Iceland Government

Iceland rises from the ashes of banking collapse

Posted 09/10/2013 - 08:45 by anrigaut

2013-10-05 23

Populist programme of new government includes a squeeze on foreign creditors as country emerges from years of instability

A new mood of proud nationalism is emerging in economically resurgent Iceland after an out-of-control banking system sank the country into financial meltdown exactly five years ago. Riding this wave of confidence is 38-year-old prime minister, Sigmundur Davíd Gunnlaugsson, elected in April on populist promises of mortgage relief for every homeowner.
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Gunnlaugsson's main pre-election pledges were to squeeze [these] foreign creditors – characterised as "hedge funds" or "vulture funds" – in order to bankroll a mortgage relief programme for all homeowners and a string of pro-business tax cuts.
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And Not all of the foreign creditors are the vulture funds Gunnlaugsson talks of. British and Dutch taxpayers still have significant exposure to the Landsbanki administration. As priority creditors they have had almost 55% of their claims repaid, though the remainder will take a good deal longer to be paid out. There are UK local authorities and charities, too, which entrusted more than £1bn with failed Icelandic banks and are still waiting to get much of their money back. Meanwhile, taxpayer-controlled Royal Bank of Scotland had been one of the largest investors in Icelandic bank bonds, a position that has left it a non-priority claimant, expecting only minimal returns in its claims.

Until recently RBS had remained on the banks' creditor lists but sold its positions to distressed debt specialists earlier this year — at a heavy loss — as the outlook for creditors began to look more uncertain in the face of Gunnlaugsson's rising fortunes.

The Icelandic prime minister has promised to give further details of his populist programme for tax cuts and home loan debt relief next month, and will be under pressure to show how he expects to fund such moves. It remains to be seen if he gains more from squeezing foreign creditors trapped within Iceland's capital controls than he loses in terms of the damage to Iceland's reputation among international investors.

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Iceland: 5 years on, nationalism is growing inside capital controls

2013-10-07 23

Thinking back to five years ago, Iceland was forced to take the right decisions, not saving the big banks. But that was perhaps the easy decision: after all, the major part of creditors in these banks were foreigners. Later on, frantic attempts were made to save the very Icelandic banks, i.e. Saga Capital, VBS and some saving societies. Now, the idea is to tax estates where foreigners are ca. 90% of creditors whereas other failed financial companies are not taxed. “Fuck the foreigners” was a policy after the collapse – and it still seems to be the only policy five years after the collapse. .....

Part of the budget proposals, put forth last week, is that estates of the failed banks should be taxed. .....

The intention seems clear enough. It would indeed be much more clear-cut if the definition was plainly to tax “estates where major part of creditors are foreign.” ....

Update 9 Oct: Comment just added to Sigrun's blog by anrigaut

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Iceland to submit report on failed banks this week

2009-04-14 23

Iceland's government said on Wednesday an evaluation of the assets and liabilities of its failed banks would be submitted to its market authority and main creditors within two days, with a deal expected by late May.

Negotiations on the division of the assets will begin as soon as possible, a government spokesman told Reuters, with an agreement expected by May 18.

Iceland's main commercial banks -- Kaupthing, Landsbanki and Glitnir -- failed last year, leaving creditors mainly across Europe, owed billions of dollars.

Creditors include a wide-range of individual depositors, bondholders and financial institutions.

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Pearson-Treasury latest comment...

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Pearson yesterday stated, "We expect the Icelandic Government to support deposits in branches of Icelandic banks."

The specific warning that Icelands banks were going to crash.

Posted 31/01/2009 - 09:20 by follow_the_tao

2008-10-30 02

I don't believe this has ever been posted.

It ought to be read by everybody.

And people then ought to start asking the regulators exactly what they were doing in 2008?

This disaster wasn't unforseeable.

Hence we get to very important questions like why were all Kaupthing IoM eggs in one basket i.e. KSFUK.

Given the situation, and remember there was a very visible sitaution at the time, why wasn't "the normal situation modified."?

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