Iceland unveiled plans aimed at cleaning up its failed financial system Monday, whereby creditors will see the government commit up to $2.1 billion to capitalize new lenders created from the ashes of those that collapsed last year. Iceland’s Minister of Finance Steingrímur J. Sigfússon discusses the plans.
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Vilhjalm A.
2 years ago
There has been a lot of news about the banks in the past several days. At first the rumor was that foreign hedge funds would be the main owners, then the government said that reliable large European banks were the main creditors, now the story has swung back to the original suspicion, ie that foreign hedge funds are the creditors. Apparently there has been active trading in Icelandic bond debt – you don’t know who owns these bonds but it is reasonable to suppose that the original bondholders and credit default swap guarantors (both of which categories would include major investment banks like JP Morgan, Deutsche Bank, Morgan Stanley, Credit Suisse, Japanese banks, etc.) have since sold their interest to other – unknown – speculators.
Skuldabréfin hafa þó á undanförnum mánuðum gengið kaupum og sölum og eru bandarískir vogunar- og tryggingarsjóðir nú fyrirferðamestir í hópi kröfuhafa.”
http://www.visir.is/article/20090721/VIDSKIPTI06/473017849
This bank transfer looks like an act of desperation. The Icelandic government has so little money that they cannot refinance the banks and cannot guarantee the Icelandic deposits in them, so they want to dump the banks into the hands of foreigners, in the hope that the foreigners will provide money to refinance. Plus the government must realize that there is very little of value in these two banks.
Steingrimur says in the video that Iceland will provide $2 billion refinancing to these two banks. I find that hard to believe. Or if it’s true, then the money would be limited to use for insuring Icelandic deposits.
I think the government should dump Landsbanki too, as I have explained before.
The government must see something in Landsbanki that they don’t want to give up – eg fish quotas, energy rights, real estate. Who knows, since the assets of Landsbanki are a state-secret.