of last resort. However, in Iceland the banks were so much larger than the national economy that the Central Bank of Iceland and the Icelandic government could not guarantee the payment of the banks' debts, leading to the collapse of the banks. https://news.bbc.co.uk/1/hi/world/europe/7852275.stm Waking up to reality in Iceland BBC News 27 January 2009 26 January 2009 https://web.archive.org/web/20090126205753/http://news.bbc.co.uk/2/hi/europe/7852275.stm 26 January 2009 live The official reserves of the Central Bank of Iceland stood at 374.8 billion krónur at the end of September 2008, Central Bank of Iceland http://www.sedlabanki.is/?pageid=552&itemid=29d909f3-c66a-41a3-bc6c-dadb8cac486f&nextday=7&nextmonth=11 International reserves and foreign currency liquidity – September 2008 7 October 2008 11 October 2008 https://web.archive.org/web/20081010223028/http://www.sedlabanki.is/?pageid=552&itemid=29d909f3-c66a-41a3-bc6c-dadb8cac486f&nextday=7&nextmonth=11 10 October 2008 dead compared with 350.3 billion krónur of short-term international debt in the Icelandic banking sector, and at least £6.5 billion (1,250 billion krónur) of retail deposits in the UK.Calculated as £4 billion in Icesave deposits and £2.5 billion in deposits at Heritable Bank and Kaupthing Singer & Friedlander that were handed to ING Direct. thumb|The Icesave logo, advertising it as "part of Landsbanki, Reykjavík, Iceland" The situation was made worse by the fact that Icesave was operating as a branch of Landsbanki, rather than as a legally independent subsidiary. As such, it was completely dependent on the Central Bank of Iceland for emergency loans of liquidity, and could not turn to the Bank of England for help. The UK Financial Services Authority (FSA) was aware of the risk, and was considering imposing special liquidity requirements on Icelandic deposit-taking banks in the weeks before the crisis. Lawyers head to Iceland to get cash back The Independent London https://www.independent.co.uk/news/business/news/lawyers-head-to-iceland-to-get-cash-back-958345.html Leftly, Mark Northedge, Richard 12 October 2008 15 October 2008 However the plan – which was never implemented – would have forced the Icelandic banks to cut interest rates or stop taking new deposits, and might even have sparked the sort of bank run it was designed to prevent. The Guernsey authorities were also planning on bringing in restrictions on foreign banks operating as branches and on transfers of funds between Guernsey subsidiaries and parent banks ("parental upstreaming"). Guernsey Financial Services Commission Consultation on Parental Upstreaming and the Introduction of Depositor Protection and Ombudsman Schemes https://www.gfsc.gg/UserFiles/File/Banking/Consultation_on_Parental_Upstreaming_and_the_Introduction_of_Depositor_Protection_and_Ombudsman_Schemes.pdf 15 October 2008 https://web.archive.org/web/20081029195833/https://www.gfsc.gg/UserFiles/File/Banking/Consultation_on_Parental_Upstreaming_and_the_Introduction_of_Depositor_Protection_and_Ombudsman_Schemes.pdf 29 October 2008 dead August 2008 Landsbanki operated in Guernsey through a legally independent subsidiary. The existence of a bank run on Landsbanki accounts in the UK in the period up to 7 October seems confirmed by a statement from the bank on 10 October, which said "Landsbanki Íslands hf. transferred substantial funds to its UK branch during this time to fulfil its Icesave commitments." Statement from Landsbanki Íslands hf: Landsbanki did not transfer funds from the UK to Iceland Landsbanki Íslands hf 10 October 2008 http://www.landsbanki.is/english/aboutlandsbanki/pressreleases/?GroupID=720&NewsID=13336&y=0&p=1 http://wayback.vefsafn.is/wayback/20081114214700/http://www.landsbanki.is/english/aboutlandsbanki/pressreleases/?GroupID=720&NewsID=13336&y=0&p=1 dead 14 November 2008 15 October 2008 The transfer of funds from Landsbanki Guernsey to Heritable Bank, a Landsbanki subsidiary in the UK, also suggests a bank run in the UK. A transfer of "substantial funds" from Iceland to the UK would have been a significant downward push on the value of the króna, even before the effects of any speculation. Bank restructuring Wholesale funding disappeared in September 2008 leading to the collapse of Glitnir, Kaupthing and Landsbanki. Due to the size of the combined balance sheet of the three banks, the government of Iceland did not have the means to save them. They were put into receivership instead with their boards replaced. Nevertheless, the failed banks were restructured by dividing them into a new and an old bank in order to avoid a credit crunch.BRUEGEL policy contribution Dezember 2011, Zsolt Darvas, A Tale of Three Countries: Recovery after Banking Crises, p. 6-7 The new state-owned banks took over the domestic activities and have been recapitalised by government with a capital ratio of 16% of all assets. The Financial Supervisory Authority (FME) has acted to "ring-fence" the Icelandic operations of Landsbanki and Glitnir, stating its aim of "continued banking operations for Icelandic families and businesses". Financial Supervisory Authority (FME) New Landsbanki Takes Over Domestic Operations of Landsbanki Islands hf http://www.fme.is/?PageID=581&NewsID=342 9 October 2008 16 October 2008 https://web.archive.org/web/20081014153117/http://www.fme.is/?PageID=581&NewsID=342 14 October 2008 dead NBI (originally known as Nýi Landsbanki) was set up on 9 October with 200 billion krónur in equity and 2,300 billion krónur of assets. Financial Supervisory Authority (FME) Decision of the Financial Supervisory Authority (FME) on the disposal of assets and liabilities of Landsbanki Íslands hf., ID no. 540291-2259, to New Landsbanki Íslands hf., ID no. 471008-0280 http://www.fme.is/lisalib/getfile.aspx?itemid=5678 9 October 2008 16 October 2008 Nýi Glitnir was set up on 15 October with 110 billion krónur in equity and 1,200 billion krónur of assets. Financial Supervisory Authority (FME) Decision of the Financial Supervisory Authority (FME) on the disposal of assets and liabilities of Glitnir Bank hf., ID no. 550500-3530, to New Glitnir Bank hf., ID no. 491008-0160 http://www.fme.is/lisalib/getfile.aspx?itemid=5683 14 October 2008 16 October 2008 Nýja Kaupþing was set up on 22 October with 75 billion krónur in equity and 700 billion krónur of assets. Financial Supervisory Authority (FME) http://www.fme.is/?PageID=581&NewsID=349 New Kaupthing Bank Takes Over Domestic Operations of Kaupthing banki hf. 22 October 2008 25 October 2008 https://web.archive.org/web/20120217043240/http://www.fme.is/?PageID=581&NewsID=349 17 February 2012 dead The equity in all three new banks was supplied by the Icelandic government, and amounted to 30% of Iceland's GDP. The new banks will also have to reimburse their predecessors for the net value of the transferred assets, as determined by "recognised appraisers". As of 14 November 2008, these net values were estimated as: The provisional opening balance sheets of the three new banks 14 November 2008 http://www.fme.is/?PageID=581&NewsID=362 25 November 2008 Financial Supervisory Authority (FME) https://web.archive.org/web/20081227121521/http://www.fme.is/?PageID=581&NewsID=362 27 December 2008 dead NBI ISK558.1bn (€3.87bn), Nýi Glitnir ISK442.4bn (€2.95bn); Nýja Kaupþing ISK172.3bn (€1.14bn).Euro equivalents for these amounts have been calculated using the Central Bank of Iceland rate for the date on which the new bank was set up: Nýi Landsbanki, 9 October 2008, EURISK = 144.27; Nýi Glitnir, 15 October 2008, EURISK = 150; Nýja Kaupþing, 21 October 2008, EURISK = 150.5. The total debt of 1173 billion krónur is more than 90% of Iceland's 2007 gross domestic product. The international businesses remained with the old banks for winding up. Glitnir and Kaupthing, shorn of their Icelandic operations, obtained moratoria on payments to creditors (similar to USA Chapter 11 protection) from the District Court of Reykjavík on 24 November. Glitnir hf. Press release – Glitnir banki hf ("Old Glitnir") http://www.glitnirbank.com/ 24 November 2008 4 December 2008 https://web.archive.org/web/20081202032457/http://www.glitnirbank.com/ 2 December 2008 liveKaupthing Bank hf. http://www.kaupthing.com/pages/164?path=K/133944/PR/200811/1272546.xml Kaupthing Bank hf. granted a moratorium 24 November 2008 4 December 2008 https://web.archive.org/web/20081124202752/http://www.kaupthing.com/pages/164?path=K%2F133944%2FPR%2F200811%2F1272546.xml 24 November 2008 dead The rescue operations of the central bank along with the restructuring and recapitalization of the banks increased the public debt ratio by about 20 percentage points of GDP.BRUEGEL policy contribution Dezember 2011, Zsolt Darvas, A Tale of Three Countries: Recovery after Banking Crises, p. 7 Effects Within Iceland November 2015 The 2008 economic climate in the country affected many Icelandic businesses and citizens. A new bank was created to replace the insolvent Landsbanki, Landsbankinn (formerly Nýi Landsbanki), causing around 271 employees to lose their jobsInvitation to submit comments pursuant to Article 1(2) in Part I of Protocol 3 to the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice on State aid issues in the restoration of certain operations of (old) Landsbanki Islands hf and the establishment and capitalisation of New Landsbanki Islands (NBI hf) 2011 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=oj:JOC_2011_041_R_0031_01 2026-08-21 en due to the restructuring of the organisation, intended to minimise the bank's international operations. Similar job losses occurred at Giltnir and Kaputhing.Public version of EFTA Surveillance Authority