The Icelandic owners of Landsbanki have not made a public appearance in Iceland since the bank went down two weeks ago. This despite the fact that the Icelandic nation has been deeply embroiled in conflict over their Icesave accounts and our politicians have been working overtime to reach an agreement with Landsbanki creditors overseas. Unsurprisingly many, MANY people here would like to know just where they are – and why they have not come forward to make public statement about the serious issues surrounding their bank.
There would be ample cause for them to address the nation. After all, we the Icelandic people may become saddled with their massive debt. According to the news on RÚV [Icelandic National Broadcasting Service] at noon today, the per capita claims that Britain is making on Landsbanki, and which they would like the Icelandic taxpayer to fork over, are 3-4 times higher than the war compensation claims Germany was made to pay after World War II. A scenario that caused runaway inflation and massive unemployment in Germany after the war. Shocking news, indeed.
Before the start of the global banking crisis, Landsbanki was repeatedly instructed by the Icelandic Financial Supervisory Authority to open subsidiaries in the countries where it operated. By opening a subsidiary in, say, the UK, Landsbanki would have operated under UK law, as a UK bank, and its liabilities now would have been covered by the UK’s compensation scheme. This is what both Glitnir and Kaupthing did, for instance. However, for whatever reason, Landsbanki did not do as instructed [or the FSA didn't follow up well enough] – which is why we, the Icelandic people, are now being called upon to cover their immense debt.
Landsbanki – the National Bank of Iceland – was privatized a few years ago and sold to a father-son team, Björgólfur Guðmundsson and his son Björgólfur Thór Björgólfsson. Björgólfur Sr. had a slightly tarnished reputation here in Iceland, as years ago he was involved in an affair surrounding the bankruptcy of the shipping company Hafskip. He was charged with criminal misconduct and received a 12 month suspended sentence, after which he and his son invested in a beer brewery in Russia, just as it was being opened to foreign investment. The brewery did well and was eventually sold to Heineken for a large profit. Rumours have circulated about their alleged ties to the Russian mafia, but nothing has ever come to light and I don’t think most people here give any credit to those stories. Anyway, Jr. and Sr. eventually returned to Iceland with the loot and proceeded to snap up Landsbanki at a price many felt was ridiculously low.
Since then, everything has been pretty quiet around the two of them, if you don’t count mixed views on whether they should, for example, be a major supporter of RÚV [they donated generously towards domestic production of TV shows], and minor hoopla around a book that was supposedly pulled from print because something compromising was written about B. Sr.’s wife. Both of them have enjoyed goodwill in Icelandic society and they have appeared grounded and sensible in their activities, to the point of seeming slightly dull – at least in comparison with Baugur boss Jón Ásgeir Jóhannesson [the majority shareholder in Glitnir bank] with his flashy cars, yachts, private jet [although B. Jr. also travels by private jet], big parties, etc.
Jón Ásgeir has appeared on television twice in the past couple of weeks to answer for the cock-up of his people, something which has done a great deal for his image, as most people respect him for having had the guts to face the nation – and moreover to keep his cool despite some tough questioning. The media here has repeatedly tried to get a hold of the two Björgólfurs and also their official press rep, but to no avail. Meanwhile, Björgólfur Jr. was spotted in the UK a couple of weekends ago, hob-nobbing at an art show where there was an Icelandic exhibit. Uncool. To say the very least.
And the country waits. And grows more impatient. And the longer we have to wait, the longer the owners of Landsbanki put off facing the people who are suffering the consequences of their and their people’s incompetency, the more difficult their re-entry into Icelandic society will be. That is, if they ever return.
STORM WARNING!
Apparently we’re in for a doozie. Winds of 18-23 m/second with a major snowfall. We had a fair bit of wet snow this afternoon but most of it seems to have melted – let’s see what the storm does. Right now it is 2°C [36F], the sun came up at 8:43 am and will set at 5:39 pm.
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I have just found our dear YT mentioned here http://www.icelandreview.com/icelandreview/daily_life/?cat_id=16539&ew_0_a_id=314132 : ) Alda rulez !!!
