Johanna Sigurdardottir, Prime Minister of Iceland believes that this week’s Icesave talks in London were more positive than at first reported.
She said that the meetings left room for optimism that a trilateral agreement will be reached soon – adding that the situation is serious and complicated and could still change. Reuters reports that talks will continue, although British and Dutch authorities are not enthusiastic to reopen formal negotiations.
The Prime Minister went on to tell RUV that the slow progress of the Icesave issue contrasts starkly with the European Union’s decision yesterday to begin accession talks with Iceland – which should finally prove that the two issues are not linked, she said.
Icelandic Foreign Minister Ossur Skarphedinsson and his Swedish counterpart, Carl Bildt met in Stockholm yesterday to discuss the Icesave issue in minute detail, RUV reports. They also discussed the status of Iceland’s IMF-led recovery package and the country’s EU application.
Meanwhile Sigbjorn Johnsen, the Norwegian Finance Minister told his country’s parliament that there is no question that Iceland is responsible for insuring deposits within Icesave and that the country was legally responsible for the behaviour of its bank branches in other EU/EEA countries.
He told parliamentarians that there is little argument over either of these facts in any country, and continued that Norwegian loans to Iceland are not contingent on a resolution to the Icesave issue, but said that Norwegian loans are part of a wider IMF/Nordic package. His comments came in response to pleas from three opposition MPs to pay out loans to Iceland immediately.
Johnsen also said in his long, pre-prepared response that Iceland’s current situation is not as bad has initially feared – with lower unemployment than both Sweden and Finland, higher than expected export revenues and relatively stable industry. Government debt is very high though, he conceded.
which should finally prove that the two issues are not linked
Not really.
Norwegian loans to Iceland are not contingent on a resolution to the Icesave issue, but said that Norwegian loans are part of a wider IMF/Nordic package.
Wait, that’s exactly the IMF’s line :) . So it looks like the buck has been firmly passed to Sweden (& Denmark/Finland, but I’m guessing that with its exposure to the Baltics, Sweden is the schwerpunkt).
Hence the “minute detail” discussion in Stockholm. Knowing the what was discussed and the results would be interesting and would make up for that missing joint Nordic statement due last month.
” slow progress of the Icesave issue contrasts starkly with the European Union’s decision yesterday to begin accession talks with Iceland – which should finally prove that the two issues are not linked”
hahaha, EU is doing the same that IMF, they are washing their hands, “yes we can start talks” what does that mean? nothing, If iceland doesnt fullfill the requirements to be accepted(inflation, interest rates, etc), and guess what without loans from IMF iceland wont fuyllfill these requirements, so they can say “It’s not that europe is linking this to Icesave, but if IMF doesnt lend you the money you can not fullfill the basic requirements to join, dont get me wrong, we want you in” “but look. look we are in talks with iceland we are not saying they can not join because Icesave”
I just can keep on repeating myself… Why is the prime-Minister always so happy abouyt the EU progress. Is she still refusing to read the polls of her own nation? there is no mayortiy for EU in Iceland! far away from it! Why is this always ignored? I wished people would read more about EU in the matetr of greece for example, also Spain, portuhgal, italy and the baltics, as well as Hungary. There you can see how the EU is acting in a crisis. is this waht we need right now?
Jóhanna Sigurðardóttir is always happy with the EU.
Even when she should be thinking far more critically.
But that is the EU at any cost mentallity of the Social Democrats.
Now that Lisbon is not yet cold we see exactly how it will be inside EU political union EU superstate in coming years :
“The council of EU finance ministers said Athens must comply with austerity demands by March 16 or lose control over its own tax and spend policies altogether.
It if fails to do so, the EU will itself impose cuts under the draconian Article 126.9 of the Lisbon Treaty in what would amount to economic suzerainty.
While the symbolic move to suspend Greece of its voting rights at one meeting makes no practical difference, it marks a constitutional watershed and represents a crushing loss of sovereignty.”
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7252288/Greece-loses-EU-voting-power-in-blow-to-sovereignty.html
What I wonder is, will happen, when German voters decide they had enough of bank rolling every one else with they productivity via they backing of Euro ?
Lets face it it is German people that do back the Euro more than any other single thing or coutnry.
“Blue-eyed sheikhs” Saturday, 9th October 2004
“Icelanders are rolling in it, says Daniel Hannan. “
“Why? Because they understand that small is beautiful and have stayed out of the EU”
“In the ten years that I have been travelling to Iceland, I have watched an economic miracle unfold there.”
“Today, Icelanders are absolutely rolling in it. A people two generations away from subsistence farming have become international tycoons.”