Decision No 244/12/COL of 27 June 2012 on restructuring aid granted to Íslandsbanki (Iceland) 2012-06-27 http://data.europa.eu/eli/dec/2012/244(2)/oj 2026-08-21 en The job losses can be compared with the 2,136 registered unemployed and 495 advertised vacancies in Iceland at the end of August 2008. Other companies were also affected. For example, the private Sterling Airlines declared bankruptcy on 29 October 2008. The national airline Icelandair has noticed a significant slump in domestic demand for flights, although it later recovered. Guðjón Arngrímsson, a spokesman for the airline, said "we're getting decent traffic from other markets... we are trying to let the weak króna help us." He has also stated that it is impossible to predict whether the company will be profitable this year. Iceland businesses feel sting of financial crisis Reuters 10 October 2008 11 October 2008 https://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSLA15877520081010 Brett Young https://web.archive.org/web/20081011104227/https://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSLA15877520081010 11 October 2008 live Morgunblaðið, an Icelandic newspaper, cut someAugust 2026 jobs and merging parts of its operations with the media corporation 365. The newspaper 24 stundir ceased publication due to the crisis, resulting in the loss of 20 jobs. Importers were particularly hard hit, with the government restricting foreign currency to essential products such as food, medicines and oil. 13 October 2008 Thomas, Chad Icelandic Shoppers Splurge as Currency Woes Reduce Food Imports https://www.bloomberg.com/apps/news?pid=20601085&sid=aVFtDRGwcc50&refer=europe 13 October 2008 Bloomberg The €400 million loan from the central banks of Denmark and Norway is sufficient to pay for a month's imports, although on 15 October there was still a "temporary delay" which affected "all payments to and from the country". Landsbanki Temporary delay in international payments http://www.landsbanki.is/english/aboutlandsbanki/pressreleases/?GroupID=720&NewsID=13350&y=0&p=1 http://wayback.vefsafn.is/wayback/20081114214620/http://www.landsbanki.is/english/aboutlandsbanki/pressreleases/?GroupID=720&NewsID=13350&y=0&p=1 dead 14 November 2008 15 October 2008 4 February 2013 The assets of Icelandic pension funds were, according to one expert, expected to shrink by 15–25%. http://www.ll.is/?i=2&f=8&o=994 Landssamtök lífeyrissjóða Staðan í hnotskurn 10 October 2008 12 October 2008 is The Icelandic Pension Funds Association announced that benefits would be cut in 2009. http://www.ll.is/?i=2&f=8&o=993 Landssamtök lífeyrissjóða 7 October 2008 12 October 2008 Fréttatilkynning frá Landssamtökum lífeyrissjóða is Iceland's GDP shrank by 10% as a result of the crisis, putting Iceland by some measures in an economic depression. https://www.independent.co.uk/news/business/news/crisis-deepens-for-iceland-as-last-of-big-three-banks-is-nationalised-956711.html Crisis deepens for Iceland as last of 'big three' banks is nationalised The Independent London 10 October 2008 Prosser, David 12 October 2008 Inflation climbed as 75% by the end of the year. Iceland Cuts Key Interest Rate to 12% From 15.5% https://www.bloomberg.com/apps/news?pid=20601085&sid=azrp3E_O4HNE&refer=europe Brogger, Tasneem Einarsdottir, Helga Kristin Bloomberg 14 October 2008 14 October 2008 Unemployment had more than tripled by late November 2008, with over 7000 registered jobseekers Interest in jobs abroad http://www.icenews.is/index.php/2008/11/22/interest-in-jobs-abroad/#comment-53133 IceNews 22 November 2008 25 March 2010August 2026 InternetArchiveBot (about 4% of the workforce) compared to just 2136 at the end of August 2008. As 80% of household debt is indexed and another 13% denominated in foreign currencies,Iceland: Financial System Stabulity Assessment, IMF country report No. 08/368, December 2008, page 11 debt payment is going to be more costly. Since October 2008, 14% of the workforce have experienced reductions in pay, and around 7% have had their working hours reduced. According to the president of the Icelandic Federation of Labour (ASÍ), Gylfi Arnbjörnsson, these figures are lower than expected. 85% of those registered as unemployed in Iceland stated that they lost their job in October, after the economic collapse. Salary Cuts for 14 Percent of Wage Earners http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=318273 IcelandReview 14 January 2009 14 January 2009 https://web.archive.org/web/20090131134203/http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=318273 31 January 2009 dead On 17 July 2009, lawmakers voted 33–28 (with two abstentions) to approve a government plan for Iceland to apply for full European Union membership. Although Iceland (as a member of EFTA) already had a free trade arrangement with the EU, it had always rejected full membership due to concerns that its independence could be compromised.November 2015 However, Prime Minister Jóhanna Sigurðardóttir, who was elected in April, had promised to bring Iceland into the EU to help stabilize its economy. EU enlargement Commissioner Olli Rehn expressed support for Iceland's membership, stating that as "a country with deep democratic traditions", Iceland will be welcome in the EU's expansion plans."Iceland applies to join European Union". CNN.com. 17 July 2009. (However, on 13 September 2013 the Government of Iceland dissolved its accession team and suspended its application to join the EU. On 12 March 2015, Foreign Minister of Iceland Gunnar Bragi Sveinsson stated that he had sent a letter to the EU withdrawing the application for membership, without the approval of the Althing, though the European Union stated that Iceland had not formally withdrawn the application.RÚV, Application not formally withdrawn) The crisis led to a radical shift in the political landscape of Iceland which until this time had been marked by stability.Silja Bára Ómarsdóttir & Viktor Orri Valgarðsson (2020) Anarchy in Iceland?The global left, pirates and socialists in post-crash Icelandic politics, Globalizations, 17:5, 840-853 (p.840). After the effects of the crisis set in, mainstream parties were discredited as newer parties such as the Left Greens and the Pirate Party moved into the mainstream. During the Social Democrat-Left Green coalition (2009-13) the crisis was blamed on corruption and a lack of transparency; in reaction to this the government attempted to reform the constitution and protect the welfare state.Silja Bára Ómarsdóttir & Viktor Orri Valgarðsson (2020) Anarchy in Iceland?The global left, pirates and socialists in post-crash Icelandic politics, Globalizations, 17:5, 840-853 (p.842). Joining the coalition resulted in the Left Greens losing their innocence as a party, resulting in voters punishing them at the 2013 election, at which they lost about half of their voter base. Voters were angry that the government had seemingly bowed to the IMF demands and introduced austerity. Later on in 2016 and 2017 the Left Greens were able to gain back a sizable proportation of their electoral gains by focusing their campaigns on their historical opposition to the Independence Party and oil drilling off the coast as well as arguing that the largest state run bank should be converted into a value based bank.Silja Bára Ómarsdóttir & Viktor Orri Valgarðsson (2020) Anarchy in Iceland?The global left, pirates and socialists in post-crash Icelandic politics, Globalizations, 17:5, 840-853 (p.843). Outside Iceland November 2015 Over £840 million in cash from more than 100 UK local authorities was invested in Icelandic banks. Councils 'not reckless with cash' BBC News 9 October 2008 9 October 2008 https://news.bbc.co.uk/2/hi/uk_news/politics/7660438.stm https://web.archive.org/web/20081009230239/http://news.bbc.co.uk/1/hi/uk_politics/7660438.stm 9 October 2008 live Representatives from each council met to try to persuade the Treasury to secure the money in the same way that customers' money in Icesave was fully guaranteed. Of all the local authorities, Kent County Council has the most money invested in Icelandic banks, £50 million. Transport for London, the organisation that operates and coordinates transport services within London, also has a large investment at £40 million. Local authorities were working under government advice to invest their money across many national and international banks as a way of spreading risk. Other UK organisations said to have invested heavily include police services and fire authorities, and even the Audit Commission.The Independent London https://www.independent.co.uk/news/uk/politics/audit-chiefs-invested-pound10m-in-iceland-963112.html 16 October 2008 16 October 2008 Audit chiefs invested £10m in Iceland In October 2008, it was hoped that about one-third of the deposited money will be available fairly rapidly, corresponding to the liquid assets of the UK subsidiaries: liquidation of other assets, such as loans and offices, will take longer. Prince, Rosa Councils can recover a third of frozen Iceland deposits within months https://www.telegraph.co.uk/finance/financetopics/financialcrisis/3202888/Councils-can-recover-a-third-of-frozen-Iceland-deposits-within-months.html 15 October 2008 The Daily Telegraph London 15 October 2008 https://web.archive.org/web/20081018183311/http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3202888/Councils-can-recover-a-third-of-frozen-Iceland-deposits-within-months.html 18 October 2008 dead In an emergency sitting of Tynwald on 9 October 2008, the Isle of Man government raised compensation from 75% of the first £15,000 per depositor to 100% of £50,000 per depositor. Isle