Landsbanki Owner Provides New Angle on Icesave

Icelandic entrepreneur Björgólfur Thor Björgólfsson, who held one of the largest stakes in Landsbanki Bank, stated in an interview on Stöd 2 news magazine Kompás last night that before Landsbanki was nationalized, the British Financial Supervisory Authority had offered to fast track the process of shifting the responsibility of the Icesave deposits to Britain.

Björgólfsson claimed in the interview that the British Financial Supervisory Authority had been prepared to speed up the relocating of the responsibility for the Icesave deposits provided Landsbanki submitted GBP 200 million (USD 309 million, EUR 249 million) in collateral. Landsbanki therefore applied for a loan of that amount at the Central Bank, Morgunbladid reports.

In response to Björgólfsson’s story, the Central Bank states: “The reason for Landsbanki’s request [for a GBP 200 million loan] in a letter dated October 6 was outflow from deposit accounts. An express treatment by the British Financial Supervisory Authority was not mentioned.”

The statement from the Central Bank goes on to say: “Considering the aforementioned reason it is obvious that the claim made by Björgólfur Thor Björgólfsson that a GBP 200 million payment from the Central Bank of Iceland would have solved all of Landsbanki’s troubles at that time is unfounded.”

In response, Björgólfsson states: “The directors of the Central Bank had full knowledge of the British Financial Supervisory Authority’s offer to fast track the loan and that can also be confirmed by others. Also those ministers in Iceland’s government who have been mostly involved in solving the problems of the Icelandic financial companies were aware of the offer made by the British authority.”

Minister of Industry Össur Skarphédinsson denies Björgólfsson’s claims. “That offer was never presented to the group of ministers who were working on those matters from time to time and I do also not recall that it was discussed in the cabinet.”

Prime Minister Geir H. Haarde also denied having received such an offer from the British Financial Supervisory Authority in an interview with Stöd 2 last night.

Björgólfsson suggested in the Kompás interview that the Central Bank’s refusal to grant Landsbanki the GBP 200 million loan, which would have allowed them to accept the British FSA’s offer, might have caused the anger of British authorities and the harsh measures undertaken to seize assets of the Icelandic banks in the UK. Some believe these measures led to the downfall of Kaupthing Bank.

In Björgólfsson’s opinion, the Central Bank could have prevented the uncertainty surrounding the Icesave deposits in the UK and the subsequent dispute between Iceland and Britain, which has caused considerable damage to Iceland’s reputation, Fréttabladid reports.

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