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How Long Can Icelandic Banks Last?

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Looks like the overleveraged Icelantic banks are in serious trouble

But what will happen to the small population?

Link?

Incidentally, my ICESave 6 month bond matures today, exactly.

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Find your own there are 100s

Helpful. <_<

There are 100s of Icelandic Bank threads also on here. Was wondering if there was any specific story or event that happened today that prompted you add to them.

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Link?

Incidentally, my ICESave 6 month bond matures today, exactly.

Well ok then

From the telegraph

Financial Crisis-hit Iceland draws up banking rescue plan

The Icelandic government is finalising a rescue plan for its crisis-hit economy – but has denied that it is considering nationalising Kaupthing, the country's largest bank.

By Richard Fletcher, Executive Editor, Business

Last Updated: 10:15PM BST 03 Oct 2008

Previous1 of 2 ImagesNext Iceland's Prime Minister Geir Haarde Photo: EDDIE MULHOLLAND

Kaupthing headquarters in Iceland Photo: KAUPTHING MEDIA CENTRE Investors dumped the Icelandic krona and Icelandic shares as fears about the depth of the country's financial crisis grew.

The country's stock market hit a four-year low yesterday. Against the dollar, the krona has fallen more than 27pc this week – its biggest weekly decline since at least 1992 – as credit agencies have downgraded Iceland and its banks after the government's part-nationalisation of banking group Glitnir.

Tryggvi Thor Herbertsson, an economic adviser to Geir Haarde, the Icelandic prime minister, revealed Iceland's plans to introduce measures to bolster financial stability and unlock currency trading next week. "What we are working on is... how to start the foreign exchange market here in Iceland and secure financial stability," he said

Mr Herbertsson declined to provide details but ruled out a loan from the International Monetary Fund. He insisted Kaupthing and Landsbanki were secure. "The other banks are in a much better position and we don't think we need to go into those banks," he said.

Nevertheless, the cost of insuring against Kaupthing defaulting on its debt rose sharply. In London, broking clients of Kaupthing were told yesterday to put up more cash or close their leveraged positions. But the bank, which employs around 700 in London, vehemently denied suggestions it was in trouble.

"Over the past week, we have been going proactively to clients and closing down positions in a sensible and measured way. We are not the first to do this and certainly will not be the last," Kaupthing chief executive Armann Thorvaldsson said. London brokers reported a "mad scramble" among Kaupthing clients to move positions held via Contract for Differences after the demand by the Icelandic bank.

A CFD allows an investor to take a leveraged position in a specific stock, with an investor able to put up as little as 10pc of the value of their position.

Kaupthing is broker to high-profile investor Robert Tchenguiz, who is believed to hold significant stakes – via CFDs – in supermarket chain J Sainsbury and pub operator Mitchells & Butlers.

Mr Tchenguiz claimed last night that he had not had a "margin call". However shares in both M&B and Sainsbury's fell sharply in early trade, though both recovered to close down 13.75 at 210p and down 5 at 329.5 respectively.

Baugur, which owns stakes in several British retailers, claimed it had no exposure to the Icelandic economy following speculation about the effect of the meltdown on the Icelandic investor.

Gunnar Sigurdsson, chief executive of Baugur, said: "The funding for these businesses is secure and the vast majority of this funding is through international banks with whom Baugur has a long working relationship."

Amid reports of panic buying at Icelandic foodstores Iceland's central bank governor David Oddsson said the central bank had enough reserves to cover the cost of all imports for eight to nine months, a stronger buffer than it had had in the past.

Over the past decade Iceland's banking sector has grown to dwarf the rest of the economy with assets at nine times annual GDP of £6.8bn.

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My girlfriend has £30K odd with Kaupthing Edge.

My understanding is that it is covered by the UK FSA compensation scheme ( yet to be tested ).

Should she be moving it now? And if so where to get a decent rate.

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They will freeze to death.

Very unlikely seeing as their heating costs are almost non existent. Heating is so cheap, they even have some heated pavements.

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http://online.wsj.com/article/SB1223085083...=googlenews_wsj

Iceland has a population of just 300,000 and a gross domestic product in 2007 of around $20 billion -- less now that the currency has fallen so sharply. Its major banks have foreign-currency liabilities totalling $120 billion.

So what are the corresponding "Assets" to which the $120 billion of liabilities relate ?

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Hmmm. Like I said, my ICESave bond matured today, so I've moved it out to put into the Halifax 6 month bond @ 7%.