Me keeping my eye on the blog as usually. No more (financial) earthquakes for Iceland !!!
Ours are just as bad. Sir Fred Goodwin, chairman of RBS had to be crowbarred out of his position by the government as a price for the collossally expensive rescue. I said a year ago he must be insane during the ABN takeover. The approaching tsunami could already by seen by mere proles like me, but not apparently a man who earnt £4.2M that year. His “goodbye” is around half that.
He’s said a few words, but they are uninteligible, so gritted are his teeth.
“According to the news on RÚV [Icelandic National Broadcasting Service] at noon today, the per capita claims that Britain is making on Landsbanki, and which they would like the Icelandic taxpayer to fork over, are 3-4 times higher than the war compensation claims Germany was made to pay after World War II.”
Hmm, sure sounds shocking,but that’s because it isn’t really true. Firstly, Germany wasn’t MADE to pay anything, the allies simply took what they liked (even whole countries, for instance Silesia became Polish). Since Reichsmarks hadn’t any value left, this means they disassembled whole industries and transported them out of the country. The russians were especially extreme, in Eastern germany, almost nothing of productoice value was left behind. One reason why the East was never able to catch up with Western Germany. Then, thank god, the US Marshall plan helped get the economy back on track again, and later Germany was able to get pay reparations to the citizen of nations that suffered under the Nazis. Well, if you take only those payments, don’t adjust them for inflation, and calculate the sum for each citzien, it may be that this is a lower sum as the debt of the Iceland banks per capita. But imho this is a quite stupid calculation – no inflation, no payments in ind, and the circmstances are totally different.
I’ve read somewhere that all claims against the banks combined amount to 116000$ for each Icelander. This may sound high, but it’s only a worst case scenario, and imho it’s still manageable. Don’t let those numbers discourage you!
Hi, Alda, Germany was made to pay vast amounts after the first world war, prior to the great depression and all that.
Did you watch the Kastljós tonight?
Made me wonder if most of the responsibility for this mess lies with our incompetent government and other officials even more than with the owners of the banks themselves?
Compared to both Björgólfurs, your story makes Jóhannesson look quite good. But wasn’t there something in the news about an enmity between Jóhannesson and Oddsson? What’s this based upon? Shouldn’t the Glitnor shareholder be happy instead about the politicians paving the way for the expansion????
“Germany was made to pay vast amounts after the first world war”
Yes, after the first world war, too. But imho this misses the more dire points. The money was far less important than the starvation after both wars, the loss of industry, all those soldiers who died in their most productive age, and the refugee problem. That’s why I think this is an apples and oranges comparison.
Iceland is in a far better situation, despite the momentary depression. And, don’t forget, for all those savings there were assets balancing them. Ok, those may have lost some value, and the liquiditation will be difficult, but they will eventually compensate for a lot of the debt. So, it’s totally unknown yet how high the final bill will be. No need for premature and possibly hyperbolical panic!
American rumours persist that a RQ-1 Predator spy plane spotted them in Greenland, but that has been strenuously denied by the Pentagon. Separately, a group of teenage English backpackers on holiday in Nepal claim to have bungee jumped with them, but no photographic or video evidence has been forthcoming. More bizarrely, Australian identical twins Suzy and Suzie claimed that the Icelandic business magnates are renting a couple of rooms in the Moonlight Bunny Ranch.
“After all, we the Icelandic people may become saddled with their massive debt.”
There is no “may” about it, either the Icelandic people make good the debt or Iceland defaults.
“Before the start of the global banking crisis, Landsbanki was repeatedly instructed by the Icelandic Financial Supervisory Authority to open subsidiaries in the countries where it operated. ”
I am not at all sure this is correct. They may have been “requested” to do this but it clearly was not demanded or required as a prerequisite for doing business. In fact when I ponder a bit the “Icelandic Financial Supervisory Authority” is neither supervisory or an authority on seemingly anything within its purview.
Kate – Thanks for the link – Jonas is actually a good friend, but kind of him to give the IWR this plug nonetheless!
