Iceland's Financial Supervisory Authority will take control of Kaupthing Bank hf, the nation's biggest bank and the third lender to be seized by the government since the financial crisis escalated. Kaupthing's domestic deposits are fully guaranteed, and the aim of the takeover is to provide a ``functioning domestic banking system,'' the FSA said in a statement on its Web site today. Iceland's banking system has buckled under the weight of debts equal to 12 times the size of the economy, with financial regulators already in charge of the second and third largest lenders, Glitnir Bank hf and Landsbanki Islands hf. Prime Minster Geir Haarde indicated yesterday he may be forced to seek aid from the International Monetary Fund after failing to secure loans from European governments and central banks. The central bank yesterday abandoned an attempt to fix the exchange rate, indicating it is powerless to halt the slump in the krona. Iceland will start talks with Russia on Tuesday to secure a loan of as much as 4 billion euros ($5.46 billion), Haarde said yesterday. Iceland's oversized bank industry put it ``probably in the worst position in the developed world to cope with the ongoing credit crisis,'' Deutsche Bank AB economist Henrik Gullberg said on Oct. 7.
Kaupthing's domestic deposits are fully guaranteed, and the aim of the takeover is to provide a ``functioning domestic banking system,'' the FSA said in a statement on its Web site today.
Iceland's banking system has buckled under the weight of debts equal to 12 times the size of the economy, with financial regulators already in charge of the second and third largest lenders, Glitnir Bank hf and Landsbanki Islands hf. Prime Minster Geir Haarde indicated yesterday he may be forced to seek aid from the International Monetary Fund after failing to secure loans from European governments and central banks.
The central bank yesterday abandoned an attempt to fix the exchange rate, indicating it is powerless to halt the slump in the krona. Iceland will start talks with Russia on Tuesday to secure a loan of as much as 4 billion euros ($5.46 billion), Haarde said yesterday.
Iceland's oversized bank industry put it ``probably in the worst position in the developed world to cope with the ongoing credit crisis,'' Deutsche Bank AB economist Henrik Gullberg said on Oct. 7.
Ooops.
As of this morning it was unclear how much is in play (a tory was on the Today show speculating that it was at least a billion UKP), but various local govt lobby groups are bending the treasury's ear about getting these deposits guaranteed along the same lines as the private depositors guarantee that Darling announced earlier in the week.
Regards Luke -- #include witty_sig.h
Local authority leaders are seeking an urgent meeting with the chancellor after it emerged at least 20 councils have cash in troubled Icelandic banks. Their overall investment is hundreds of millions of pounds and they are asking the UK government for the protection it has promised to personal savers. The Conservatives have warned that up to £1bn in council funding could potentially be in danger.
Their overall investment is hundreds of millions of pounds and they are asking the UK government for the protection it has promised to personal savers.
The Conservatives have warned that up to £1bn in council funding could potentially be in danger.
Kent County Council, £50m Transport for London, £40m Westminster City Council, £17m Hertfordshire County Council, £17m Havering Council, £12.5m
Up to £1bn comes out of the largest pot of money, £50M by Kent County Council, times 10 institutions. The Tories don't even know how to do this properly.
But £200M sounds about okay. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
I mean times 20. A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith
The city of Oskarshamn has lost something like €30-35 million on some supposedly safe real interest bonds, except for a clause that said that if the seller of said bonds fell onto hard times they would lose all value.
It's even sadder because Oskarshamn is not a wealthy place, but the city government is wealthy (they still have like €130 million in financial assets). That's because they, that's right, sold all their city owned hydro electric power plants 15 years ago. They were initially paid with shares from the company that bought the plants (Sydkraft, later bought by Eon), so not too horribly bad...
But some idiot official who misunderstood what diversification is about and what it's good (and not good) for sold those shares and bought a diversified portfolio. And here we are. </head explodes>
Lessons: city governments should not own shares and bonds. If they have more money than they can spend they should cut taxes. If the citizens feel like specualting on the markets they can now do it with their own money.
And if city governments really do own anything, it should be strategic assests with stable cashflows and without any kind of surprises... like hydroplants.
Grrrr!
Peak oil is not an energy crisis. It is a liquid fuel crisis.
Iceland's stock exchange on Thursday suspended trading in all shares citing unusual market conditions after the country's largest lender, Kaupthing Bank, followed domestic peers into state ownership.The nationalisation of Kaupthing followed that of Landsbanki, owner of the Icesave savings business popular in the UK, and Glitnir earlier this week and pushed the island economy to the verge of collapse.Sigurdur Einarsson, Kaupthing's executive chairman, said the bank had asked Iceland's Financial Supervisory Authority (FME) to take control after Kaupthing Singer & Friedlander, its UK subsidiary, was placed into administration on Wednesday by the UK government, putting the parent company in technical default."It did not matter that the parent company had sufficient liquidity and its position was solid," he added. Mr Einarsson also said Kaupthing Edge, Kaupthing's online saving bank, had been hit by a wave of withdrawals by UK depositors in the wake of the run on Icesave, in spite of its deposits directly benefiting from a UK guarantee, whereas Icesave's were backed by an Icelandic protection scheme in the first instance. Kaupthing agreed to sell Kaupthing Edge deposit business to ING, the Dutch bank, on Wednesday.
The nationalisation of Kaupthing followed that of Landsbanki, owner of the Icesave savings business popular in the UK, and Glitnir earlier this week and pushed the island economy to the verge of collapse.
Sigurdur Einarsson, Kaupthing's executive chairman, said the bank had asked Iceland's Financial Supervisory Authority (FME) to take control after Kaupthing Singer & Friedlander, its UK subsidiary, was placed into administration on Wednesday by the UK government, putting the parent company in technical default.
"It did not matter that the parent company had sufficient liquidity and its position was solid," he added.
Mr Einarsson also said Kaupthing Edge, Kaupthing's online saving bank, had been hit by a wave of withdrawals by UK depositors in the wake of the run on Icesave, in spite of its deposits directly benefiting from a UK guarantee, whereas Icesave's were backed by an Icelandic protection scheme in the first instance. Kaupthing agreed to sell Kaupthing Edge deposit business to ING, the Dutch bank, on Wednesday.