“This sparse, chilly speck of tundra has just overtaken Norway to become the wealthiest place in Europe. Faced with a small home market, Icelandic entrepreneurs have expanded into neighbouring countries. “
“In Britain alone they have bought, among other things, Hamleys, Somerfield, Oasis and Karen Millen. Icelanders now enjoy the highest life expectancy in the world. And heres the thing they have achieved all this while remaining outside the EU
@Bromley – A basic point from the Norwegian/Nordics is that customers in the fallen Icelandic banks must bee treated equal, and that money frome the banks or the guarantee fund could not be used in a way that disfavoured foreign customers, either they are in UK/NL/Norway or other countries that lost money.
Take Kaupthing that falled in Norway – the Norwegian fund fullfilled the obligations to the customers under the Norwegian guarantee scheme – which was up to NKr 2.000.000 (ca 225.000 Euro) – Icelands part was the first 20.000 of this. Norwegian government had to guarantee the Icelandic part – which mean that Norwegian taxpayers paid some of this fund. If there was money in Iceland that was used to favour Icelandic customers, then there is a problem particular to those who got paid more than 20.000.
To say it simple. If “Fisy” had 20.000 or 10.000.000 (euro) in a Kaupthing bank, then it is simple to understand that the system in Iceland was only ment to sequre the first 20′. The system was based om minimum risk to the banks and high risk to its customers, particular in Iceland, because the other countries used heigher levels… My “Fisy” would have lost much money – 980.000 Euro if the first round of payments.
It was Iceland that decided this. Norwegian customers was very aware of the risk in the foreign banks.
The norwegian regulators have written this cronicle on how the processes about the Icelandic banks in Norway was handled:
Norwegian:
http://www.aftenposten.no/meninger/debatt/article3473007.ece
Google translated to english
http://tinyurl.com/ydxnokk
I know there is an “Ragnar Hall” issue, but to me it seems to be more an “Dovregubbens Hall” issue…
http://www.youtube.com/watch?v=SBUp9zhEy9U
Sorry – this is the Google translated link I reffered to
http://tinyurl.com/yd7h99d
Thanks Oystein.
Although it doesn’t get discussed all that much here on IceNews, that discrimination point was key point in the UK’s (& I think the NL’s) argument as well (for example, at that arbitration meeting).
But it was nice to see that at least some regulators were on the ball – weekly reports and monthly meetings with the Glitnir subsidiary in Norway.
“Icelanders are rolling in it, says Daniel Hannan. “
I can’t wait to see how his latest favourite fares:
http://blogs.telegraph.co.uk/news/danielhannan/100026409/libertarianism-has-made-georgia-rich-and-free/
@Bromley: that is a good one. At first I thought this guy was referring to the US state of Georgia but no, it is the caucasian Georgia (Sakartvelo)he means.
I can only say that this Hannan is an idiot who has never been to Georgia. I have, just before the war against Russia and I can only say that the country is dead-poor (yet very beautiful and very friendly people) .
Saakashvili has a very good press here, especially because he has a dutch wife but basically he is a dictator, even worse than Sjevardnadze.
His party wins elections with a communist score. Protests from the opposition are kicked from the street by the police.
About 90 % of the population eeks out a living with about 100 euro per month.
Moreover, the war which Saakashvili stupidly started against Russia has caused enormous damage and destroyed what little advance there has been in the past years (for instance tourism).
Perhaps it is safe to say that teh brittish, like most other european nations, have sent their idiots to the european parliament.
Next articles from Hannan:
” Rwanda, a lesson in multiculturalism for continental Europe”
” Neo liberalism made Haiti the greatest place on earth”
” Islam gave Pakistan stability and wealth”
@Bromley.
The response/document from The Norwegian Finance Minister which is refered to in the article is posted here – translated via Google.
http://tinyurl.com/yfpeud3
It is a key point that this program is ment to help Iceland, not punish. But it is still up to Iceland if they thrust this and decide take it.
To Oystein-Norway:
I am not very familiar with the handling the deposit guarantee for Kaupthing and Glitnir in Norway after the crash (probably because there has not been much dispute with our Norwegian friends about it, which is good :-))
There was some grumbling in Iceland that the Glitnir daughter bank was “sold” shortly after the crash, for far below its real value, and few months later resold for 5-times the amount, providing nice profits for the banks involved. Do you have any references on what actually happened there?
As for Kaupthing branch in Norway, from what I understand, the bankruptcy proceedings for old Kaupthing are coming along well, and almost all depositor claims, have been already (or will be) easily covered by the asset recoveries. Again, it would be good to get confirmation of this, from the Norwegian perspective.
Always good to have a post from you Øystein .
” >To say it simple. If “Fisy” had 20.000 or 10.000.000 (euro) in a Kaupthing bank, then it is simple to understand that the system in Iceland was only ment to sequre the first 20?. The system was based om minimum risk to the banks and high risk to its customers, particular in Iceland, because the other countries used heigher levels… My “Fisy” would have lost much money – 980.000 Euro if the first round of payments.
Yes, but why should I have any of my money guaranteed back ?
Let alone if I am a big fish investor that assumes got they money by being smart and so under stands risks of banks and higher interest rates.
