Abstract
At 11:19 p.m. on Monday, October 6, 2008, the Icelandic authorities attempted to cut the link between the banks and the sovereign by passing the Emergency Act into law. This was an application of force majeure rights as a means to amend laws affecting the financial institutions.
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Notes
- 1.
Act no. 125/2008 on the authority for treasury disbursements due to special circumstances in financial markets etc.
- 2.
Ministry of Finance. (2011, March). Skýrsla fjármálaráðherra um endurreisn viðskiptabankanna. (Minister of finance report on the restoration of the commercial banks).
- 3.
International Monetary Fund. (2012. April). Iceland: Ex Post Evaluation of Exceptional Access Under the 2008 Stand-by Arrangement.
- 4.
Ibid., p. 4.
- 5.
Jonung, L. (2009). The Swedish model for resolving the banking crisis of 1991–93. Seven reasons why it was successful (No. 360). Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
- 6.
Ibid., Figure 2.
- 7.
As elsewhere in this book, amounts in ISK are converted to euros at the fixed exchange rate of 150 kr. per euro and not at the prevailing rate at the time of discussed events. In the period 2008–2015 the official exchange rate fluctuated in the range 90–187 kr. per euro with average 157 kr. per euro.
- 8.
Moody’s upgraded Glitnir, Kaupthing and Landsbanki to Aaa on February 26, 2007 and downgraded them to Aa3 in April 2007.
- 9.
Government Debt Management. (2001, November 23). Government Debt Management Prospect 2002. http://news.icex.is/newsservice/MMIcexNSWeb.dll/newspage?language=EN&primarylanguagecode=EN&newsnumber=13446
- 10.
Government Debt Management. (2008, May 23). Signing of agreements regarding issuance and market making in government securities. http://www.lanamal.is/en/investors/primary-dealers-for-government-securities/primary-dealers-agreement/nanar/937/signing-of-agreements-regarding-issuance-and-market-making-in-government-securities-
- 11.
Government Debt Management. (2008, May 13). Tariffs for securities lending and their limits. http://www.lanamal.is/assets/nyrlanasysla/gjaldskramai_08.pdf
- 12.
The Icelandic State Audit. (2012, June). Report to the Icelandic Parliament. The Governments Facilitation to Financial Companies and Institutions in the Wake of the Banking Crisis. http://www.rikisendurskodun.is/fileadmin/media/skyrslur/fyrirgreidsla_vid_fjarmalafyrirtaeki2.pdf
- 13.
See Supreme Court verdict no. 130/2016, May 4, 2016.
- 14.
Ministry of Finance. (March, 2011). Report by the minister of finance on the restoration of the commercial banks.
- 15.
The RIKH 18 1009 bond was issued in September 2009 but bore interest from 9 October 2008. The bond bore interest equivalent to the rates on deposit institutions’ accounts with the Central Bank of Iceland. Interest is paid four times a year. The bond matures on October 9, 2018, at which time the principal will be paid in one lump sum. The first interest payment, made on October 9, 2009, included interest for the full year from October 9, 2008.
- 16.
The state’s holding in Landsbankinn is 98.2 %. LBI, the old Landsbanki Íslands, originally owned an 18.67 % stake in Landsbankinn, but the state acquired most of that holding when the contingent Landsbankinn-LBI bond was issued.
- 17.
Ministry of Finance. (March, 2011). Report by the minister of finance on the restoration of the commercial banks.
- 18.
The addition to the subordinated loan due to dividend payments was in US dollars and pounds sterling – USD 20 million and GBP 19.9 million – which was the equivalent of ISK 6.5 billion on 1 March 2011.
- 19.
Annual accounts of Arion Bank hf. and Íslandsbanki hf. for the year 2015.
- 20.
Annual accounts of Arion Bank hf., Íslandsbanki hf., and Landsbankinn hf. for the year 2015.
- 21.
Stefánsson, Sigurður Hallur, Kirstín Þ. Flygenring, & Jón Þorvaldur Heiðarsson. (2013). Parliamentary Special Investigation Commission Report on the Housing Financing Fund, etc.
- 22.
Rules on Capital Contributions to Savings Banks pursuant to Article 2 of the Act on Authority for Treasury Disbursements due to Unusual Financial Market Circumstances, etc., 18 December 2008.
- 23.
Hrannar Már S. Hafberg, Tinna Finnbogadóttir, and Bjarni Frímann Karlsson. The Background and Causes of the Difficulties and Fall of the Savings Banks. Parliamentary Special Investigation Commission, 2014.
- 24.
Landsbankinn hf., annual accounts for 2012, Explanatory Note no. 5.
- 25.
The CBI never acquired FIH, it remained in Kaupthing’s ownership, but the CBI was its beneficial owner in the sense that any proceeds from its sale would go to the CBI. One of the reasons that FIH remained in Kaupthing’s ownership was that some of its loans had covenants regarding change of control.
- 26.
Central Bank of Iceland. (2010, September 19). Sale of Danish bank FIH.
- 27.
Act no. 164/2010.
- 28.
Central Bank of Iceland. (2015, October 27). Uppgjör fallinna fjármálafyrirtækja á grundvelli stöðugleikaskilyrða: áhrif á greiðslujöfnuð og fjármálastöðugleika. (Settlement of the failed financial institutions on the basis of stability conditions: Impact on balance of payments and financial stability.) http://sedlabanki.is/library/Skraarsafn/Gjaldeyrismal/AssessmentOfPreliminaryCompositionProposals.pdf
- 29.
Central Bank of Iceland. (2010, May 19). Central Bank of Iceland, Banque centrale du Luxembourg and the liquidator of Landsbanki Luxembourg S.A. sign an agreement in Luxembourg. (Press release no. 11/2010).
- 30.
Central Bank of Iceland. (2010, May 31). Pension funds purchase Treasury’s HFF bonds to strengthen FX reserves. (Press release no. 13/2010).
- 31.
Minister of Finance. (2016, May 20). Frumvarp til laga um meðferð krónueigna sem háðar eru sérstökum takmörkunum. (A bill on the treatment of ISK assets that are subject to special restrictions.) (Þskj. 1314 – 777. mál, 145. löggjafarþing.)
- 32.
Central Bank of Iceland. (2016, May 25). Central Bank of Iceland foreign currency auction 16 June 2016. http://www.cb.is/publications/news/news/2016/05/25/Central-Bank-of-Iceland-foreign-currency-auction-16-June-2016-/
- 33.
Jonung, L. (2009). The Swedish model for resolving the banking crisis of 1991–93. Seven reasons why it was successful (No. 360). Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
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Jónsson, Á., Sigurgeirsson, H. (2016). A Full Recovery: Fiscal Cost of the Crisis. In: The Icelandic Financial Crisis. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-39455-2_9
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