One should think that transparancy is of utmost importance for any Icelandic government since the heyday of the behind-closed-doors governance of the Independence Party and the Progressive Party.
Questions remain regarding the true ownership of Magma Energy, which has now gotten its hands on valuable energy resources through a game of remiscent of previous governments. Little [...]
One should think that transparancy is of utmost importance for any Icelandic government since the heyday of the behind-closed-doors governance of the Independence Party and the Progressive Party.
Questions remain regarding the true ownership of Magma Energy, which has now gotten its hands on valuable energy resources through a game of remiscent of previous governments. Little has changed regarding keeping everything possible up on the table.
Therefore trust is hard to come by for politicians who claim they are working hard. For whose benefit should be the obvious question.
A rumour now persists that the foreign creditors who will eventually be the controlling stakeholders of Islandsbanki (formerly Glitnir, formerly Islandsbanki) are demanding that 20.000 homes whose home equity is negative.
This would be a massive blow to Icelandic society and screams out for an answer for the following questions.
Who are and will be the foreign creditors of Islandsbanki? At what price did they assume that position?
A story from visir.is indicates that the largest creditors will be comprised mostly of hedge funds, not international financial institutions like the government has maintained.
At an auction held by the International Swaps and Derivatives Association in November of last year, attemps were made to find out how the market evaluated the Icelandic banks. Usually hedge funds, insurance companies and banks buy and sell these derivatives, to either insure bonds from being called in or betting on the business not being able to service its debs.
The results were that Kaupthing’s bonds were estimated at 6,6% of face value, Glitnir’s at 4% and Landsbankinn’s at 1,25%. According to the rules of the auctions, Landsbankinn’s is therefore deemed to be basically worthless.
Early 2009, the price received at the auction was estimated to probably be too low. That’s when they started being traded in international markets and the price rose. Kaupthing was estimated to rise to 10%, a significant increase from the auction. Glitnir’s managed an even higher jump up to 14%.
These are risky investments, as much rubble still needs to be cleared from the banks ruins and the impact of the current currency controls is still unknown. But the creditor group has changed a lot through the year, from being mostly comprised of European banks to now US hedge and insurance funds.
Their influence on the actions taken by Islandsbanki towards Icelandic households could be significant. It is to the detriment of the government that this rumor goes unanswered.
And what will happen in Icelandic society when 20.000 homes are foreclosed on and sold through auctions? Will Bjarni Armannsson or Bjorgolfur Thor come along and buy them at bargain prices? Then charge the previous owners rent for living there?
The glue that holds Icelandic society appears to be thinning every week.