Icelands Landsbanki (Icesave) in receivership

REYKJAVIK, Oct 7 (Reuters) – Iceland has dismissed the board of directors of Landsbanki and has put the Icelandic bank in receivership, a minister told state radio on Tuesday. Commerce and banking minister Bjorgvin Sigurdsson said the move was made in cooperation with Landsbanki and the bank would be open and run as normal while the changes were taking place. Sigurdsson said Iceland’s Financial Supervisory Authority had put its own people in place of the bank’s board. Late Monday, Iceland adopted sweeping powers over its battered banks as its financial system tottered and its currency plunged.

The Icesave website states:

We are not currently processing any deposits or any withdrawal requests through our Icesave internet accounts. We apologise for any inconvenience this may cause our customers. We hope to provide you with more information shortly.

Remember that nobody has lost any money yet.  Or at least we don’t know the full situation yet.  What is clear is that Iceland as a nation is pretty much bankrupt.

The global credit crunch has crippled Iceland’s biggest banks, which racked up foreign debts equivalent to as much as 12 times the size of the economy. The nation’s current account gap swelled to the equivalent of 34 percent of gross domestic product in the second quarter, mainly because of the cost of debt payments.

Bloomberg, 7 October 2008

The Icelandic government has apparently approached Russia for a €4bn loan.  It looks like they have received a warm welcome from the Russians who will no doubt bask in the good PR for many months to come.  Not to mention the geopolitical advances – didn’t the americans have a base there until a few years ago?

Icesave is Iceland’s second biggest bank.  I wonder how many people are trying to take their money out of Kaupthing Edge right now?

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One response to “Icelands Landsbanki (Icesave) in receivership

  1. Well people have lost money now. Savers in Landsbanki Guernsey stand to lose 70% of their deposits.

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