Iceland announces €1.5bn plan to recapitalise banks

| July 20, 2009 | 0 Comments

Iceland has unveiled a €1.5 billion (£1.3 billion) scheme to recapitalise its three major banks. The Government will issue bonds to the three new banks it is creating from the collapsed ones.

It is hoped the plan will get the banking system on a stronger footing after its three largest banks, Glitnir, Landsbanki and Kaupthing, had to be nationalised last October.

The collapse of the UK branch of Landsbanki, Icesave, jeopardised the savings of 300,000 people in the UK.

Furthermore, there were over 100 British local authorities that had hundreds of million pounds invested in Icelandic banks.

The incident created tension between the UK and Iceland over who should compensate British savers.

Meanwhile, under the plan, the Government will offer controlling stakes in Islandsbanki and New Kaupthing to the old banks’ shareholders, while retaining a stake in the banks.

A similar scheme is expected for Landsbanki but discussions are still taking place.

Iceland’s finance minister, Steingrimur Sigfusson, said: “Not only do today’s announcements provide a firm basis for further progress, they also benefit customers of the new banks and the Icelandic economy in general.”

Tags: , , Glitnir, , , , Landsbanki,

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