Bjorgolfur Thor is no longer on the Forbes billionaire list.
And Hannes Smarason of FL Group fame personal debts to Landsbankinn amount to half the IceSave amount owed to the Brits and the Dutch according to the latest calculations. Of course without proper collateral or what?
Related posts:
The Monetary Policy Committee (MPC) has voted to lower Central Bank interest rates by 0.5 percentage points. The deposit rate (current account rate) will be lowered to 8%. The maximum bid rate for 28-day certificates of deposit (CDs) will be 9.25%. The seven-day collateral lending rate will be 9.5% and the overnight lending rate 11%. (Central Bank press release)
Bjarni Benediktsson, leader of Iceland’s Independence Party has protested claims he was involved in a property speculation racket in Macau.
The company whose board Benediktsson used to chair, had shares in another company which is linked to the Macau situation and is now under investigation by Iceland’s Special Prosecutor into the economic collapse. The case is potentially one of the largest the Special Prosecutor has been involved in to date.
The DV newspaper broke the story of Benediktsson’s ties to the Macau property speculation and has covered the same issue before; but that time in connection to the Milestone holdings company, owned by Karl and Steingrimur Wernersson.
The project focused on the purchase of 68 luxury apartments in a tall tower in the self-governing Chinese city of Macau. The Icelandic insurance company, Sjova also took part in the project, which ended up overburdening it. The state had to inject ISK 12 billion into Sjova to save it from bankruptcy. Glitnir and Islandsbanki put ISK 4 billion into the project.
Bjarni Benediktsson is connected to the fiasco due to having been chairman of the board at BNT, which owns the oil company N1. Benediktsson was in his role at BNT when the company Vafningur ehf was set up with BNT holding a large stake through another third company.
The Macau project was ascribed to Vafningur in 2008 as collateral for refinancing of company debts.
Benediktsson responded to the allegations saying they are an attempt to discredit him and that he knew nothing of the project being used as Vafningur collateral until long after the event.
The Monetary Policy Committee (MPC) has voted to lower the deposit rate (current account rate) by 0.5 percentage points to 9%. The maximum volume at weekly auctions of 28-day certificates of deposit (CDs) will be increased from 25 b.kr. to 30 b.kr., with a minimum bid rate of 9.5% and a maximum of 10.25%. This implies a 0.25 percentage point increase in the maximum interest rate. The seven-day collateral lending rate will be lowered from 12% to 11% and the overnight lending rate from 14.5% to 13%.
(Press release)
On August 11, I wrote this to the IMF representative in Iceland, Mr. Franek Roswadowski in light of comments made by Icelandic banks and ministers that the IMF was the entity responsible for debt reorganization.
Unlike Icelandic officials, Mr. Roswadoswki answers his emails and today I recieved this from him:
Dear Daði,
No, the IMF is not against household debt being reorganized, but we (like the government) have spoken out against one specific approach: across-the-board debt reduction. The problem with across-the-board debt reduction is that it supports those who don’t need it as well as those who do, it supports the rich more than the poor, and it supports those who took exceptionally high risks more than those who didn’t.
Sincerely,
Franek
So it is true that the IMF, like the government is against “across the board solutions”. Agreeably the concern for the wealthy and the risk-taking being rewarded more than others is rightful.
But the IMF is not against reorganization and the issue still remains that until Lilja Mosesdottir’s awakening in the last couple of weeks, the lack of solutions for Icelandic households has made the aftermath of the economic crisis even worse.
I’ve thought a lot about this in the past few months and this is my stance on the subject right now.
a) Household debt should be given priority. Business debts are much more complicated so the solutions should be completely seperate.
b) Those with currency loans and price-indexed loans should both be offered solutions. Both have suffered because of the economy crashing.
c) The bill, proposed by Lilja Mosesdottir and others whereas the bank can only collect the mortgaged home makes a lot of sense. The lender is risk-free today and basically has collateral in his borrower’s life.
d) The Zingales Plan is worth a look. As are any other plans that keep the interests of society in mind.