Gray – yes there was enmity between Doddsson and JÁJ which is much more complex than anything to do with the banks. I touched briefly upon it here, and there are some links in the post:
http://icelandweatherreport.com/2008/10/the-biggest-bank-robbery-in-icelandic-history.html
Lee – LOL!!
kristjan – indeed, after watching Kastljós this evening and what came to light there, it seems like the FSA was mostly to blame. In which case I stand corrected. However, the information presented previously was that Landsbanki shirked their obligations.
Alda,
I think FSA allowed Landsbanki to shirk. The bank felt it was best for them financially and froma regulatory standpointand FSA clearly did not see the harm this action, or lack of action could cause.
Plenty of blame to go around, government failed, central bank failed, FSA failed, bankers failed to protect the assets of their stockholders both foreign and domestic. There was ample warning but no one listened.
Kristján, completely agree. And yes, blame seems to be the only thing that’s not depreciating these days.
Gray, the danger here is, more than in Germany, that all the young people – and able people – will move away and leave the ones that are unable to cope, around here, basically bound in slavery.
Sorry to say, we have looked into moving to Canada. I don’t want to move at all, but I also don’t want my children and grandchildren to have to pay for those farking idiots, both in our government, monetary control and the banking dudes.
Well Guðmundsson seems to have popped up recently commenting on his West Ham soccer club in the UK. He is quoted saying that he “isn’t currently in talks to sell the team. The club will have the money it needs to improve its squad” – which makes you wonder where his head is. Maybe he’s already washed his hands regarding his bank…
http://online.wsj.com/article/SB122471425257060191.html?mod=googlenews_wsj
Moving to Canada? You people just can’t leave the snow and ice alone, can you?
The full transcript of the famous Árni M. Mathiesen / “move over” Darling conversation is out, with excerpts in the FT, the petition site and in full on Iceland Review. Fascinating reading.
Darling’s statement that “The Icelandic government, believe it or not, have told me yesterday they have no intention of honouring their obligations here” is factually incorrect, but in essence, bang on. I’m staggered the petition folk have stuck this on their site, as anyone reading it from the Darling’s angle must see exactly why his government took the action it did.
It shoots the fox of those who say Icelandic international obligations were always going to be met. At best the minister says “we will if we can, after we’ve taken care of domestic depositors. And, incidentally, we have no money as we’ve been telling you for six months”.
The UK Treasury should put this on their website.
Hildigunnur, take care not to make premature decisions before all factors involved have becomes clear! This would be a grave move, especially for the kids, and you don’t want to look back in a year or so and see that the situation actually isn’t even half as a bad as you imagined.
And regarding the political side: Excuse me, pls, but moving from one right wing government shamelessly stomping for unregulated capitalism to just another doesn’t seem to be the right kind of change to me. Who knows what Harper and his gang will do to Canada’s economy and social net in the future? You may simply move from Scylla to Charybdis!
:-/
Look at the headline: “Transcript challenges Darling’s claim over Iceland compensation”
By David Ibison in Reykjavik
“A transcript of a conversation between the chancellor, Alistair Darling, and his Icelandic counterpart appears to question the British government’s claim that Iceland had refused to compensate UK savers.”
Mathiesen did not say that Iceland would not honor its obligations. What he said was that Iceland was obligated to pay back both Icelandic depositors and English depositors, but did not have the money available to pay both groups off right now. This clearly implies that Iceland would pay off the English depositors later when it had more money. This would be the equivalent of paying off one credit card bill instead of another – paying one bill first does not mean that you don’t intend to pay the second. Iceland had separate agreements with both groups of depositors that had nothing to do with one another. Where is the agreement that says that one group, the English, must be paid ahead of the other? Probably there isn’t any. Payments to both groups would not be guaranteed in the pending bankruptcy of Landsbanki. Depositors would be considered unsecured creditors in bankruptcy court and since they are last in line both would get nothing. The British were in effect trying to “jump the queue” to save the British depositors. Very bad form, what?
garpur, as trev already pointed out the full transcript makes interesting reading.
