Third Big Iceland Bank Files for U.S. Bankruptcy

Landsbanki Islands hf sought bankruptcy protection from its U.S. creditors on Tuesday, the last of Iceland's three largest banks to do so in the last two weeks, Reuters reported. The Reykjavik-based lender filed a Chapter 15 bankruptcy petition with the U.S. bankruptcy court for the Southern District of New York. It said it had more than $1 billion of both assets and liabilities. Iceland's banks had taken on billions of dollars of debt in recent years to fund aggressive overseas expansion. After the country took a majority stake in Glitnir in late September, investors rushed to shed Icelandic assets, causing the krona to sink and a bank run on the nation's largest lenders. Since 2006, Landsbanki has issued $2.6 billion of notes in the United States, according to a filing by a court-appointed assistant managing the bank's reorganization. Its only known assets in the United States are bank accounts, some loan receivables and bonds and stocks held for hedging purposes. The assistant asked for Landsbanki's court proceedings in Iceland to be recognized in the United States. Read more.