of Man Today 9 October 2008 http://www.iomtoday.co.im/politics/Tynwald-approves-raising-50000-savings.4576500.jp Tynwald Approves Raising of £50,000 Savings Guarantee 12 October 2008 https://web.archive.org/web/20081012140422/http://www.iomtoday.co.im/politics/Tynwald-approves-raising-50000-savings.4576500.jp 12 October 2008 dead The Chief Minister of the Isle of Man, Tony Brown, confirmed that Kaupthing had guaranteed the operations and liabilities of its Manx subsidiary in September 2007, and that the Manx government was pressing Iceland to honour this guarantee. Isle of Man Today 10 October 2008 http://www.iomtoday.co.im/politics/Isle-of-Man-pledges-action.4580891.jp Isle of Man Pledges Action on Kaupthing Collapse 12 October 2008 https://web.archive.org/web/20081013072559/http://www.iomtoday.co.im/politics/Isle-of-Man-pledges-action.4580891.jp 13 October 2008 dead Depositors with Landsbanki on Guernsey found themselves without any depositor protection. Lewis, Paul 11 October 2008 https://news.bbc.co.uk/2/hi/programmes/moneybox/7665119.stm Offshore Icelandic Funds at Risk BBC News 12 October 2008 https://web.archive.org/web/20081014051021/http://news.bbc.co.uk/2/hi/programmes/moneybox/7665119.stm 14 October 2008 live In October 2008, an agreement was reached between the Icelandic and Dutch governments on the savings of about 120,000 Dutch citizens. The Icelandic government agreed to cover the first €20,887 on savings accounts of Dutch citizens held by Landsbanki subsidiary Icesave, using money lent by the Dutch government. The total value of Icesave deposits in the Netherlands were €1.7 billion. Iceland Reaches Deposit Accord With U.K., Netherlands Bloomberg 11 October 2008 11 October 2008 Brogger, Tasneem Einarsdottir, Helga Kristin https://www.bloomberg.com/apps/news?pid=20601085&sid=aijgJy15_hJI At the same time, Iceland and Britain reached an agreement on the general contours of a solution: Icesave deposits in the UK total £4 billion (€5 billion) in 300,000 accounts. Young, Brett 11 October 2008 Britain, Iceland make progress on Icesave deposits Reuters https://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLB53875520081011?pageNumber=2&virtualBrandChannel=0&sp=true 11 October 2008 The figure of €20,887 was the amount covered by the Icelandic Depositors' and Investors' Guarantee Fund (DIGF; Tryggingarsjóður in Icelandic):Art. 10, "Act No 98/1999 on Deposit Guarantees and Investor- Compensation Scheme". however, the DIGF had equity of only 8.3 billion krónur at the end of 2007,Icelandic Depositors' and Investors' Guarantee Fund "Financial statements 2007" http://wayback.vefsafn.is/wayback/20140330010516/http://www.tryggingarsjodur.is/modules/files/file_group_26/arsreikningur%202007_enska.pdf 30 March 2014 (PDF). €90 million at the exchange rates of the time and far from sufficient to cover the Dutch and British claims. The cost of deposit insurance in the UK was unclear in November 2008. The Financial Services Compensation Scheme (FSCS) paid around £3 billion to transfer deposits from Heritable Bank and Kaupthing Singer & Friedlander to ING Direct, while the UK Treasury paid an additional £600 million to guarantee retail deposits that were higher than the FSCS limit. https://publications.parliament.uk/pa/cm200708/cmhansrd/cm081013/wmstext/81013m0001.htm#08101310000002 13 October 2008 The Chancellor of the Exchequer (Mr. Alistair Darling) Written ministerial statements – TREASURY – Contingencies Fund 25 November 2008 Hansard The Treasury also paid out £800 million to guarantee Icesave deposits that were higher than the limit. A loan of £2.2 billion to the Icelandic government was expected to cover the claims against the Icelandic DIGF relating to Icesave, while the exposure of the UK FSCS is expected to be £1-2 billion. The Supreme Court of Iceland, in 2011, ordered the repayment of "£4.5bn to the UK and €1.6bn (£1.2bn) by liquidating assets".https://www.theguardian.com/business/2016/jan/13/britain-has-been-fully-reimbursed-for-icesave-bank-collapse-iceland-says https://web.archive.org/web/20160113074250/http://www.theguardian.com/business/2016/jan/13/britain-has-been-fully-reimbursed-for-icesave-bank-collapse-iceland-says dead 13 January 2016 Britain has been fully reimbursed for Icesave bank collapse, Iceland says 13 January 2016 The Guardian en-us 2019-05-31 In January 2016, The Financial Times reported that HM Treasury "had been paid £740m from the Landsbanki estate".Iceland refunds Treasury over Landsbanki collapse Dunkley Emma 16 January 2016 Financial Times London 4 This payment by the Landsbanki estate was the final repayment to the UK's treasury, which totaled £4.6bn. The crisis also prompted the Ministry of Foreign Affairs to reduce its foreign aid to developing nations, from 0.31% to 0.27% of GNP. The effect of the aid cut was greatly amplified by the falling value of the króna: the budget of the Icelandic International Development Agency (ICEIDA) was reduced from US$22 million to $13 million. Since Iceland's foreign aid is targeted in sectors for which the country has particular expertise (e.g., fisheries, geothermal power), the cutbacks will have a substantial impact in countries which receive Icelandic aid – most noticeably in Sri Lanka, where ICEIDA is pulling out altogether. Iceland's Development Community Grapples with Foreign Aid Cut Devex 23 February 2009 24 September 2009 Ryan Weddle https://www.devex.com/articles/iceland-s-development-community-grapples-with-foreign-aid-cut On 27 February 2009, The Wall Street Journal reported that Iceland's new government was trying to raise $25 million by selling its ambassadorial residences in Washington, New York, London and Oslo.Lewis, Christina S.N. (27 February 2009). "Strapped Iceland Lists Homes in D.C., New York, London". The Wall Street Journal. On 28 August 2009, Iceland's parliament voted 34–15 (with 14 abstentions) to approve a bill (commonly referred to as the Icesave bill) to pay the United Kingdom and the Netherlands more than $5 billion lost in Icelandic deposit accounts. Initially opposed in June, the bill was passed after amendments were added which set a ceiling on the payment based on the country's gross domestic product. Opponents of the bill argued that Icelanders, already reeling from the crisis, should not have to pay for mistakes made by private banks under the watch of other governments. However, the government argued that if the bill failed to pass, the UK and the Netherlands might retaliate by blocking a planned aid package for Iceland from the International Monetary Fund (IMF). Under the deal, up to 4% of Iceland's gross domestic product (GDP) will be paid to the UK, in sterling terms, from 2017 to 2023 while the Netherlands will receive up to 2% of Iceland's GDP, in euro terms, for the same period.Valdimarsson, Omar (28 August 2009). "Iceland parliament approves debt bill". Reuters. Retrieved 4 February 2013. Talks between Icelandic, Dutch and UK ministers in January 2010 dubbed as "Icesave" did not result in any specific actions being agreed upon.https://dealbook.nytimes.com/2010/02/26/icesave-talks-break-down-and-referendum-looms/ 26 February 2010 Icesave Talks Break Down, and Referendum Looms Nicholson, Chris The New York Times 4 February 2013 Official investigations Special Investigation Commission On 12 December 2008,http://www.rna.is/eldri-nefndir/addragandi-og-orsakir-falls-islensku-bankanna-2008/skyrsla-nefndarinnar/bindi-1-kaflar-1-6/1.-kafli/ 1. Kafli Verkefni og skipan nefndarinnar the Althing established a Special Investigation Commission (SIC), which came to consist of Supreme Court Justice Páll Hreinsson who served as chairman, Parliamentary Ombudsman Tryggvi Gunnarsson and Sigríður Benediktsdóttir associate chair at Yale University, to investigate the causes and lessons of the crisis. The commission released its report on 12 April 2010. Icelandic criminal investigations The Office of the Special Prosecutor was founded with the passage of a bill in the Icelandic parliament 10 December 2008. The aim was to investigate suspected criminal conduct leading up to, in connection with or in the wake of the banking crisis, whether these relate to the activities of financial undertakings, other legal entities or individuals, and, as appropriate, to follow up these investigations by bringing charges in court against those concerned. http://www.serstakursaksoknari.is/english/special-prosecutor/ Special Prosecutor Office of the Special Prosecutor 19 November 2012 to investigate suspicions of criminal actions in the period preceding, in connection with or in the wake of the collapse of the Icelandic banks, whether these relate to the activities of financial undertakings, other legal entities or individuals, and, as appropriate, to follow up these investigations by bringing charges in court against those concerned. 