Loss in Asset Sales Abroad: Tuesday 21 April, 13–14.30

FIH Bank (from its website). Did the CBI lose 60 billion Icelandic kronur because of blunders?

Professor Hannes H. Gissurarson, RNH Academic Director, will read a paper at the spring conference of the Institute of Business Administration Studies at the University of Iceland Tuesday 21 April, 13–14.30, in the University Centre, in meeting room HT-101. The title is “Icelandic Asset Sales Abroad After the Bank Collapse.” Professor Gissurarson will argue that Norwegian, Finnish, Danish and British authorities were responsible for heavy and unnecessary losses of the Icelandic banks during and after the 2008 bank collapse. In the beginning of the collapse, both Norwegian and Finnish authorities refused to provide liquidity to domestic banks owned by Icelanders, thus forcing the owners to sell them to local businessmen at a pittance. A similar thing occurred in Denmark two years later, with FIH Bank, whereupon the buyers outwitted the Central Bank of Iceland which had taken a collateral in the bank for the debts of Kaupthing to the CBI. Because of blunders, the CBI there lost about sixty billion Icelandic kronur.

In October 2008 the British Labour government closed two British banks owned by Icelanders, Heritable and KSF, at the same time as it provided other British banks with a large and unprecedented rescue package, both with liquidity and recapitalisation. Now the two banks have mostly been wound up, and it has become clear that they were quite solvent. Professor Gissurarson estimates total losses in those examples in the four countries involved to amount to 270 billion Icelandic kronur or about £1.4 billion. Some of this money could have been used to reimburse Icelandic taxpayers for costs incurred in the bank collapse, since it would have been fair that the fallen banks had borne those costs. Professor Gissurarson’s lecture forms a part of the joint project by RNH and AECR on “Europe, Iceland and the Future of Capitalism”.

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