Kaupthing investment deadline looms

arion1The deadline expires today for Old Kaupthing Bank to decide whether it wants to take an 87 percent stake in Arion Bank (formerly New Kaupthing). If it decides to take Arion on, the Icelandic government would only be left as the majority shareholder in New Landsbanki.

The government passed Islandsbanki (New Glitnir) onto its principal creditors and retains just a five percent stake, RUV reports.

Eight small savings banks have also requested the state invest in them. If the government decides to comply with their wishes, the management of the investment would go to the specially created banking commissioner who looks after all the government’s investments in financial institutions.

It is understood the government plans to rid itself of New Landsbanki by attempting to build up the new bank until its shares can again be traded publicly on the stock exchange. The eventual goal is total government withdrawal from the banking industry within five years of the crash, or roughly four years from now. At that point, the role of banking commissioner would legally cease to exist.