Uncertainty over sale of partially-nationalised Icelandic banks

Iceland’s finance minister says the state will sell its shares in the new banks it created during the financial crash; but that it will not be this year, unless market conditions are favourable.

The government plans to begin the sales process for its share in Iceland’s banks, including its three biggest retail banks, later this year, according to a plan released Friday by Iceland State Financial Investments. The state’s stake in the banks and savings banks is estimated at around ISK 200 billion (EUR 1.2 billion).

Minister of Finance Oddný Harðardóttir told RÚV yesterday that the state’s banking assets will only be sold if market conditions are favourable for a profitable transaction.

Oddný says that if the conditions are not right and the treasury does not benefit from the expected ISK 7 billion from banking asset sales this year, then the government will instead concentrate on selling other assets.

Iceland State Financial Investments said in a statement that it sees three ways that the state can sell the banks back to the private sector: either with a stock market floatation, sale to foreign banks, or sale to investors.

Oddný told reporters it would be great to sell some state banking assets at a good market value; but that she is not personally confident that will happen this year.

The Icelandic government (through Icelandic State Financial Investments) currently owns 81.3 percent of Landsbanki, 13 percent of Arion Banki, and five percent of Íslandsbanki – as well as stakes in other banks in the country.