Iceland

Iceland's government Friday reappointed its central bank governor, Mar Gudmundsson, for a second five-year term, backing him to continue steering the tiny island nation's recovery from a devastating financial crisis six years ago, The Wall Street Journal reported. Mr. Gudmundsson first took the reins at the central bank, Sedlabanki, in 2009 after the collapse of Iceland's financial sector when the country's three biggest banks buckled under the weight of their debts as their access to credit became restricted.

Britain’s Serious Fraud Office said on Thursday that it had reached a second settlement in a series of civil claims brought by two brothers after a flawed investigation into the collapse of the Icelandic bank Kaupthing during the financial crisis, the International New York Times DealBook blog reported.

Britain’s Serious Fraud Office said on Friday that it would pay 3 million pounds, or about $5.1 million, to settle civil claims brought by a property developer following a flawed investigation into the collapse of the Icelandic bank Kaupthing during the financial crisis, the International New York Times DealBook blog reported.

Iceland aims to sell as much as 30 percent of New Landsbanki, one of the banks to emerge from the 2008 financial crisis, to help reduce government debt, Reuters reported. Iceland's three main banks had assets worth around 10 times the value of the economy when they buckled under a weight of debt, sending its currency and economy into a tailspin. New Landsbanki was the only one of the three domestic lenders created out of the financial ruin to be majority-owned by the state.

Iceland's defunct banks could be put into bankruptcy if creditors do not agree to a haircut on debts owed by Kaupthing, Glitnir and Landsbanki, which collapsed in 2008 owing more than $75 billion, the finance minister warned on Tuesday, Reuters reported. Iceland slapped on capital controls after the financial meltdown, hampering much needed investment, but these cannot be removed until a deal to wind up the left-overs of the old banks - around 2,500 billion krona ($22 billion) in cash, shares and bonds - is reached with creditors.

Iceland’s government proposed disbanding the Housing Financing Fund, the nation’s largest mortgage provider, as the lender struggles to make a profit amid loan losses and competition from commercial banks, Bloomberg News reported. The island nation will wind down the operations over the next 30 years and continue to service the lender’s 480 billion kronur ($4.29 billion) in bonds, the government said yesterday in Reykjavik. Legislation to push through the changes will be introduced in parliament this fall, allowing for the suspension of HFF’s current daily operations.

Iceland’s prime minister has criticised the UK and Dutch authorities for filing a IKr1,000bn (£5.6bn) lawsuit over the 2008 collapse of online lender Icesave, saying they should “forget” the affair as they were unlikely to win the case. Sigmundur David Gunnlaugsson, prime minister since May, told the Financial Times the Icesave lawsuit – in which the UK and Netherlands authorities are seeking a sum equivalent to nearly two-thirds of the island’s annual GDP – recalled his country’s previous legal battle against the two countries, which ended in court victory for Iceland last year.

British and Dutch authorities have reignited the controversial dispute over the collapse of online lender Icesave at the height of the financial crisis in 2008 by filing a lawsuit for up to IKr1,000bn (£5.6bn) against Iceland’s bank guarantee fund, the Financial Times reported. Iceland’s guarantee scheme, TIF, said on Monday that the UK was seeking IKr452bn while the Netherlands wanted IKr104bn. Both countries are also seeking interest and costs in the five-year-old dispute.

Hedge funds and other creditors in Iceland’s failed banks are trying to get a response from the nation’s authorities on the status of their claims as the government considers amending the bankruptcy law, Bloomberg News reported. More than five years after Iceland’s biggest banks defaulted on $85 billion, the nation has yet to arrive at an agreement with creditors on how to settle their claims. At stake for Iceland is its financial stability as authorities search for a solution that doesn’t trigger a krona sell-off just as the island tries to scale back capital controls.

An angular glass building on the waterfront here used to be the headquarters of a banking giant with operations in Europe, North America and the Middle East, The New York Times DealBook blog reported. Now, it houses a shadow of that behemoth — a small bank doing business only in Iceland and lacking both the trading culture and ambitions of its failed predecessor. The metamorphosis is a result of one of the biggest bank crashes any country has ever had. The risk in Iceland’s financial system has dissipated, but the basic businesses of banking have shrunk as well.