26 April 2015 https://web.archive.org/web/20150426184621/http://www.serstakursaksoknari.is/english/special-prosecutor/ In February 2009, Ólafur Hauksson (b. Reykjavík 1964) was appointed; it was the Icelandic government's second attempt to appoint to the role, and Ólafur was one of only two applicants. He had previously been the police chief in Akranes. At the time the unit had four staff members; by September 2013 it had 109, with 140 cases under investigation. By that time, the top managers of all three Icelandic banks which collapsed during the financial crisis had been charged, though the cases progressed slowly.2013-09-12 Iceland Prosecutor Investigates, Convicts Bankers for Financial Crimes en Bloomberg.com https://www.bloomberg.com/news/articles/2013-09-12/iceland-prosecutor-investigates-convicts-bankers-for-financial-crimes 2023-05-11 The last active investigation related to the financial crisis concluded in December 2017; 202 cases had been investigated in total over the period, with 23 of them ending up in court.https://www.ruv.is/frett/rannsokn-allra-hrunmala-er-lokid Rannsókn allra hrunmála er lokið 2018-01-24 RÚV 2018-01-25 en By January 2018, 13 of the court cases ended with guilty verdicts, four with not guilty verdicts and six trials were still pending. The investigation has been focusing on a number of questionable financial practices engaged in by Icelandic banks: Almost half of all the loans made by Icelandic banks were to holdings companies, many of which are connected to those same Icelandic banks. Money was allegedly lent by the banks to their employees and associates so they could buy shares in those same banks while simply using those same shares as collateral for the loans. Borrowers were then allowed to defer paying interest on the loan until the end of the period, when the whole amount plus interest accrued was due. These same loans were then allegedly written off days before the banks collapsed. Kaupthing allowed a Qatari investor to purchase 5% of its shares. It was later revealed that the Qatari investor "bought" the stake using a loan from Kaupthing itself and a holding company associated with one of its employees (i.e., the bank was, in effect, buying its own shares).Mason, Rowena (14 April 2009). "Iceland banking inquiry finds murky geysers runs deep". The Telegraph. Judgments Businessman Aron Karlsson was sentenced to 2 years in prison by the District Court of Reykjavík for committing fraud in real estate dealings. Aron was made to pay a total of 160–162 million ISK with interest to Arion Bank, Glitnir's winding-up board and Íslandsbanki in addition to all legal costs. The 96–97 million ISK profit of the fraud held by Aron's real estate company, AK fasteignafélag, was confiscated. https://visir.is/aron-karlsson-daemdur-i-tveggja-ara-fangelsi-/article/2012121118956 Aron Karlsson dæmdur í tveggja ára fangelsi 19 November 2012 365 (media corporation) is Aron Karlsson sentenced to two years in prison 19 November 2012 https://mbl.is/frettir/innlent/2012/11/19/daemdur_i_tveggja_ara_fangelsi/ Dæmdur í tveggja ára fangelsi 19 November 2012 Morgunblaðið (Árvakur) is Sentenced to two years in prison 16 March 2014 https://ruv.is/frett/aron-karlsson-fekk-tvo-ar Aron Karlsson fékk tvö ár 19 November 2012 National Broadcasting Service is Aron Karlsson got two years 19 November 2014 The Supreme Court of Iceland increased his sentence to 2 1 2 years in prison. https://dv.is/frettir/2013/9/19/thyngri-domur-fyrir-ad-blekkja-banka/ Þyngri dómur fyrir að blekkja banka 19 September 2013 DV is Increased sentence for deceiving banks 16 March 2014 https://web.archive.org/web/20130922041440/http://www.dv.is/frettir/2013/9/19/thyngri-domur-fyrir-ad-blekkja-banka/ 22 September 2013 dead Baldur Guðlaugsson, permanent secretary of the Ministry of Finance, was sentenced to mandatory 2 years in prison by the District Court of Reykjavík for insider trading. https://visir.is/baldur-fekk-tvo-ar-oskilordsbundid/article/2011110409257 Baldur fékk tvö ár óskilorðsbundið 7 April 2011 365 (media corporation) is Baldur received two years mandatory 16 March 2014 The proceeds of the trade, 192 million ISK (including capital gains tax), were confiscated. http://dv.is/frettir/2011/4/7/baldur-daemdur-i-tveggja-ara-fangelsi/ Baldur dæmdur í tveggja ára fangelsi 7 April 2011 DV is Baldur sentenced to two years in prison 16 March 2014 https://web.archive.org/web/20160307035538/http://www.dv.is/frettir/2011/4/7/baldur-daemdur-i-tveggja-ara-fangelsi/ 7 March 2016 dead The case was remitted to the Supreme Court of Iceland which upheld the ruling. https://visir.is/haestirettur-stadfesti-dominn---baldur-i-tveggja-ara-fangelsi/article/2012120219084 Hæstiréttur staðfesti dóminn – Baldur í tveggja ára fangelsi 17 February 2012 365 (media corporation) is Supreme Court upholds ruling – Baldur two years in prison 19 November 2012 It was the first time a conviction was handed down by a court for insider trading in Iceland. https://visir.is/timamotadomur-yfir-baldri-gudlaugssyni/article/2011704089937 Tímamótadómur yfir Baldri Guðlaugssyni 8 April 2011 365 (media corporation) is Milestone conviction of Baldur Gudlaugsson 16 March 2014 Bjarnfreður Ólafsson, Supreme Court attorney, was acquitted by the District Court of Reykjavik for his involvement in the illegal increase in share capitalisation of Exista by 50 billion ISK. https://visir.is/lydur-gudmundsson-greidir-tvaer-milljonir-i-sekt---bjarnfredur-syknadur/article/2013130539930 Lýður Guðmundsson greiðir tvær milljónir í sekt – Bjarnfreður sýknaður 30 May 2013 365 (media corporation) is Lydur Gudmundsson pays two million in fines – Bjarnfreður acquitted 13 March 2014 https://mbl.is/frettir/innlent/2013/05/30/daemdur_til_ad_greida_2_milljonir/ Lýður dæmdur til að greiða tvær milljónir í sekt 30 May 2013 Morgunblaðið (Árvakur) is Lydur sentenced to pay two million in fines 15 March 2014 http://dv.is/frettir/2013/5/30/lydur-tharf-ad-greida-2-milljonir-i-sekt/ Lýður þarf að greiða 2 milljónir í sekt 30 May 2013 DV is Lydur must pay 2 millions in fines 16 March 2014 https://web.archive.org/web/20160304090933/http://www.dv.is/frettir/2013/5/30/lydur-tharf-ad-greida-2-milljonir-i-sekt/ 4 March 2016 dead The Supreme Court of Iceland suspended his license to practise as attorney for 1 year and sentenced him to 6 months in prison. Out of the 6 months, 3 were suspended for 2 years. https://visir.is/lydur-og-bjarnfredur-daemdir-i-fangelsi/article/2014140319423 Lýður og Bjarnfreður dæmdir í fangelsi 13 March 2014 365 (media corporation) is Lydur and Bjarnfreður sentenced to prison 13 March 2014 https://mbl.is/frettir/innlent/2014/03/13/daemdir_i_fangelsi/ Lýður og Bjarnfreður dæmdir í fangelsi 13 March 2014 Morgunblaðið (Árvakur) is Lydur and Bjarnfredur sentenced to prison 15 March 2014 http://dv.is/frettir/2014/3/13/lydur-i-atta-manada-fangelsi/ Dæmdir sekir í Exista-máli 13 March 2014 DV is Sentenced in Exista case 16 March 2014 https://web.archive.org/web/20160304090940/http://www.dv.is/frettir/2014/3/13/lydur-i-atta-manada-fangelsi/ 4 March 2016 dead Bjarni Ármannsson, president of Glitnir, was sentenced to 6 months in prison by the District Court of Reykjavik for major tax noncompliance. His sentence was suspended and he was additionally ordered to repay nearly 36 million ISK of unpaid tax. https://visir.is/bjarni-armannsson-daemdur-i-halfs-ars-skilordsbundid-fangelsi/article/2013130629243 Bjarni Ármannsson dæmdur í hálfs árs skilorðsbundið fangelsi 28 June 2013 365 (media corporation) is Bjarni Ármannsson sentenced to half a year's suspended prison sentence 16 May 2014 https://mbl.is/frettir/innlent/2013/06/28/bjarni_i_6_manada_skilordsbundid_fangelsi/ Bjarni dæmdur í 6 mánaða skilorðsbundið fangelsi 28 June 2013 Morgunblaðið (Árvakur) is Bjarni sentenced to 6 months' suspended prison sentence 16 May 2014 The Supreme Court of Iceland increased his suspended sentence to 8 months. https://visir.is/domur-bjarna-armannssonar-thyngdur-/article/2014140519342 Dómur Bjarna Ármannssonar þyngdur 15 May 2013 365 (media corporation) is Sentence of Bjarni Ármansson increased 16 May 2014 https://mbl.is/frettir/innlent/2014/05/15/haestirettur_thyngdi_refsingu_bjarna/ Hæstiréttur þyngdi refsingu Bjarna 15 May 2013 Morgunblaðið (Árvakur) is Supreme Court increases sentence for Bjarni 16 May 2014 Elín Sigfúsdóttir, managing director of Corporate Banking of Landsbanki, was acquitted by the District Court of Reykjavik for her involvement in the Imon case. https://visir.is/imon-malid--sigurjon-og-elin-syknud/article/2014140609469 Imon-málið: Sigurjón og Elín sýknuð 5 June 2014 365 (media corporation) is The Imon case: Sigurjón and Elín acquitted 9 May 2015 The Supreme Court of Iceland overturned the ruling and sentenced Elín to 18 months in prison for her involvement in the Imon case. https://ruv.is/frett/sigurjon-og-elin-daemd-i-fangelsi Sigurjón og Elín dæmd í fangelsi 8 October 2015 National Broadcasting Service is Sigurjón and Elín sentenced to prison 8 October 2015 http://dv.is/frettir/2015/10/8/sigurjon-daemdur-i-thriggja-og-halfs-ars-fangelsi/ Sigurjón dæmdur í þriggja og hálfs árs fangelsi 8 October 2015 DV is Sigurjón sentenced to three and a half years in prison 8 October 2015 https://web.archive.org/web/20151010012237/http://www.dv.is/frettir/2015/10/8/sigurjon-daemdur-i-thriggja-og-halfs-ars-fangelsi/ 10 October 2015 dead https://visir.is/haestirettur-daemir-sigurjon-og-elinu-til-fangelsisvistar/article/2015151008789 Hæstiréttur dæmir Sigurjón og Elínu til fangelsisvistar 8 October 2015 365 (media corporation) is Supreme Court sentences Sigurjón and Elín to prison 8 October 2015 https://www.mbl.is/frettir/innlent/2015/10/08/sigurjon_i_3_ars_fangelsi/ Sigurjón í þriggja og hálfs árs fangelsi 8 October 2015 Morgunblaðið (Árvakur) is Sigurjón three and a half years in prison 8 October 2015 Friðfinnur Ragnar Sigurðsson, managing director of Markets of Glitnir, was sentenced to a mandatory 1 year in prison by the District Court of Reykjanes for insider trading. The ruling also subjected him to a 19.2 million ISK asset confiscation https://visir.is/eins-ars-fangelsi-fyrir-innherjasvik-/article/2013130319877 Eins árs fangelsi fyrir innherjasvik 1 March 2013 365 (media corporation) is One year in prison for insider trading 1 March 2013 http://vb.is/frettir/81792/ Dæmdur í tólf mánaða fangelsi fyrir innherjasvik 11 March 2013 Viðskiptablaðið (Myllusetur) is Sentenced to 12 months in prison