Gylfi Magnusson, Iceland’s Minister of Commerce is not excited by the possibility of merging the banking sector so that one super-bank could have over 50 percent market share. From a competition point-of-view, that would not be a good long term situation, he argues.
The possible merging of the Icelandic banks has been under discussion since the banking crisis hit last October and the weekend’s state takeover of SPRON and Sparisjodabanki has done nothing to stop the speculation, RUV.is reports.
Gylfi Magnusson said, however, that no formal discussions are taking place on the issue; but people are certainly throwing the issue around and brainstorming ideas, whatever the outcome may be.
The Minister of Commerce also told RUV that preparations for negotiations regarding Icesave repayments are going well and that they are expected to start soon. The state intervention in SPRON and Sparisjodabanki has marked a turning point in the story and from now on the sole goal will be economic reconstruction, he said.
Forget competition between the banks! That will be irrelevant for many years and it’s just a distration now. The focus should be on creating a stable and efficient nationalised banking system, not worrying about consumer choice in 5-10 years time when parts of it may be privatised again…
I would rather have one well-policed superbank with over 50% market share,than a myriad of lesser banks run by gangsters lending each other(and stealing)the money earned by the nation…which,correct me if I’m wrong,is the system that has just collapsed.
Who do you work for Gylfi?? The people or the entrepreneurs??
Learn the lesson.
>The focus should be on creating a stable and efficient nationalised banking system
You know that is contradiction in terms right?
Treatment of people by banks since government takeover bad enough with the different banks still existing imagine bad it will be with just one bank where no choice to move.
You lived too long under liberalization and forget what it like to deal with government monopoloy banks.
Or maybe you young man come of age after privatisations and not know what it like to live under heel of government run monopoly enterprises.
@Fisy – A few years of privatised banks and the COUNTRY is bankrupted by them. It is impossible that nationalised banks could do worse. Take a step back and engage brain…
Fisy is right. Look back 20 years when there were only government owned banks in Iceland. You needed a loan? Only if you knew the right people in the government? You dis something that was against some important politician? You’d be put out of business. Sounds familiar?
Any change to later sell (let alone profitably) such a bank and use the proceeds to pay off foreign debt? Forget it! A state run monopoly bank system is not a good basis to create the so desperately needed credibility for Iceland’s economy.
I say bring on the massive one giant Kreppubanki! A country of 315,000 really needs 7 zombie nationalized banks???? Really now! Come one you bankers, you all gotta to work the kreppa like us common fólk!
well said silvia!!
Here’s an interesting article that reveals Iceland’s “secret plan”:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a.bLzEggZ0.4
Iceland gives Kaupthing to the foreign creditors – let’s call them Deutsche Bank – in exchange for their claims. Iceland would get to use a new reliable bank that would allow the country access to foreign markets and credit lines, even if Iceland does not own the bank.
In order for DB to get value from Kaupthing and maintain its investment, DB must recapitalize Kaupthing. Otherwise, the bank will struggle or fail or go bankrupt. In other words, DB must inject a lot of its own money from abroad in order to save Kaupthing. Kaupthing needs at least 3-4 billion euros to loan to Icelandic homeowners to prevent them from defaulting and crashing the bank. Plus more money to Icelandic businesses to stop them from going bankrupt.
Does it make sense for DB to spend an additional 3-4 billion to save an investment that is worth maybe 10 billion?
Probably not.
DB might take over Kaupthing and not recapitalize very much. Just collect whatever they can from the homeowners and other debtors, and try to force the Icelandic Central bank to give them money, which the SB would get from the IMF.
Deutsche Bank sounds good to me,
a German bank, and a Faroese insurance company
just what we need, more variety and competition.
WHAT A DISASTER OF COUNTRY AND WHAT A PUNCH OF THIEVES, CORRUPTED POLITICIANS AND ALL… REALLY, I THOUGH THIS WAS ONLY SOMETHING TO BE SEEN IN ARGENTINA OR ANY THIRD WORLD COUNTRY…
ICELAND HAS PROVED THE WORLD THAT IS REALLY FAR AWAY FROM DEMOCRATIC STANDARDS…
THIS IS A BANANA REPUBLIC…
You want some more bad news?
The debts of the fishing industry are 500-800 billion ISK. This means that the ship/quota owners have borrowed against the fishing quotas 5-8 times leverage and put the money in their pockets, which has now disappeared to Lux, Tortola or money heaven.
The fishing industry got about 1 billion ISK for all their fish last year. So you can forget about the fish saving Iceland. It would take 5-8 years of fishing just to pay back the fish-quota debt.
If Iceland were to nationalize the fish quotas, the government would owe the foreign banks for taking away the debts.
I guess that leaves only about 5-10 billion in home value and maybe 5 billion in pension funds as the only thing of value in Iceland that isn’t owned by or owed to foreign creditors.
How about declaring war on the Faroes or Ost-Frisia and then declaring unconditional surrender.