Iceland: Landsbanki Restructuring, 2008

Iceland’s three largest banks—Landsbanki, Kaupthing, and Glitnir—grew rapidly in the 2000s and failed amid depositor runs when they lost access to foreign funding markets at the onset of the Global Financial Crisis. On October 6, 2008, the Icelandic Parliament passed the Emergency Act, and aut...

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Main Author: George, Ayodeji
Format: Text
Language:unknown
Published: EliScholar – A Digital Platform for Scholarly Publishing at Yale 2024
Subjects:
GFC
Online Access:https://elischolar.library.yale.edu/journal-of-financial-crises/vol6/iss1/11
https://elischolar.library.yale.edu/context/journal-of-financial-crises/article/1539/viewcontent/auto_convert.pdf
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spelling ftyaleuniv:oai:elischolar.library.yale.edu:journal-of-financial-crises-1539 2024-04-28T08:25:48+00:00 Iceland: Landsbanki Restructuring, 2008 George, Ayodeji 2024-03-28T14:35:13Z application/pdf https://elischolar.library.yale.edu/journal-of-financial-crises/vol6/iss1/11 https://elischolar.library.yale.edu/context/journal-of-financial-crises/article/1539/viewcontent/auto_convert.pdf unknown EliScholar – A Digital Platform for Scholarly Publishing at Yale https://elischolar.library.yale.edu/journal-of-financial-crises/vol6/iss1/11 https://elischolar.library.yale.edu/context/journal-of-financial-crises/article/1539/viewcontent/auto_convert.pdf Journal of Financial Crises capital injection GFC Iceland Landsbanki restructuring text 2024 ftyaleuniv 2024-04-03T17:05:06Z Iceland’s three largest banks—Landsbanki, Kaupthing, and Glitnir—grew rapidly in the 2000s and failed amid depositor runs when they lost access to foreign funding markets at the onset of the Global Financial Crisis. On October 6, 2008, the Icelandic Parliament passed the Emergency Act, and authorities quickly used their new powers to nationalize the three banks. The Ministry of Finance and Economic Affairs (Ministry of Finance) created new versions of the three banks to hold the old banks’ performing domestic assets and all insured domestic deposits, and the prime minister assured all domestic depositors that they would be protected. Nonperforming domestic assets and foreign assets remained in the old banks with senior and subordinated debtors and foreign deposits. Existing shareholders were immediately wiped out. The treatment of stakeholders in the old banks was based on provisional valuations of the assets in the new and old banks, with consulting firms commissioned in November and December 2008 to provide more definitive valuations. After the creation of the new banks, discussions with the creditors of the old banks continued for more than a year as they negotiated the value of assets transferred. On December 15, 2009, the state gave the old banks contingent bonds and equity stakes in the new banks, alongside the state. On December 18, 2009, Icelandic authorities announced the completion of the banks’ restructuring. This case focuses on Landsbanki, then Iceland’s second-largest bank, because it was the first the government put into receivership. A tentative estimation in 2016 found an accumulated net fiscal gain of across all three failed banks, factoring in the book value of the banks at the time. As of year-end 2022, the Icelandic State Treasury held 98.2% of shares in New Landsbanki (Landsbankinn, or NBI) with a book value of roughly USD 2 billion. Text Iceland Yale University: EliScholar
institution Open Polar
collection Yale University: EliScholar
op_collection_id ftyaleuniv
language unknown
topic capital injection
GFC
Iceland
Landsbanki
restructuring
spellingShingle capital injection
GFC
Iceland
Landsbanki
restructuring
George, Ayodeji
Iceland: Landsbanki Restructuring, 2008
topic_facet capital injection
GFC
Iceland
Landsbanki
restructuring
description Iceland’s three largest banks—Landsbanki, Kaupthing, and Glitnir—grew rapidly in the 2000s and failed amid depositor runs when they lost access to foreign funding markets at the onset of the Global Financial Crisis. On October 6, 2008, the Icelandic Parliament passed the Emergency Act, and authorities quickly used their new powers to nationalize the three banks. The Ministry of Finance and Economic Affairs (Ministry of Finance) created new versions of the three banks to hold the old banks’ performing domestic assets and all insured domestic deposits, and the prime minister assured all domestic depositors that they would be protected. Nonperforming domestic assets and foreign assets remained in the old banks with senior and subordinated debtors and foreign deposits. Existing shareholders were immediately wiped out. The treatment of stakeholders in the old banks was based on provisional valuations of the assets in the new and old banks, with consulting firms commissioned in November and December 2008 to provide more definitive valuations. After the creation of the new banks, discussions with the creditors of the old banks continued for more than a year as they negotiated the value of assets transferred. On December 15, 2009, the state gave the old banks contingent bonds and equity stakes in the new banks, alongside the state. On December 18, 2009, Icelandic authorities announced the completion of the banks’ restructuring. This case focuses on Landsbanki, then Iceland’s second-largest bank, because it was the first the government put into receivership. A tentative estimation in 2016 found an accumulated net fiscal gain of across all three failed banks, factoring in the book value of the banks at the time. As of year-end 2022, the Icelandic State Treasury held 98.2% of shares in New Landsbanki (Landsbankinn, or NBI) with a book value of roughly USD 2 billion.
format Text
author George, Ayodeji
author_facet George, Ayodeji
author_sort George, Ayodeji
title Iceland: Landsbanki Restructuring, 2008
title_short Iceland: Landsbanki Restructuring, 2008
title_full Iceland: Landsbanki Restructuring, 2008
title_fullStr Iceland: Landsbanki Restructuring, 2008
title_full_unstemmed Iceland: Landsbanki Restructuring, 2008
title_sort iceland: landsbanki restructuring, 2008
publisher EliScholar – A Digital Platform for Scholarly Publishing at Yale
publishDate 2024
url https://elischolar.library.yale.edu/journal-of-financial-crises/vol6/iss1/11
https://elischolar.library.yale.edu/context/journal-of-financial-crises/article/1539/viewcontent/auto_convert.pdf
genre Iceland
genre_facet Iceland
op_source Journal of Financial Crises
op_relation https://elischolar.library.yale.edu/journal-of-financial-crises/vol6/iss1/11
https://elischolar.library.yale.edu/context/journal-of-financial-crises/article/1539/viewcontent/auto_convert.pdf
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