Sigurjon Arnason, the CEO who lead Landsbankinn into the IceSave fiasco is confident that if the sale of the banks assets are done correctly then they will cover the 650 billion the state has to assume because of the disastrous savings account.
Maybe the state could ask Sigurjon to organize the sale?
But there is a hinge. Following IceSave is a long line of creditors who also want their share. So if IceSave is paid to the full, will they not expect the same.
And there is a problem. A lawyer, Agust Thorhallsson speculates that Landsbankinn’s assets are mortgaged a couple if not a few times over.
Althingi meets in a couple of hours because of the IceSave agreement. Do our nationally elected party-puppets realise how deep in they really are on this issue?
A sensible demand would be to bring everything about the government’s decision on IceSave into public view.
But how can you expect sensible outcome from Althingi when its leaders are exposed as Steingrimur J. Sigfusson and Bjarni Benediktsson were on Channel 2 yesterday? Steingrimur is vehemently against Iceland paying a penny for IceSave, while Bjarni thinks we should negotiate with the UK and Dutch government on the issue.
Oh, wait was that before Steingrimur was in the government and before Bjarni was in the opposition? Yes it was.
Enough to drive the most staunch heathen into closing his eyes and saying the Lord’s Prayer before the world collapses around him.
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andy
2 years ago
The old LB assets are worth a lot less than the Icesave debt, which will balloon out to £3.2 Bn pounds by 2014 when payments start (what is that at 200ISK to the pound) for the UK. The Dutch debt will be another £1.5Bn by the. All in all, £4.7 Bn (?).
LB assets overseas may no be accessible if secured against ECB or BoE loans, so the main assets will be the Icelandic company shareholdings owned by Landsbanki or potentially, a shareholding in NBI.
Add on the recap of the Banks and it would appear that this bill may be too large for the Icelandic system to pay (?)
Vilhjalm A.
2 years ago
The problem is that there are far more creditors and claims to Landsbanki assets than there are Landsbanki. The Icelandic government (i.e. the Icesave depositor fund) MUST have priority over all other claims if the sale of these assets is to be used to compensate the depositors.
It doesn’t matter so much that there are multiple claims on the same limited assets – what matters is who has priority to get them.
Landsbanki is bankrupt, and in bankruptcy court first priority for assets goes to secured creditors. Depositors (i.e. the Icesave depositors in Britain) are non-secured creditors are last in priority and will normally get nothing. And – - this is very important — the Icelandic government is probably not a secured creditor (as far as I can tell) so if and when Iceland sells Landsbanki assets, the assets go to secured creditors (such as foreign lenders or the EU Central Bank), NOT to the Icelandic government or the Tryggingasjóður. Thus the sale of Landsbanki assets will NOT automatically be used to pay off the depositors. If the assets go to other parties, then Iceland would have to pay off the depostitors with the pound equivalent of 650 billion ISK, plus interest. This of course would mean that Iceland is completely dead.
How to get priority for the Tryggingasjóður? I’m not sure exactly. The agreement (in effect an international treaty) should have specified that Tryggingasjóður or the Icelandic government get first priority in bankruptcy court. Or the British government can get the bankruptcy court in Britain to stipulate that Iceland gets priority.
Right now everything is uncertain since Landsbanki assets have not been published and creditors have not put in their claims and submitted asset distribution plans. Obviously, Iceland should agree to nothing until all this is clear.
Bromley86
2 years ago
So I take it from that Vilhjalm that it’s possible that some Landsbanki creditors might be able to persue Landsbanki in courts outside of Iceland? If so, I can see how that might be a problem.
If not then of course there is no problem, assuming the emergency law holds up in Icelandic courts.