Iceland

Icelandic Prime Minister Sigmundur David Gunnlaugsson resigned Tuesday, becoming the first major casualty of renewed global scrutiny into offshore accounts sparked by millions of documents allegedly leaked from a Panamanian law firm, The Wall Street Journal reported. Mr. Gunnlaugsson left office amid growing popular uproar in his small island nation over his not disclosing links to an offshore company in a Caribbean tax haven. After a meeting with Mr.

Failed Icelandic bank Glitnir said on Thursday it had got agreement from the central bank to begin paying out billions of dollars owed to creditors since it collapsed in 2008, Reuters reported. Iceland's financial system crashed during the global financial crisis triggering the imposition capital controls to protect the country's krona currency. These rules have prevented creditors of Iceland's failed banks from recovering money generated from asset sales.

Iceland moved a step closer to lifting capital controls imposed following its 2008 financial meltdown, with creditors of one failed bank on Tuesday proposing the nationalisation of the successor bank in which they hold a majority stake, Reuters reported. The process is part of a settlement agreed between the creditors of three institutions that crashed in 2008 and the government and is a necessary step before money can be allowed again to flow out of the country.

Since Iceland's banking system collapsed in late 2008, the small island state has served as a pioneering counter example to Europe's way of handling a debt crisis. When Icelandic banks, which had grown to 10 times the country's annual income, could no longer refinance their debt, Reykjavik did three things. It restructured the banks, letting creditors fight for the scraps while new banks continued to serve the local economy; it let the currency plummet; and it imposed foreign exchange controls, preventing foreigners from repatriating their investments en masse.

After Iceland imposed capital controls during the global financial crisis, the move helped stabilize the country’s banking system, putting the economy on a path to recovery, the International New York Times DealBook blog reported. As Iceland now unwinds those controls nearly seven years later, the government is trying to prevent a mass exodus of money and keep the country from backsliding. It is a pivotal moment for a country that came to symbolize the financial crisis, after its three main banks imploded in 2008.

After more than six long and lonely years, Iceland is hoping its financial isolation will soon be over. The North Atlantic nation, whose spectacular 2008 meltdown came to symbolise the greed and mismanagement of the global financial system, is expected to begin unwinding the bankruptcies of its three main banks and lifting controls on the movement of capital in and out of the island within months.

Iceland’s government signaled this week that it is closing in on a plan that would unfreeze the assets of three failed banks for creditors owed tens of billions of dollars, The Wall Street Journal reported. At a meeting Tuesday, a government lawyer told some creditors that Iceland would propose a plan early next year to restructure the debt of Kaupthing Bank hf, Glitnir Bank hf and Landsbanki, according to people familiar with the talks.

Iceland is set to unveil plans for exiting its six-year capital control regime at the start of next week after granting an exemption to LBI hf to repay 400 billion kronur ($3.2 billion) to priority creditors, according to people familiar with government’s plans, Bloomberg News reported. The government presented an accord yesterday that will enable the full settlement of priority claims against the nation’s lenders, the Finance Ministry said in a statement.

The property developer Vincent Tchenguiz has filed a $3.5 billion claim in London against the accounting firm Grant Thornton, the Icelandic bank Kaupthing and three individuals, claiming they were behind a flawed criminal inquiry into the bank’s collapse, the International New York Times DealBook blog reported. The Serious Fraud Office of Britain dropped its inquiry against Mr.

Six years after Iceland’s banks defaulted on $85 billion in debt and brought the Atlantic island’s economy to its knees, Islandsbanki hf is seeking to sell shares to international investors, Bloomberg News reported. The island’s second-largest bank, formed from the remnants of failed Glitnir Bank hf, wants to sell shares to investors in a Scandinavian capital or London, the Reykjavik-based bank’s Chief Financial Officer Jon Omarsson said in an Oct. 16 interview in Stockholm.