Mathiesen clearly states that Icelandic depositors get their entire deposits guaranteed while overseas depositors will get the legal minimum – with the caveat that the fund to pay this is basically empty. The two key points can be seen in the following excerpt:
“Mathiesen: We have the insurance fund according to the Directive and how that works is explained in this letter and the pledge of support from the government to the fund.
Darling: So the entitlements the people have, which I think is about sixteen thousand pounds, they will be paid that?
Mathiesen: Well, I hope that will be the case. I cannot visibly state that or guarantee that now, but we are certainly working to solve this issue. This is something we really don’t want to have hanging over us. ”
….
Darling: Well, I know that. Can you tell me this, if the insurance fund you refer to, does it have money to pay out?
Mathiesen: They have some money, but as is with most of these funds, it is very limited compared to the exposure.
…..
Darling: Do I understand that you guarantee the deposits of Icelandic depositors?
Mathiesen: Yes, we guarantee the deposits in the banks and branches here in Iceland.
Darling: But not the branches outside Iceland?
Mathiesen: No, not outside of what was already in the letter that we sent. ”
Neither side come out of this well.
garpur, the conversation was pretty explicit. Icelandic depositors were to be taken care of first, and the rest if and when money could be found to do so. It’s nothing to do with UK depositors jumping the queue. There was no guarantee that the Icelandic government had the means to fulfil their obligations, no matter how friendly the intention. What on earth did you expect the UK government to say?
“OK – business as usual then, whilst you try and find the cash to meet your commitments, and we’ll tell our depositors that you’ll do your best.
Meanwhile assets would be repatriated to Iceland as quick as they could be.
The UK government would have been mad to act any other way than they did, although the language could have been more diplomatic.
“What on earth did you expect the UK government to say? ”
For sure not “they have no intention of honouring their obligations here”, because it’s an outrages lie.
OK, ok. Change that to “what on earth did you expect the UK government to DO?”.
I agreed long ago that what they said was dubious and the transcript proves it was wrong – assuming of course, that the transcipt is correct.
See what Netherlanders government did. No freezing assets, no big fat lies…
One of the things that struck me most about the Icelandic society was the docile reactions to national scandals. A majority of people opposed the building of the dam and the smelter, a majority of the people opposed the joining of “the coalition of the willing” and taking an active role in the war in Iraq and Afghanistan (a deciscion made by the PM and his cabinet, before even informing parliament), but there were never any mass protests in Reykjavik. Sure there are some strong discussions on Kastljos and Silfur Egills, but the Icelandic electorate never punishes its politicians, but if you do not throw in a free concert and a camping weekend you can not get more than 500 people together to stage a protest.
( A member of parliament from the Westman Islands was convicted by the court to a jail sentence for fraude and theft. But a poll in his constituency AFTER his conviction showed that he would still have had a majority of the votes.)
“Every country gets the leaders it deserves” is a famous quote. Unfortunately in Iceland that means, that you get to vote for a bunch of incompetent physiotherapists and high-school teachers (not that there is anything wrong with those professions, I just don’t think these people should be running a country). I think that in any other country, that was facing bankruptcy throught the actions of a few, and that had “terorrist laws” used against it, would at least begin with seizing all assets of those responsible and then sort out the whole sorry mess! But in Iceland these bastards are given all the time in the world to move everything they own to an acount in the Cayman Islands, so they can keep up their life style in LONDON and you will never see them again.
“So long, and thanks for all the fish”
“moving to Canada”… Out of the G8 Canada is looking the strongest by far. But Canada is asleep for now resting on the notion that its regulations happen to have been the right thing to do way back when. But they will get hit and get hit hard any moment now at least from my perspective, I’ve already lost my job over this. Who will they sell to? The dollar has sunk a great deal all of a sudden. Maybe that will help some folks but hurt others.
So who’s my scapegoat? I can’t blame Iceland. let’s see, this week they are blaming Greenspan which brings Clinton into the picture. Such noise and desperate measures to keep their own gravy train running on hot air.
