Iceland

Iceland’s banks may come under pressure to forgive about $2 billion in mortgage debt after protests this week prompted the government to consider proposals from the island’s homeowner protection group, Bloomberg reported. “The debt the banks have to write off could very well be very challenging for them,” said Economy Minister Arni Pall Arnason, in an interview in Reykjavik. “So be it. The banks have to acknowledge quickly that current debt levels are unrealistic and that timely write-offs are necessary.

Iceland's parliament will have to decide whether to charge former leaders for failing to prevent the country's financial meltdown, after a committee of lawmakers split Saturday over whether they should be indicted, The Wall Street Journal reported. The deadlock means it will be harder for parliament to try former Prime Minister Geir Haarde and three other top officials for their role in the 2008 economic crash. Iceland was one of the first victims of the worldwide economic downturn sparked by the collapse of the U.S. subprime mortgage market in 2007.

Iceland’s lenders may lose as much as $4.3 billion, equivalent to a third of the economy, after a court last month found that some foreign loans were illegal, said Finance Minister Steingrimur J. Sigfusson, Bloomberg reported. “This is the largest single loan category of the banks, with a value of between 800 billion kronur and 900 billion kronur ($7.2 billion),” Sigfusson said.

Icelandic banks may face a second crisis as a court ruling banning some foreign currency loans saddles lenders, mostly owned by international creditors, with losses on $28 billion of debt, Bloomberg reported. The Supreme Court ruled June 16 that loans indexed to foreign-currency rates were illegal in three cases involving private car loans and a corporate property loan.

A committee overseeing the remains of Icelandic lender Glitnir Banki Hf has sued several former bank officials and affiliated investors in the United States to recover more than $2 billion, Reuters reported.

The Reykjavik City Theatre is to embark on a marathon performance on Monday in a radical break from its usual productions, which have recently included King Lear and Waiting for Godot. Shortly after Monday’s release of a report into the causes of Iceland’s 2008 banking crisis, actors will start reading the 2,000-page inquiry findings. They will continue around the clock until every word is told. It could take five days, the Financial Times reported.

The Netherlands and Great Britain are ready to resume talks with Iceland on repayment of over $5 billion lost in the banking crisis, but are waiting for Iceland to propose terms, the Dutch finance ministry said, Reuters reported. "For new talks to be scheduled Iceland should first make a comprehensive proposal taking account of both sides' interests," a spokesman for the ministry said on Monday. He added that Dutch Finance Minister Jan Kees de Jager and Icelandic Finance Minister Steingrimur Sigfusson spoke last week and agreed that the ball was now in Iceland's court.

The president of Iceland has urged Gordon Brown, UK prime minister, to take personal responsibility for settling the dispute over €3.9bn lost by British and Dutch savers in the Icesave bank after Icelandic voters overwhelmingly rejected a deal to repay the money. Olafur Ragnar Grimsson, whose decision to block the repayment plan triggered Saturday's referendum, told the Financial Times it was "high time" for Mr Brown to "take the matter into his own hands" after more than a year of wrangling.

Icelanders Saturday roundly rejected a deal to repay the U.K. and the Netherlands €3.9 billion ($5.3 billion) lost in the collapse of an Icelandic Internet bank, complicating the island's bid to access badly needed international-aid funding and render normal its relations with the rest of the world, The Wall Street Journal reported. More than 93% of Icelanders voted no in a national referendum, according to preliminary figures published Sunday morning by state broadcaster RUV. It was Iceland's first plebiscite since the island's independence from Denmark in 1944.

The Netherlands will take negotiations with Iceland over a bank debt dispute into account when considering Iceland's hopes to join the European Union, Foreign Minister Maxime Verhagen said on Saturday. Like all EU nations, the Netherlands can block Iceland's bid to join the group, which the island nation launched in the wake of the collapse of its financial system in 2008. The Netherlands and Great Britain want Iceland to repay more than $5 billion in compensation the two EU countries paid out to local savers in Icelandic online banks after the collapse.