I am afraid that the government and the IMF are officially only concentrating on answering the Progressive Party’s mad 20% idea. The discussion has to move, like any sensible discussion must, away from the Progressive Party.
Thanks to Mr. Rozwadowski for taking the time to answer my email. If only Icelanders were as polite: I wrote to this MP months ago with these questions and he still hasn’t answered. Maybe his computer is at the repair shop.
The Icelandic government has submitted a bill to parliament which would allow the assets of people under investigation by the State Tax Investigation office to be frozen.
The bill’s explanatory statement says the aim is to prevent people avoiding their tax obligations by moving funds or assets from their own names to other people.
Under the proposed law, as soon as a person has been informed of the tax investigation being carried out on them, they will no longer be able to disperse their assets by selling them, using them as collateral for loans, or by other legal procedures.
Mbl.is reports that it is unsure under what circumstances the law would be needed; but that tax investigators look likely to start chasing several big cases following the banking collapse last autumn.
Britain’s Serious Fraud Office, the public body which investigates large scale financial cases, has been conducting its own investigation into the collapse of the Icelandic banks.
Last weekend’s leak of Kaupthing Bank’s unusual loans portfolio has caused the SFO to ramp up its investigation in recent days, according to British newspaper The Telegraph.
A special team within the SFO is investigating the leaked document containing details of huge unsecured loans to a tight-knit group of businesses. The document contains details of all Kaupthing loans over EUR 45 million. There were 205 in total. The SFO has also been receiving information from former UK branch staff members, investors and customers.
The SFO is said to be searching for more individuals who have links with the bank to come forward. The loans document from Kaupthing shows that the large majority of the loans went to Kaupthing’s owners and related parties. Many of the loans have little or no security. In addition to this, many customers took loans from the bank to buy shares in the bank, using nothing but the shares themselves as collateral for the loans.
Although no official investigation is underway, the SFO has been looking into Kaupthing, Landsbanki and Glitnir for many months, at least since the collapse last October.
Olafur Thor Hauksson, Iceland’s special prosecutor in the official banking investigation, said in an interview with mbl.is that the SFO has made no formal contact with his team and has not requested any documentation from it. He said his team of investigators first heard about the SFO investigation through the media like everyone else.
Kaupthing’s leaked documents are welcome proof of what people have been saying since last autumn, and what some experts warned for years.
The Icelandic banks were controlled by an elite who raked in as much money as possible for themselves, through loans with worthless or no collateral and bonus payments and dividends that were based on thin air.
Black on white it shows how the game worked, business-empirebuilding through cross-ownership and tits for tats all over the board.
The last few days have been strange. Some journalists have pointed out the stunning silence that politicians and members of parliament have been displaying through these tumoultous times. And why is stuff leaking from Kaupthing, not the other banks? Rumour has it that if Landsbankinn’s books were opened up then you’d see much uglier stuff than in Kaupthing, especially relating to the nation’s politicians. Glitnir’s relationship with FL Group and Jon Asgeir Johannesson is also something people would like to learn more about. And if he got that money out of Kaupthing, how much did he get from the other two which supposedly were even more inviting to him.
So a nation asks, can we have some more?
The leaked document also reveals the extent to which Kaupthing had been lending to those with a major economic interest in the bank’s shares. For example it sets out a complex web of loans and shares posted as collateral between the bank, holding company Exista, which owned 23% of Kaupthing, and Exista’s controlling shareholders Agust and Lydur Gudmundsson.
First they tried to stop Wikileaks from publishing this and then the solvency committee of Kaupthing managed to get a ruling against the State Broadcasting News from talking about the findings.
Absolutely useless, the information is already everywhere and only confirms what people have been asking, yes Kaupthing like the other Icelandic banks was used as a tool to transfer as much cash and assets into the hands of a few connected Icelanders.
