More on Iceland bank boss pay and the demise of SpKef

Following this weekend’s two big Icelandic banking stories, further information and opinions have come forward, among others from Icelandic Prime Minister Johanna Sigurdardottir, who says that bank directors’ huge salaries are a direct provocation so soon after the banking crash.

It emerged during the last week that the directors of Islandsbanki and Arion Bank are taking home millions of kronur each month in salary and that Arion has awarded its boss nearly 45 percent more pay in 2010 than in 2009.

On her Facebook page, the Prime Minister said that such sums of money are completely unfair while so many in Iceland are still struggling with the worst effects of 2008’s banking crash. An Arion board member meanwhile defended the move, saying that the higher wage relates to a new bank director and is therefore not a pay rise but a whole new employment contract.

The other big banking story of the weekend was the merger of SpKef into Landsbanki due to the savings bank’s terrible liquidity position.

Minister of Finance Steingrimur J. Sigfusson told RUV that he would have liked to rescue the bank, which he described as a linchpin of the savings banks network; but added that it would have cost the state as much as ISK 20 billion (EUR 124.2 million). By forcing Landsbanki to take over the troubled bank, the taxpayer is saving at least ISK 8 billion, he said. This means, however, that the state is still faced with a roughly 12 billion krona bill.

Some 120 people worked for SpKef and Landsbanki has promised to save all the jobs it can — although it will not rule out redundancies outright. SpKef branches in Isafjordur, Olafsvik, Grindavik and Reykjanesbaer will be closed down and merged with local Landsbanki branches. The other 14 (mostly rural) SpKef branches will remain open but will be re-branded as Landsbanki.

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