Pension funds in Iceland want to buy the banks - Many want nationalization instead

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2013-03-27 (All day)

The Icelandic pension funds are likely buyers of the banks in Iceland that are mostly owned by foreigners. When the Icelandic banking system fell, new banks were founded on the ruins of the old ones. Foreign creditors and hedge funds are now the largest owners of two of these banks. The government owns the third one.

The three largest banks in Iceland defaulted in 2008. Resolution committees are handling their affairs. Foreign investors and hedge funds own large claims on the defaulted banks, but among the assets of the defaulted banks are the new banks, Arion Bank and Islandsbanki bank. Icelandic pension funds are likely to begin formal discussions regarding the purchase of these banks. The pension funds would pay with foreign currency and enable the claim holders to get their money out of the Icelandic economy. This would help with lifting the capital controls.

The claim holders share in the Icelandic banks is estimated to be worth 220 billion ISK (1.39 billion EUR), but the governor of the central bank has said that they must offer a huge discount on that number, and instead they will be paid with foreign currency.

The largest step to free the assets of the claim holders of Glitnir and Kaupthing [the defaulted banks], is to sell Islandsbanki and Arion Bank [the new banks]. Foreign claim holders own a 95% share in Islandsbanki and 87% share in Arion Bank. ....

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