But getting that ruling might cost the “new” Kaupthing customers. This sort of PR disaster is suicidal. I know for one that whenever I get rid of my mortgage, my personal finances are going elsewhere. But not to an Icelandic bank. I am done with playing along.
And hundreds of customers are already saying they will leave the bank as soon as possible. Where should they go?
Landsbankinn let Jon Asgeir borrow $24 million without collateral for his home? Rumour has it that the reason so little leaks from the bank is that there are so many politicians who have dirty laundry within.
Glitnir has not given its customers any discounts on loans…except well, a story in DV this weekend told how they discounted roughly 100 million ISK on a loan that former CEO Larus Welding had with the bank. So he can go off to his master´s degree at Harvard without any worries about money.
The Savings & Loans have been milked dry mercilessly by the same system that ruled the banks. And MP bank, the new player in town is just the same people in different suits singing the same song.
But the spotlight has turned on the solvency committees. They appear to be working for the benefit of the same people who bankrupted Iceland, and absolutely not for the benefit of the people who pay them their wages.
Eva Joly spoke of an exodus. The feeling of most Icelanders who have listened to the news this weekend is that they live in an increasingly wicked place.
Attention all mortgage seekers. Baugur chief Jon Asgeir Johannesson borrowed $24 million from Landsbankinn to buy an apartment at Gramercy Park North in New York without any collateral.
Stunned foreigners must scratch their head when they realize that the owners of each Icelandic bank, didn’t just borrow a whole hell of a lot of money from their own banks but also from the others. Often without collateral or with imaginary collateral.
A great way for a group of 10-30 people to get as much cash out of the whole system as possible.
Since the economic collapse the amount of assets reclaimed by banks has increased dramatically. Collectively, Landsbankinn, New Kaupthing and Íslandsbanki own at least 347 lots, cars, stables, summerhouses as well as homes. Foreclosure proceedings have been frequent among banks to collect collateral on defaulted mortgages.
The total loans of failed Icelandic bank Landsbanki in the United Kingdom to fellow Icelandic businessmen amounted to a minimum ISK 130 billion of a total loan portfolio of around ISK 730 billion.
By far the biggest single loan paid out by Landsbanki UK went to Novator Pharma, a company owned by Bjorgolfur Thor Bjorgolfsson (son of Landsbanki’s biggest shareholder) and companies associated with Baugur Group (huge retail chain with Icelandic media empire including Stod 2 and Frettabladid), Stod 2 News reported.
The majority of money loaned went to non-Icelandic businesses; but by far the biggest individual loans all went to Icelanders. For example, Novator received a loan from Landsbanki in the UK for GBP 205 million, whereas the highest loan to any non Icelandic company was GBP 58 million.
Novator’s outstanding debt to Landsbanki stands at ISK 40 billion and the debt of Baugur Group and associated companies is ISK 58 billion. The loan to Novator was taken to finance its takeover of Actavis, which is now responsible for the loan.
According to Frettabladid sources within Landsbanki, the loans to Novator and Baugur were secured with the best possible collateral the companies had to offer at the time. Of the total loans given out by Landsbanki in the UK, Icelandic companies got 18 percent.
Frettabladid sources point out that the figure is reduced to 12-15 percent if the loans from Heritable Bank are included. Heritable was a Landsbanki subsidiary which only loaned to British companies.
In the meantime, the agreement reached with Dutch and British authorities over Icesave reimbursements was greeted with hostility by the opposition in parliament yesterday and by protesters outside.
While the contract commits the government and the Icelandic people to shoulder the responsibility for Icesave, the liquidation of Old Landsbanki assets in coming years is hoped to cover much of the debt. The amount of debt held by failed Icelandic investment companies is, therefore, of direct consequence to all Icelandic residents.
The resolution committee of Landsbanki Bank has acquired the almost 24 percent stake that Langflug held in Icelandair Group, as announced today. The shares were collateral for loans that were granted to Langflug to purchase stock in Icelandair Group.