for insider trading 12 December 2013 29 May 2013 https://web.archive.org/web/20130529035617/http://www.vb.is/frettir/81792/ dead The Supreme Court of Iceland decreased his sentence to 9 months in prison and 7.1 million ISK in asset confiscation on the ground that Friðfinnur was a first-time offender. Out of the 9 months, 6 were suspended for 2 years. Guðmundur Hjaltason, managing director of Corporate Banking of Glitnir, was sentenced to 9 months in prison by the District Court of Reykjavík for a major breach of trust. Out of the 9 months, 6 were suspended for 2 years. https://visir.is/larus-welding-og-gudmundur-hjaltason-daemdir-i-fangelsi-/article/2012121229270 Lárus Welding og Guðmundur Hjaltason sakfelldir 28 December 2012 365 (media corporation) is Lárus Welding and Guðmundur Hjaltason convicted 28 December 2012 https://dv.is/frettir/2012/12/28/larus-og-gudmundur-sakfelldir-i-vafningsmalinu/ Lárus og Guðmundur dæmdir í fangelsi 28 December 2012 DV is Lárus og Guðmundur sentenced to prison 16 March 2014 https://web.archive.org/web/20150518161118/https://dv.is/frettir/2012/12/28/larus-og-gudmundur-sakfelldir-i-vafningsmalinu/ 18 May 2015 dead The Supreme Court of Iceland acquitted Guðmundur. https://visir.is/syknadir-i-vafningsmalinu/article/2014140219411 Sýknaðir í Vafningsmálinu 13 February 2014 365 (media corporation) is Acquitted in the Vafningur case 16 March 2014 https://mbl.is/frettir/innlent/2014/02/13/larus_og_gudmundur_syknadir/ Lárus og Guðmundur sýknaðir 13 February 2014 Morgunblaðið (Árvakur) is Lárus and Guðmundur acquitted 16 March 2014 http://dv.is/frettir/2014/2/13/syknadir/ Sýknaðir þrátt fyrir ásetning 13 February 2014 DV is Acquitted despite intent 16 March 2014 https://web.archive.org/web/20160307170656/http://www.dv.is/frettir/2014/2/13/syknadir/ 7 March 2016 dead Hannes Þór Smárason, chairman and president of FL Group, was compelled by the District Court of Reykjavik to pay 2 billion ISK to Landsbanki because of a contract of suretyship he signed in 2007. https://mbl.is/frettir/innlent/2013/11/28/hannes_greidi_2_milljarda/ Þarf að greiða tvo milljarða vegna sjálfskuldaábyrgðar 28 November 2013 Morgunblaðið (Árvakur) is Must pay two billion because of suretyship 29 March 2014 Hannes was acquitted by the District Court of Reykjavik for the alleged embezzlement of 3 billion ISK when he transferred money from FL Group's account to the holding company Fons. https://visir.is/akaeru-a-hendur-hannesi-smarasyni-visad-fra/article/2014140329203 Ákæru á hendur Hannesi Smárasyni vísað frá 26 March 2014 365 (media corporation) is Charge against Hannes Smárason dismissed 29 March 2014 https://mbl.is/frettir/innlent/2014/03/26/akaeru_a_hendur_hannesi_visad_fra_9/ Ákæru á hendur Hannesi vísað frá 26 March 2014 Morgunblaðið (Árvakur) is Charge against Hannes dismissed 29 March 2014 The Special Prosecutor appealed to the Supreme Court of Iceland. https://visir.is/kaera-fravisun-i-mali-hannesar-smarasonar/article/2014140328809 Kæra frávísun í máli Hannesar Smárasonar 28 March 2014 365 (media corporation) is Appeal dismissal in the case of Hannes Smárason 29 March 2014 Hreiðar Már Sigurðsson, president of Kaupthing Bank, was sentenced to mandatory 5 1 2 years in prison by the District Court of Reykjavik for his involvement in the Al-Thani case. https://visir.is/al-thani-malid-thungir-fangelsisdomar-yfir-kaupthingsmonnum/article/2013131219659 Al-Thani málið: Þungir fangelsisdómar yfir Kaupþingsmönnum 12 December 2013 365 (media corporation) is Al-Thani case: Heavy prison sentences for Kaupthing men 12 December 2013 https://mbl.is/frettir/innlent/2013/12/12/daemdur_i_fimm_og_halfs_ars_fangelsi/ Hreiðar fékk fimm og hálfs árs fangelsi 12 December 2013 Morgunblaðið (Árvakur) is Hreiðar received five and a half years in prison 16 March 2014 https://dv.is/frettir/2013/12/12/kaupthingsmennirnir-fengu-thunga-doma/ Kaupþingsmennirnir fengu þunga dóma 12 December 2013 DV is Kaupthing men got heavy sentences 16 March 2014 https://web.archive.org/web/20131216071759/http://www.dv.is/frettir/2013/12/12/kaupthingsmennirnir-fengu-thunga-doma/ 16 December 2013 dead Following an appeal, the sentence was upheld on 12 February 2015 by Iceland's supreme court.Daðason Kolbeinn Tumi 2015-12-02 Iceland jails former Kaupthing bank bosses - Vísir https://www.visir.is/g/202043392d/iceland-jails-former-kaupthing-bank-bosses 2023-05-11 visir.is is Jón Þorsteinn Jónsson, chairman of Byr Savings Bank, was acquitted by the District Court of Reykjavik for his involvement in the Exeter case. The Supreme Court of Iceland overturned the ruling and sentenced Jón to 4 1 2 years in prison for breach of trust in the Exeter case. https://visir.is/fjogurra-og-halfs-ars-fangelsi-i-exeter-malinu/article/2012120609219 Fjögurra og hálfs árs fangelsi í Exeter-málinu 7 June 2012 365 (media corporation) is Four and a half years in prison in the Exeter case 16 March 2014 https://mbl.is/frettir/innlent/2012/06/07/fjogur_og_halft_ar_fyrir_umbodssvik/ Fjögur og hálft ár fyrir umboðssvik 7 June 2012 Morgunblaðið (Árvakur) is Four and a half years for breach of trust 16 March 2014 Lárus Welding, CEO of Glitnir, was sentenced to 9 months in prison by the District Court of Reykjavík for a major breach of trust. Out of the 9 months, 6 were suspended for 2 years. The Supreme Court of Iceland acquitted Lárus. Lýður Guðmundsson, chairman of Exista, was fined 2 million ISK by the District Court of Reykjavik for his involvement in the illegal increase in share capitalisation of Exista by 50 billion ISK. The Special Prosecutor appealed to the Supreme Court of Iceland which sentenced him to 8 months in prison. Out of the 8 months, 5 are suspended for 2 years. Magnús Guðmundsson, president of Kaupthing Bank in Luxembourg, was sentenced to mandatory 3 years in prison by the District Court of Reykjavik for his involvement in the Al-Thani case; following an appeal, the sentence increased to four-and-a-half years on 12 February 2015 by Iceland's supreme court. Ólafur Ólafsson, a shareholder of Kaupthing Bank, was sentenced to mandatory 3 1 2 years in prison by the District Court of Reykjavik for his involvement in the Al-Thani case; following an appeal, the sentence increased to four and a half years on 12 February 2015 by Iceland's supreme court. Ragnar Zophonías Guðjónsson, president of Byr Savings Bank, was acquitted by the District Court of Reykjavik for his involvement in the Exeter case. The Supreme Court of Iceland overturned the ruling and sentenced Ragnar to 4 1 2 years in prison for breach of trust in the Exeter case. Sigurður Einarsson, chairman of Kaupthing Bank, was sentenced to mandatory 5 years in prison by the District Court of Reykjavik for his involvement in the Al-Thani case; following an appeal, he was sentenced to four years on 12 February 2015 by Iceland's supreme court. Sigurjón Þ. Árnason, president of Landsbanki, was acquitted by the District Court of Reykjavik for his involvement in the Imon case. The Supreme Court of Iceland overturned the ruling and sentenced Sigurjón to 3 1 2 years in prison for his involvement in the Imon case. Steinþór Gunnarsson, managing director of Brokerage of Landsbanki, was sentenced to 9 months in prison by the District Court of Reykjavík for market manipulation in the Imon case. Out of the 9 months, 6 were suspended. https://visir.is/afryjar-i-imon-malinu/article/2014140609431 Áfrýjar í Imon-málinu 5 June 2014 365 (media corporation) is Appeals in the Imon case 9 May 2015 Styrmir Þór Bragason, president of MP Bank, was twice acquitted by the District Court of Reykjavik for his involvement in the Exeter case. https://visir.is/exeter-menn-syknadir/article/2011110628885 Exeter-menn sýknaðir 29 June 2011 365 (media corporation) is Exeter men acquitted 16 March 2014 http://dv.is/frettir/2011/6/29/exeter-menn-syknadir/ Exeter menn sýknaðir 29 June 2011 DV is Exeter men acquitted 16 March 2014 https://web.archive.org/web/20160307040422/http://www.dv.is/frettir/2011/6/29/exeter-menn-syknadir/ 7 March 2016 dead https://mbl.is/frettir/innlent/2013/01/31/styrmir_thor_syknadur_i_exeter_malinu/ Styrmir Þór sýknaður í Exeter-málinu 31 January 2013 Morgunblaðið (Árvakur) is Styrmir Thor acquitted in the Exeter case 16 March 2014 http://dv.is/frettir/2013/1/31/styrmir-thor-syknadur-i-exeter-malinu/ Styrmir Þór sýknaður í Exeter-málinu 31 January 2013 DV is Styrmir Thor acquitted in the Exeter case 16 March 2014 https://web.archive.org/web/20130203082236/http://www.dv.is/frettir/2013/1/31/styrmir-thor-syknadur-i-exeter-malinu/ 3 February 2013 dead The Supreme Court of Iceland overturned the ruling and sentenced Styrmir to 1 year in prison for breach of trust in the Exeter case. https://visir.is/exeter-domi-snuid-styrmir-i-ars-fangelsi/article/2013131039779 Exeter-dómi snúið: Styrmir í árs fangelsi 31 October 2013 365 (media corporation) is Exeter ruling overturned: Styrmir gets year in prison 31 October 2013 https://mbl.is/frettir/innlent/2013/10/31/styrmir_or_fekk_eins_ars_dom/ Styrmir Þór fékk eins árs dóm 31 October 2013 Morgunblaðið (Árvakur) is Styrmir Þór received one year's sentence 16 March 2014 https://dv.is/frettir/2013/10/31/fyrrverandi-forstjori-i-fangelsi-fyrir-umbodssvik/ Fyrrverandi forstjóri í fangelsi fyrir umboðssvik 31 October 2013 DV is Former president to prison for breach of trust 16 March 2014 https://web.archive.org/web/20150518161113/https://dv.is/frettir/2013/10/31/fyrrverandi-forstjori-i-fangelsi-fyrir-umbodssvik/ 18 May 2015 dead Arrests by UK Serious Fraud Office On 9 March 2011, Robert and Vincent Tchenguiz were arrested in London by the UK's Serious Fraud Office as part of their ongoing investigation