And last I heard, Landsbanki execs were seen opening a street kiosk outside Cartagena Colombia. I’ll bet it is right next to the store I saw (really, I have pictures) called Tienda Elvis.
Doesn’t matter: I suggest you wander on to some Netherlands forums and you will find anger surpassing anything from the Brits (I speak some Nederlands) not least at their government for NOT following the UK example. Their depositors are still waiting like ours.
“See what Netherlanders government did. No freezing assets, no big fat lies…”
Really?
“Morgunbladid reports that the Norwegian police have seized the assets of Iceland’s Landsbanki Bank in Norway as collateral for claims from the state of North Holland, which deposited EUR 80 million (USD 100 million) to the online savings unit of Landsbanki in the Netherlands in July and August this year.”
http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=314255
Hehe, you look funny with all that egg on your face!
(sry, I know that’s mean humour, but I couldn’t resist)
“moving to Canada” …
As a former immigrant in Canada I’m surprised people are talking about it like it’s just something you pick up and do … last I heard the Canadian authorities were incredibly strict about immigration, even more so than the US, who at least have a green card lottery. Even I who spent my formative years in Canada and went through the Canadian school system can’t just pick up and move there!
I went to the same class with the younger Bj0rgulfsson. I have and never had anything good to say about him. He was my worst bully, to a point where I look back and hate most of my school years till college because of him.
I don’t think he will ever return, nor will his father. I don’t think they’ll ever respond to the nations request/desire to talk about their failures. I also believe they stashed huge amounts of money away.
I’d be surprised if they ever returned.
I guess that living in North America isn’t all bad, even though I’ve had a hard time dealing with the government here.
I think it is still easier to immigrate to Canada than the US. Although with a new president hopefully Obama, it’ll get easier being a foreigner in the US.
I’m surprised more Icelanders aren’t looking into other Scandinavian countries.
That egg of yours, Gray, didn’t even touch my nose. Do you make any difference between Norway and Netherlands?
Indeed, moving to Canada isn’t a simple waltz. The perception in Canada and the U.S. is that Canada is a pushover. It is a points system, so if you have relatives or a fat pocket full of money you get more points to start. I had nothing except a skill that at the time was in high demand. Then the paper work and wait… I got in and still here.
I’ve been dreaming of moving to Iceland but that isn’t a practical goal for the foreseeable future now. It isn’t about the money, just enough to stay warm and healthy is all I ask as long as the opportunity exists for a future. Canada has slowly become what I saw coming to the U.S. when I left 20 years ago. This is not what I want to see happen to my beloved Iceland. Canada is still a kinder gentler version of the U.S. but slowly it is sinking with the big ship.
Leave a light on for me, I’m coming.
Even though the Icelandic government instructed Landsbanki to open subsidiaries in the UK, they didn’t stop them from mopping up even more money from depositors for weeks and months afterwards. Then there is the question of weather or not the UK authorities would even have allowed them to open up subsidiaries. It was in the middle of the credit crunch and it was getting increasingly clear that they were not taking very good care of the money they were entrusted with.
I’m disgusted with the behavior of Icelandic bankers abroad, but at the same time I desperately hope that me and my family (who absolutely have not been rolling in foreign cash for the past few years) will not be made to pay their immense debts for generations. As many Icelanders I naively believed that as the banks were privatized their owners would be responsible for them.
And I would also like to say that (even if that maybe doesn’t belong in this particular thread) I can’t bring myself to sign that petition. The postcards with the pictures of blond and blue eyed Icelanders holding signs that read “Do I look like a terrorist?” seem to imply that a terrorist looks a certain way, presumably the very opposite of fair skinned and Nordic.
“Do you make any difference between Norway and Netherlands?”
Hello? “the Norwegian police have seized the assets of Iceland’s Landsbanki Bank in Norway as collateral for claims from the state of North Holland”
You can only freeze assets if you can get hold of them. There were none, or not enough, in North Holland, and so the state asked Norwegian authorities for assistance, and they delivered. No doubt about it that this qualifies as an example of the Netherlands freezing Landsbanki assets (with the help of Norway, ok).
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