It my understanding Kauthping branch was part of the top up scheme (Banks’ Guarantee Fund ) in Norway since August 2007.
” At 7am 9 October 2008, Kredittilsynet [ Norway regulator ] announced that Kaupthing-branch did not get liquidity from Iceland and had to shut down online banking and ATMs …
We immediately informed the Ministry of Finance and recommended that it was given a guarantee that state, if necessary, would advance the portion of deposits that should have been covered from Iceland.
++++ We considered this as necessary to create peace among depositors in Kaupthing Norway and to preserve confidence in general to the Norwegian guarantee scheme, in light of the turmoil we saw among depositors in other countries. ++++
At 9 o’clock the same day was the Finance Minister with a statement that all deposits in Kaupthing branch would be secured within two million. ”
I just did want to high light ++++ again the real reason for all this — which is that this extra despot guarantees was done after Ireland did increase theirs.. to protect the out flow of funds to Ireland from Norway and other places.
This had nothing to do with Iceland.
>It was Iceland that decided this.
Not to increase above the EU directive guanteee limit of EUR 20,000 ? Its highly irresponsible of the other countries to great all this moral hazards and idea in minds of depositors that the governments will always cover their mistakes.
All it will do is ensure that depositors and investors more reckless in future. This bail outs and increased deposit guarantees are path to future financial hells worst than the current one we all just did live through.
One final comment like to make about Norway and how they did handle the ” collapse “.
February 16, 2009 at 7:48 pm
http://www.icenews.is/index.php/2009/02/16/kaupthing-sweden-sold-to-finns/#comment-65016
Brumly86 I think you find that it is Glitnir you mean:
As I say many times assets of Icelandic banks in whole mostly good. Just after collapse countries want money now — EU memberstate being loudest but not only ones — problem finding buyers in current time.
But these assets good that by 2-3 years sales of said will cover debts. Problm will be firesale assets.
That Glitnir ASA sale to Norwegians show the Norwegian way which is to make a good deal for their companys when other party is weak and never to lose money. But still it was sold so no crying about that really.
++++ Glitnir ASA in Norway Sold under Value? ++++
http://icelandreview.com/icelandreview/daily_news/?cat_id=16567&ew_0_a_id=318683
?The subsidiary of Iceland’s Glitnir Bank, Glitnir Bank ASA in Norway, was sold for NOK 300 million (USD 42 million, EUR 33 million) on October 21, 2008, or ISK 5.5 billion, but its current worth is estimated at ISK 36.5 billion (USD 281 million, EUR 217 million).
http://www.icenews.is/index.php/2008/10/21/sparebank-1-banks-acquire-glitnir-bank-asa/
Oystein-Norway
“The Norwegian Finance Minister…. Nordic loans have similar terms, with an interest rate equal to three-month + 2.75 percentage points”
I think the UK loans should be on this basis, thats would give an are of between 4.75 and 7.75%
Fisy
Yes, but why should I have any of my money guaranteed back ?
I thought that was the point that Oystein was making, i.e. that you *in your Icelandic branch* did have you savings protected above the TIF level of 20k euros.
What’s your view of the moral hazard implications in Iceland?
And thanks for that second link Oystein. That does indeed make up for the missing joint statement :) .
@Bjarni and Fisy
Bankenes sikringsfond – The guarantee fund – have published an evaluation report at the following page, but unfortunately it is only in docx format and only in Norwegian.
Here is the link – http://www.bankenessikringsfond.no/no/Hoved/Nyheter/Evaluering-av-krisen-hosten-2008/
See if you can get something out of it.
- – - – -
@Fisy – we have had the 2Mill for quite many years – 1996? – it was established after we had out bank crisis ;-) – I can promise that there have been people living on high level on this rock to, and still is. The periode before the crisis was called “jappetida” –
http://no.wikipedia.org/wiki/Jappetida
We were young then and built our house in the end of 80thies – 15% interrest, we had an appartment at the same time that was a bit problematic to sell (7 monts?9, two small kids…., but we handled it. At that time I a had a job which also included to lock people out of their homes…
The good thing is that the prices of homes are lower, when interrest is high, and under the crisis it felt down to 2,9% in some few years.
I think we need some crisis sometimes… It is only those who take some risks that wins.
>I thought that was the point that Oystein was making, i.e. that you *in your
>Icelandic branch* did have you savings protected above the TIF level of 20k euros.
Point I made was missed.
This unilateral guarantees for branches is just wrong. It is encrouaging all the wrong behaviors for those people in the countries that did deposit.
It just tells them to keep on putting they money for the highest returns.. Take no responsibility. Dont worry the taxpayers of Norway, or UK, or Holland will bail you out..
That is just wrong. Particuarly for those who are with enough capital to know how to manage things.
Bailing them out is very wrong indeed.
Quite, Fisy. Again, what’s your view on the issue of moral hazard in Iceland with the depositors recovery rates raised from 10-30% to 100%?