in conjunction with Iceland's Special Prosecutor's Office into the collapse of Icelandic Bank Kaupthing."Robert and Vincent Tchenguiz arrested in Iceland probe". BBC News. 9 March 2011."Tchenguiz brothers arrested in SFO Kaupthing investigation" https://web.archive.org/web/20110715123254/http://www.propertymall.com/press/article/24799 15 July 2011, PropertyMall, 9 March 2011 Neither was, however, indicted, and in fact they sued the Serious Fraud Office for wrongful arrest, receiving large sums in compensation.bbc.co.uk https://www.reuters.com/article/sfo-brief-idUSFWN0Q600M20140731 Scrutiny of Icelandic business leaders Since the crisis began, many of Iceland's business leaders, who had previously been considered financial gurus who greatly developed Iceland's economy, are now under intense public scrutiny for their roles in causing the financial crisis: Jón Ásgeir Jóhannesson and Jóhannes Jónsson, the owners of the Baugur Group retail empire, which includes Hamleys, House of Fraser, The Oasis Centre and a large portion of Iceland's media. Jón Ásgeir, who had been known as the "popstar businessman" due to his shaggy golden mullet, has become the subject of a satirical video on YouTube set to the theme of the movie The Godfather. In addition, a former mistress later revealed details of his "playboy lifestyle" during a trial that found him guilty of false accounting (which prompted the Baugur Group to relocate to the United Kingdom). Lýður Guðmundsson and Águst Guðmundsson,The Águst Guðmundsson involved here should not be confused with Águst Guðmundsson, who is a famous Icelandic filmmaker of the same name. the frozen food entrepreneurs who were in charge of Kaupthing. Björgólfur Thor Björgólfsson and Björgólfur Guðmundsson, the shipping and brewing moguls who owned Landsbanki.Mason, Rowena (19 October 2008). "Iceland falls out of love with its billionaires". The Telegraph. Reportedly, all of those under scrutiny are now rarely seen in public and some have apparently left the country. They are also reportedly the subjects of an ongoing investigation to determine if any of their business practices warrant criminal prosecution. Statements from former politicians Former Prime Minister Davíð Oddsson has claimed that Iceland needs to investigate "unusual and unconventional loans" given by the banks to senior politicians during the years before the crisis. Björn Bjarnson, the former Minister for Justice and Ecclesiastical Affairs, has started a blog detailing the problems with the business sector and the efforts to cover them up. This was cited as an example of how politicians and businessmen, who traditionally held a tight grip over the Icelandic media, have lost this control and that dozens of similar blogs have been created. Björn stated that: "I have written a lot about problems in the business sector over the last 14 years, and I can only compare some parts of it to Enron. Here companies have been playing a game, using the media and publishing to make themselves look good. We only hope that the foreign media will soon begin to understand what has been going on". Political aftermath Kitchenware Revolution thumb|right|Some of the 6000 protesters in front of the Alþingishús, seat of the Icelandic parliament, on 15 November 2008. Parts of the Icelandic public have arranged protests against the Central Bank, the Parliament and the government's alleged lack of responsibility before and after the crisis, attracting between 3000 and 6000 people (1–2% of Iceland's population) on Saturdays. Icelanders Take to Streets to Protest Policy Makers' Failures. On January the third, the thirteenth consecutive protest was held. The protest bringing from 4000–7000 demonstrators(facts vary). Einarsdottir, Helga Kristin Brogger, Tasneem https://www.bloomberg.com/apps/news?pid=20601085&sid=a0r9Lfo7mSUw&refer=europe Bloomberg 15 November 2008 15 November 2008 In early November 2008, the President of Iceland, Ólafur Ragnar Grímsson, at an informal lunch with foreign diplomats, criticized Iceland's traditional friends (particularly Britain, Sweden and Denmark) as well as the International Monetary Fund. According to a memo from the Norwegian embassy, he suggested that the Russians might want to use the Keflavík Air Base, the Russian ambassador replied that they had no need for it. The President is quoted to have said that Iceland would soon recover, even if they had to fight alone. The President does not necessarily agree with the government on these issues. Skjeseth, Alf http://klassekampen.no/55221/article/item/null Inviterer Russland Klassekampen 12 November 2008 13 November 2008 no https://web.archive.org/web/20090104171235/http://klassekampen.no/55221/article/item/null 4 January 2009 dead http://politiken.dk/newsinenglish/article596825.ece Iceland: Denmark has turned its back Politiken 12 November 2008 13 November 2008 In October 2008, the UK PM Gordon Brown used provisions in part 2 of the Anti-Terrorism, Crime and Security Act 2001 to freeze Landsbanki holdings in the United Kingdom."Iceland to Britain: 'We're No Terrorists'". "Time". 3 November 2008. Iceland's prime minister Geir Haarde protested against what he described as "a terrorist law being applied against us", calling it "a completely unfriendly act"."Who are you calling terrorists, Mr Brown?". The Independent. 24 October 2008"Relations in deep freeze as Iceland denounces UK's 'unfriendly' action"September 2024 medicmedic. The Times. 10 October 2008 Angered by the British decision, Iceland decided to submit a formal complaint to NATO about their move, and it also provoked more than 80,000 Icelanders (equal to 25% of its entire population) to sign an online petition set up under the heading "Icelanders are not terrorists". The relationship got even tenser when UK replied a month later by cancelling its scheduled patrol of the Icelandic airspace in December 2008. Iceland has no standing army of its own, and relies on a long-term standing agreement with NATO where a group of member states have committed in turns to defend the Icelandic airspace, and the UK Royal Air Force had now cancelled this after mutual agreement with NATO. http://usatoday30.usatoday.com/news/world/2008-11-14-727094515_x.htm British air force mission to Iceland scrapped USA Today 14 November 2008 15 November 2008 https://web.archive.org/web/20220214002720/http://usatoday30.usatoday.com/news/world/2008-11-14-727094515_x.htm 14 February 2022 According to a poll from late November 2008, 64% were in favour of early elections, with only 29.3% opposed.http://english.people.com.cn/90001/90777/90853/6540625.html Poll: Majority of Icelanders want early elections – People's Daily Online People's Daily 26 November 2008 11 November 2009 In a poll from 22 November 2008, the Social Democratic Alliance led with 33.6%, followed by the Left-Green Alliance at 27.8% and the Independence Party at 24.8%; the Progressive Party and the Liberal Party were far behind, with only 6.3% and 4.3%, respectively.http://www.angus-reid.com/polls/view/32339/social_alliance_leads_rivals_in_iceland Social Alliance Leads Rivals in Iceland: Angus Reid Global Monitor Angus-reid.com 11 November 2009 https://web.archive.org/web/20081227043049/http://www.angus-reid.com/polls/view/32339/social_alliance_leads_rivals_in_iceland 27 December 2008 usurped As the Parliament met again on 20 January 2009, there were protests with reinvigorated force and escalation of conflict between protesters and the police.Heffernan Timothy 2020 'Where Is the New Constitution?': Public Protest and Community-Building in Post–Economic Collapse Iceland https://doi.org/10.3167/arcs.2020.060114 Conflict and Society 6 1 236-254 Berghahn Journals On 22 January, police used tear gas to disperse people on Austurvöllur (the square in front of the Alþing), the first such use since the 1949 anti-NATO protest.https://www.mbl.is/mm/frettir/innlent/2009/01/22/taragasi_beitt_a_austurvelli/ Táragasi beitt á Austurvelli mbl.is 11 November 2009 Government resignation Prime Minister Geir H. Haarde announced on 23 January 2009 that he would be stepping down as leader of the Independence Party for health reasons: he had been diagnosed as having a malignant oesophageal tumour. He said he would travel to the Netherlands around the end of January for treatment. Education Minister and Independence Party vice-chairman Þorgerður Katrín Gunnarsdóttir was to serve as Prime Minister in his absence. The leader of the Social Democratic Alliance, Foreign Minister Ingibjörg Sólrún Gísladóttir, was also unwell, undergoing treatment for a benign brain tumour since September 2008. The government recommended that elections be held on 9 May 2009. PM of Iceland steps down, elections to take place in May IceNews - Daily News - http://www.icenews.is/index.php/2009/01/23/pm-of-iceland-steps-down-elections-to-take-place-in-may/#more-5432 IceNews 23 January 2008 23 January 2008August 2026 InternetArchiveBot Björgvin G. Sigurðsson, Iceland's Commerce Minister, resigned on 25 January, citing the pressures of the nation's economic collapse, as the country's political leaders failed to agree on how to lead country out of its financial crisis. One of his last acts as minister was to dismiss the director of the Financial Supervisory Authority (FSA). Björgvin acknowledged that Icelanders have lost faith in their government and political system. "I want to shoulder my part of the responsibility for that," he said. Iceland's commerce minister quits, citing meltdown http://www.utsandiego.com/news/2009/jan/25/eu-iceland-elections-012509/?ap Associated Press The San Diego Union-Tribune 25 January 2009 4 February 