Iceland

Iceland is losing patience with creditors in its failed banks as the government considers forcing through bankruptcy proceedings to help it exit capital control in place since 2008, Bloomberg News reported. “The Bankruptcy Act doesn’t anticipate that attempts to seek composition last forever,” Finance Minister Bjarni Benediktsson said in a Jan. 10 interview in Reykjavik.

Iceland's central bank said on Monday it will begin selling just over 100 billion crowns ($8.6 bln) worth of bonds held against assets and claims left with it as the nation's banks collapsed during the global financial crisis, Reuters reported. The sale of the indexed bonds by the Central Bank of Iceland Holding Company ehf (ESI) would begin within the next six months and be carried out in stages over five years, the bank said in a statement on its website.

Iceland's government unveiled a 150 billion Icelandic kronur ($1.25 billion) household-debt relief program Saturday, with the plan calling for increased taxes on the financial-services industry to help fund mortgage write-downs for Icelanders equivalent to several thousand dollars per mortgage holder, The Wall Street Journal reported. The program, unveiled by Prime Minister Sigmundur Davíð Gunnlaugsson about six months after taking office, comes after a 2013 election where promises to address high levels of household debt in the small island nation was a central issue.

The International Monetary Fund raised a cautionary flag Wednesday over the possible consequences of lofty campaign promises made by Iceland's new prime minister and the small island nation's inability to make progress on lifting capital controls, The Wall Street Journal reported. The IMF said in a report that Iceland's economic recovery remained fragile because of Sigmundur David Gunnlaugsson's costly electoral commitments and lingering concerns related to a 2008 banking crisis. Elected as prime minister in the spring, Mr.

Bondholders in Iceland’s state-backed Housing Finance Fund are waiting for the nation’s biggest mortgage bank to change the terms of their investment as the government looks for ways to keep the lender afloat, Bloomberg reported. “It wouldn’t surprise me if they tried to push through changes to the terms of HFF bonds this summer,” Kari Arnor Karason, chief executive officer at Stapi Pension Fund, said in a phone interview. Stapi, which holds 77 billion kronur ($630 million) in HFF and government bonds, hasn’t yet been approached by the lender, he said.

Voters in Iceland have ousted the center-left government that restored the country to solvency after the 2008 financial crisis, paving the way for the return to power of the center-right parties that many people blamed for causing the crisis, the International Herald Tribune reported.

Four years ago, Iceland's electorate—seeking a harbor from financial turmoil—voted in a government that said entry to the European Union and euro zone would offer protection from currency volatility, punishing inflation and the embarrassment of a failed economy, The Wall Street Journal reported. As the tiny Nordic nation prepares to hit the polls Saturday, the EU dream is wilting. Strong tourism and fishing, widening trade relationships and the fact that the crisis that brought down three Icelandic banks is getting cleaned up has fueled skepticism about the idea.

Iceland's special prosecutor has indicted two former chief executives and more than a dozen other ex-employees of banks that fell in the financial crisis that gripped the nation in the autumn of 2008, accusing them of stock price manipulation and securities fraud, The Wall Street Journal reported. The charges were brought over the past week by Olafur Thor Hauksson, who was hired in 2009 to investigate suspicions of fraud and allegation at major banks, including now-defunct Landsbanki hf and Kaupthing Bank hf.

Iceland's biggest mortgage bank said the government would bail out the lender before it’s unable to honor its debts, Bloomberg reported. “There’s no risk of a default,” Sigurdur Jon Bjornsson, chief financial officer of the Reykjavik-based Housing Financing Fund, said in an interview late yesterday. “The Treasury, if it needed to, would bail out the fund.” His comments were echoed by Finance Minister Katrin Juliusdottir today, who said the government is prepared to cover the struggling fund, which yesterday was downgraded by Moody’s Investors Service to junk.

With the global economy still struggling to recover from the financial maelstrom five years ago, governments around the world have been criticized for largely failing to punish the bankers who were responsible for the calamity. But even here in Iceland, a country of just 320,000 that has gone after financiers with far more vigor than the United States and other countries hit by the crisis, obtaining criminal convictions has proved devilishly difficult, the International Herald Tribune reported.