2013 Negotiations on continuing the coalition broke down the next day, apparently over demands from the Social Democratic Alliance to take over the leadership of the government, and Geir Haarde tendered the government's resignation to the President of Iceland, Ólafur Ragnar Grímsson. Prime Minister Formally Tenders Government's Resignation https://eng.forsaetisraduneyti.is/news-and-articles/nr/3348 Prime Minister's Office Iceland 26 January 2009 25 March 2010 The President asked the present government to continue until a new government can be formed, Iceland's coalition government resigns https://eng.utanrikisraduneyti.is/speeches-and-articles/nr/4746 Ministry of Foreign Affairs 26 January 2009 25 March 2010 and held talks with the five political parties represented in the Althing. Iceland's 'figurehead' president has important decision to make IceNews - Daily News - http://www.icenews.is/index.php/2009/01/26/icelands-figurehead-president-has-important-decision-to-make/ IceNews 26 January 2009 26 January 2009 https://web.archive.org/web/20090131213809/http://www.icenews.is/index.php/2009/01/26/icelands-figurehead-president-has-important-decision-to-make/ 31 January 2009 live After these discussions, Ingibjörg Sólrún Gísladóttir of the Social Democratic Alliance and Steingrímur J. Sigfússon of the Left-Green Movement were asked by the President to negotiate the formation of a new coalition government. Such a coalition would be five seats short of an overall majority in the Althing, but the Progressive Party (seven seats) was expected to support the coalition without actually joining the government. New Icelandic government under negotiation http://www.icenews.is/index.php/2009/01/27/new-icelandic-government-being-negotiated/ IceNews 27 January 2009 25 March 2010 27 October 2012 https://web.archive.org/web/20121027135210/http://www.icenews.is/index.php/2009/01/27/new-icelandic-government-being-negotiated/ dead Neither party leader became Prime Minister: instead, the position went to Jóhanna Sigurðardóttir of the Social Democratic Alliance, then the Minister of Social Affairs and Social Security, Sigurdardóttir Ready to Become Iceland's PM http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16567&ew_0_a_id=319005 Iceland Review 27 January 2009 25 March 2010 14 January 2010 https://web.archive.org/web/20100114072010/http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16567&ew_0_a_id=319005 dead who became the new chairwoman of her party on 28 March 2009. On 8 April 2009, former Prime Minister Geir H. Haarde stated that he was solely responsible for accepting controversial donations to the Icelandic Independence Party in 2006, ISK 30 million from the investment group FL Group, and ISK 25 million from Landsbanki. Eyjan Geir Haarde segist bera einn alla ábyrgð á FL Group styrknum http://eyjan.is/blog/2009/04/08/geir-haarde-segist-bera-einn-alla-abyrgd-a-fl-group-styrknum/ 8 April 2009 1 October 2010 https://web.archive.org/web/20090411144615/http://eyjan.is/blog/2009/04/08/geir-haarde-segist-bera-einn-alla-abyrgd-a-fl-group-styrknum/ 11 April 2009 dead Geir was strongly criticized in the April 2010 report of the Special Investigative Commission into the financial collapse, being accused of "negligence" along with three other ministers of his government. http://www.icelandreview.com/icelandreview/search/news/Default.asp?ew_0_a_id=360575 14 April 2010 Iceland Review Crisis Report: Icelandic Ministers Were Negligent 1 October 2010 https://web.archive.org/web/20101003104847/http://www.icelandreview.com/icelandreview/search/news/Default.asp?ew_0_a_id=360575 3 October 2010 deadHelgason, Gudjon Dodds, Paisley Iceland Ex-PM Faces Possible Charges in Meltdown https://abcnews.go.com/Business/wireStory?id=11748263 ABC News AP 28 September 2010 28 September 2010 Iceland's parliament voted 33–30 to indict Geir, but not the other ministers, on charges of negligence in office at a session on 28 September 2010. Iceland's Former PM Taken to Court http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=368276 Iceland Review 28 September 2010 28 September 2010 https://web.archive.org/web/20110325065640/http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=368276 25 March 2011 dead He stood trial before the Landsdómur, a special court to hear cases alleging misconduct in government office: it was the first time the Landsdómur had convened since it was established in the 1905 Constitution.Islands tidligere statsminister stilles for riksrett http://www.aftenposten.no/nyheter/uriks/article3831879.ece Aftenposten NTB Oslo, Norway no 28 September 2010 28 September 2010 https://web.archive.org/web/20101001222900/http://www.aftenposten.no/nyheter/uriks/article3831879.ece 1 October 2010 dead The trial began in Reykjavik on 5 March 2012."Trial of Iceland ex-PM Haarde over 2008 crisis begins". BBC News. 5 March 2012. Geir Haarde was found guilty on one of four charges on 23 April 2012, for not holding cabinet meetings on important state matters. Landsdómur said Mr. Haarde would face no punishment, as this was a minor offence."Iceland ex-PM Haarde 'partly' guilty over 2008 crisis". BBC News. 23 April 2012. Crisis resolution Recovery starting in 2011 Iceland's financial position has steadily improved since the crash. The economic contraction and rise in unemployment appear to have been arrested by late 2010 and with growth under way in mid-2011."OECD Economic Surveys – Iceland, June 2011". oecd.org. Four main factors have been important in this regard. First is the emergency legislation passed by the Icelandic parliament in October 2008. It served to minimise the impact of the 2008 financial crisis on the country. The Financial Supervisory Authority of Iceland used permission granted by the emergency legislation to take over the domestic operations of the three largest banks.http://e24.no/spesial/finanskrisen/article2696518.ece Gud velsigne Island!( Finanskrisen, Makro og politkk, Utenriks ) E24.no 6 October 2008 8 July 2009 dead https://archive.today/20120702211413/http://e24.no/spesial/finanskrisen/article2696518.ece 2 July 2012 The much larger foreign operations of the banks, however, went into receivership. A second important factor is the success of the IMF Stand-By-Arrangement in the country since November 2008. The SBA includes three pillars. The first pillar is a program of medium term fiscal consolidation, involving painful austerity measures and significant tax hikes. The result has been that central government debts have been stabilised at around 80–90 percent of GDP. A second pillar is the resurrection of a viable but sharply downsized domestic banking system on the ruins of its gargantuan international banking system which the government was unable to bail out. A third pillar is the enactment of capital controls and the work to gradually lift these to restore normal financial linkages with the outside world. An important result of the emergency legislation and the SBA is that the country has not been seriously affected by the Euro area crisis. Despite a contentious debate with Britain and the Netherlands over the question of a state guarantee on the Icesave deposits of Landsbanki in these countries, credit default swaps on Icelandic sovereign debt have steadily declined from over 1000 points prior to the crash in 2008 to around 200 points in June 2011. The fact that the assets of the failed Landsbanki branches were estimated to cover most of the depositor claims had an influence to ease concerns over the situation. The third major factor behind the resolution of the financial crisis was the decision by the government of Iceland to apply for membership in the EU in July 2009. While views on the feasibility of EU membership are quite mixed in Iceland, this action has served to enhance the credibility of the country on international financial markets. One sign of the success of the above efforts is the fact that the Icelandic government was successfully able to raise $1 billion with a bond issue on 9 June 2011. This development indicates that international investors have given the government and the new banking system, with two of the three biggest banks now in foreign hands, a clean bill of health.http://www.institutionalinvestor.com/Article/2845172/Iceland-To-Raise-1B-In-Bond-Sale.html?ArticleId=2845172 Iceland To Raise $1B in Bond Sale Institutional Investor 17 June 2011 9 June 2011 20 September 2012 https://web.archive.org/web/20120920005048/http://www.institutionalinvestor.com/Article/2845172/Iceland-To-Raise-1B-In-Bond-Sale.html?ArticleId=2845172 deadhttps://www.wsj.com/articles/SB10001424052702304319804576387572241329838?mod=googlenews_wsj Iceland's Banks Come in From the Cold Asgeir Jonsson The Wall Street Journal 17 June 2011 16 June 2011 The first two major measures were implemented by the government of Geir H. Haarde but also carried out by the government of Johanna Sigurdardottir, which then took the step to apply for EU membership. Finally, the fourth major factor was the sharp rise in foreign tourism, which pumped a large amount of money into the economy; this tourism boom was caused primarily by the 2010 eruptions of Eyjafjallajökull and the rise in popularity of Game of Thrones, which had some scenes that were filmed in Iceland.https://www.youtube.com/watch?v=17oZPYcpPnQ https://ghostarchive.org/varchive/youtube/20211114/17oZPYcpPnQ 2021-11-14 live Wendover Productions YouTube video Iceland's Tourism Revolution en 5 June 2019 Iceland has undertaken recapitalization of lenders such as injection of ISK 33 billion (2.1% of 2010 GDP) into Housing Financing Fund at the end of 2010, under a restructuring plan approved by the EFTSA.OECD Economic Surveys: Iceland 2011 -OECD – 2011 Page 50 "The Housing Finance Fund (cont.).. The increasing difficulties that many households have had in paying their mortgages since the financial crisis struck have necessitated substantial debt restructuring, eroding the HFF's capital. Including debt write-downs associated with the December 2010 agreement between the government and the main mortgage loan providers to reduce the value of certain mortgages to 110% of the value of the underlying property, impaired loans soared from ISK 3.4 billion (0.4% of the HFF's loan portfolio) in 2009 to ISK 38.8 billion (5.2% of the loan portfolio) in 2010. To ensure that the HFF remained solvent, the government made a capital injection of ISK 33 billion (2.1% of 2010 GDP) at the end of 2010. The European Surveillance Authority recently approved this state ..." Aftermath (2012–2013) section August 2014 By mid-2012 Iceland was regarded as one of Europe's recovery success stories. It has had two years of economic growth. Unemployment was down to 6.3% and Iceland was attracting immigrants to fill jobs. Currency devaluation effectively reduced wages by 50% making exports more competitive and imports more expensive. Ten-year government bonds were issued below 6%, lower than some of the PIIGS nations in the EU (Portugal, Italy, Ireland, Greece, and Spain). Tryggvi Thor Herbertsson, a member of parliament, noted that adjustments via currency devaluations are less painful than government labor policies and negotiations. Nevertheless, while EU fervor has cooled the government continued to pursue membership.https://www.wsj.com/articles/SB10001424052702304203604577396171007652042?mod=ITP_pageone_0 In European Crisis, Iceland Emerges as an Island of Recovery Forelle, Charles The Wall Street Journal 19 May 2012 Iceland elected a new government in April 2013, which as one of their top priorities wanted to negotiate a debt haircut towards foreign creditors of the three failed Icelandic banks now in receivership, as part of a deal to lift the long enforced (since November 2008) capital controls.http://www.ft.com/intl/cms/s/0/298407e8-b19a-11e2-b324-00144feabdc0.html#axzz2eKmrZdHa Iceland's creditors braced for losses Financial Times 2 May 2013 9 September 2013 The 2013 controls ban a swap/exchange of ISK denominated assets to foreign currency, and so by effect has trapped repayment of ISK denominated assets to the creditors – which in theory mean they should be interested to accept a haircut in return for getting the capital controls lifted.http://uti.is/2013/07/aspects-of-capital-controls-in-iceland-and-cyprus-and-the-long-time-damaging-effect/ Sigrún Davíðsdóttir's Icelog 23 July 2013 9 September 2013August 2026 InternetArchiveBot https://www.bloomberg.com/news/2013-04-30/iceland-lacks-currency-for-easy-exit-of-krona-creditors-1-.html Iceland Lacks Currency for Easy Exit of Krona Creditors Bloomberg L.P. 30 April 2013 9 September 2013 The Icelandic government intent somehow to route the saved money from the negotiated debt haircut for creditors into a national household debt relief fund, enabling a 20% debt relief for all household mortgages. In July 2013, Standard & Poors recommended Iceland to drop the debt relief initiative, as it would only result in increased debt for the government – making it even more difficult to lend at credit markets, and it was forecasted also to ignite high inflation along with an economic recession equal to a GDP detraction of 10%.http://www.ft.com/intl/cms/s/0/20fa6168-f5fa-11e2-a55d-00144feabdc0.html?siteedition=intl#axzz2eKmrZdHa S&P warns Iceland over debt write-off plan Financial Times 26 July 2013 9 September 2013 The government has nevertheless appointed a taskforce to present proposals on how best to achieve the government's goal about implementing a combined capital control abolition and debt relief for households, with a reporting deadline in October 2013.https://www.bloomberg.com/news/2013-08-21/iceland-keeps-western-europe-s-highest-rate-as-inflation-slows.html Iceland Keeps Western Europe's Highest Rate as Krona Stable Bloomberg L.P. 21 August 2013 9 September 2013https://www.bloomberg.com/video/iceland-premier-says-no-date-to-lift-controls-1b~cNwqVTO6wEvCKoF6rww.html Iceland Premier Says No Date to Lift Controls (video interview) Bloomberg L.P. 20 September 2013 20 September 2013 Capital controls were eventually ended in March 2017.BBC News, 'Iceland to end capital controls from 2008 financial crisis' (12 March 2017). A significant amount of the capital trapped in Iceland by the capital controls was channelled into property investment, partly by the financial management company Gamma, and was one factor that fuelled rising property prices in Iceland after the crash.Kári Tulinius, 'So What's This Literary Scandal I Keep Hearing About?', The Reykjavík Grapevine (9 June 2015). The Icelandic Prime Minister commissioned Frosti Sigurjónsson to study Iceland's monetary system. In the 2015 report, Sigurjónsson argued the central bank was unable to contain the credit boom and proposed sovereign money reform.Afp 2015-03-31 Iceland looks at ending boom and bust with radical money plan https://www.telegraph.co.uk/finance/economics/11507810/Iceland-looks-at-ending-boom-and-bust-with-radical-money-plan.html 2025-08-24 The Telegraph en COVID-19 According to the IMF, the reforms implemented in response to the financial crisis strengthened banking supervision, capital requirements, and financial stability and helped the country’s banks remain resilient during the COVID-19 pandemic- which severely disrupted tourism, the main contributor to the Icelandic economy since 2012.Iceland: Financial System Stability Assessment https://www.imf.org/en/publications/cr/issues/2023/06/22/iceland-financial-system-stability-assessment-535055 https://web.archive.org/web/20260223161557/https://www.imf.org/en/publications/cr/issues/2023/06/22/iceland-financial-system-stability-assessment-535055 2026-02-23 2026-10-14 IMF en See also Banks 1991 Indian economic crisis 2008 financial crisis 2008–2012 California budget crisis 2010 Icelandic loan guarantees referendum 2011 Icelandic loan guarantees referendum Banking in Iceland Darien scheme Economy of Iceland Iceland - IMF relations Icelandic outvasion List of banks acquired or bankrupted during the Great Recession List of stock market crashes and bear markets Stock market crash Stock market crashes in India Swedish banking rescue The Report of the Althingi Special Investigation Commission Timeline of the Icelandic financial crisis References 30em Further reading 30em Aliber, Robert Z., and Gylfi Zoega, eds. Preludes to the Icelandic Financial Crisis (Palgrave Macmillan; 2014) 357 pages Bagus, Philipp and David Howden (2011). Deep Freeze: Iceland's Economic Collapse, Ludwig von Mises Institute, 2011. 978-1-933550-34-3 Boyes Roger Meltdown Iceland: Lessons on the World Financial Crisis from a Small Bankrupt Island Bloomsbury USA 2009 978-1-60819-018-8 registration https://archive.org/details/meltdownicelandl0000boye Chartier Daniel The End of Iceland's Innocence. The Image of Iceland in the Foreign Media during the Financial Crisis Citizen Press Iceland and University of Ottawa Press 2010 978-0-7766-0760-3, original title *Chartier Daniel La spectaculaire déroute de l'Islande Presses de l'Université du Québec Canada 2010 978-2760525399 Gudmundsson, Már and Thorsteinn Thorgeirsson (2010). Fault lines in Cross-border Banking: Lessons from the Icelandic case, SUERF Studies 05/2010, Vienna. Jonsson Asgeir Why Iceland: How One of the World's Smallest Countries Became the Meltdown's Biggest Casualty McGraw-Hill Professional 2008 978-0-07-163284-3 Jonsson, Ivar (2012) "Explaining the Crisis of Iceland – A Realist Approach" in Journal of Critical Realism, 11,1. Sigríður Benediktsdóttir, Gauti Eggertsson, and Eggert Þórarinsson. 2017. The Rise, the Fall, and the Resurrection of Iceland. Steinsson, Jón. 2017. Comment on The Rise, the Fall, and the Resurrection of Iceland. Silja Bára Ómarsdóttir & Viktor Orri Valgarðsson (2020) "Anarchy in Iceland? The global left, pirates and socialists in post-crash Icelandic politics", Globalizations, 17:5, 840–853 External links Hrunið þið munið, a website listing and reviewing scholarly and artistic handlings of the Crisis. What happened to Iceland? BBC News Kreppanomics The Economist A Meltdown in Iceland Time Iceland Suspends Trading, Creates New Bank Time Iceland: Britain's Credit Crunch Scapegoat Time The shocking errors of Iceland's meltdown Financial Times The Skeleton Economy, The Reykjavík Grapevine Icelanders struggle with economic collapse The New York Times The first casualty of the crisis: Iceland https://web.archive.org/web/20090131132719/http://www.voxeu.org/index.php?q=node/2549 31 January 2009 Credit collapse numbs Icelanders BBC News Iceland: The country that became a hedge fund Fortune The Vikings are coming!A modern Icelandic self-image in the light of the economic crisis, scholarly analysis by Ann-Sofie Nielsen Gremaud, in: NORDEUROPAforum 20 (2010:1–2), 87–106. We Do Not Intend to Pay The Debts of the Banks That Have Been a Little Heedless, translated extracts of an interview given by Davið Oddsson on Icelandic public-service broadcaster RÚV, 7 October The Icelandic banking crisis and what to do about it: The lender of last resort theory of optimal currency areas Category:Economic history of Iceland Iceland Icelandic financial crisis Icelandic financial crisis Iceland Financial crisis Financial crisis Financial crisis Financial crisis Iceland Iceland Iceland Iceland Category:Political scandals in Iceland