I will report back here if it doesn't make it to my current account, being otherwise 'lost in transit' :ph34r::lol::blink:

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So what are the corresponding "Assets" to which the $120 billion of liabilities relate ?

At least there will always a plentiful supply of food there.

That's why mums go to Iceland

:rolleyes:

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They will freeze to death.

I thought most of Iceland used the thermal energy to heat their homes so this won't happen?

I'm surprised the Ponzi Iceland banks have managed to stay afloat so long after their crazy buying spree.

As I've said before the game is who's going to implode first. No one wants the accolade which is why we are constantly seeing ever more crazy bailouts by various states.

The end of the global Ponzi system is looming, unless of course they can create some new Ponzi scheme to get things moving again.

I'm surprised we haven't seen a global plan to mine the planets to get the resources we need to kick start the economy. It needs to be big and also crazy enough so the technical problems allow huge sums to be thrown at it with relatively no possible returns for years in the vain hope someone in the future will sort it out.

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Guest adp
So what are the corresponding "Assets" to which the $120 billion of liabilities relate ?

Iceland's banks were sold to investors in the 1990s and were permitted to offer mortgages in 2004, contributing to the island's real-estate boom.

Kaupthing's profit jumped more than 50-fold from 2000 to 2005 after it borrowed abroad to finance expansion. It acquired financial services companies FIH Erhvervsbank A/S of Denmark in 2004 and Singer & Friedlander Group of the U.K. in 2005.

Landsbanki purchased Teather & Greenwood and Kepler Equities of the U.K. and Merrion Capital Group of Ireland in 2005, as well as the U.K.'s Bridgewell Group Plc last year.

Glitnir's assets grew more than ninefold from 2002 through 2007 as it acquired Swedish financial services companies Fischer Partners and Tamm & Partners Fondkommission AB, and Finnish money-management firm FIM Group Oyj. The expansion forced Glitnir to rely heavily on wholesale markets, rather than deposits, for its funding needs.

Crossholdings

As the nation's banks grew, they helped fund a web of investment firms with stakes in other Icelandic companies.

Stodir, the Glitnir investor, also has holdings in insurer TM and real estate company Landic Property. Exista hf, a financial services firm, owns almost 25 percent of Kaupthing. Bakkabraedur Holding BV, owned by the founders of food maker Bakkavor Group, in turn owns 45 percent of Exista.

Landsbanki this week agreed to sell its European broking units, including Teather & Greenwood and Bridgewell, to Straumur Burdaras Investment Bank hf for 380 million euros.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

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http://www.reuters.com/article/bondsNews/i...lBrandChannel=0

LONDON, Oct 3 (Reuters) - Offshore trading in Iceland's crown currency had all but dried up by Friday as fears grew about its highly leveraged banking sector following the partial nationalisation of local lender Glitnir (GLB.IC: Quote, Profile, Research, Stock Buzz), traders said.

.....

Credit default swaps (CDS) on Iceland were being quoted upfront on Friday with investors asking for advance payment to insure against possible restructuring or default of its sovereign debt. (For details please double click on

Hmm would they ditch the currency for Euro ?

IMF loan rules out http://www.bloomberg.com/apps/news?pid=206...mp;refer=europe

Edited by Ash4781

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I'm surprised the Ponzi Iceland banks have managed to stay afloat so long after their crazy buying spree.

I'm suprised as well, but the inevitable bust can't be too far away.

I would expect pressure to be too great before the end of this year.

It must be a very painful time for the average icelander with high inflation, extortionate interest rates, shrinking economy and disappearing disposable income all this whilst they watch their currency collapse to junk status.

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Guest adp
I'm suprised as well, but the inevitable bust can't be too far away.

I would expect pressure to be too great before the end of this year.

It must be a very painful time for the average icelander with high inflation, extortionate interest rates, shrinking economy and disappearing disposable income all this whilst they watch their currency collapse to junk status.

Yes - I used to work for an expanded internationally Icelandic company and those I know there are extremely worried. My guess is, as most Icelanders are exceptionally well educated, multi-lingual, and highly qualified, there will be a mass exodus brain drain from the country, leaving those left behind somewhere akin to the stone age.

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Iceland's banks were sold to investors in the 1990s and were permitted to offer mortgages in 2004, contributing to the island's real-estate boom.

/

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Thank you .

Edit to add :

"Iceland spent a decade punching above its weight as the three biggest banks amassed assets valued last year at nine times the country's $19 billion gross domestic product."

so 9 x $19B = $171B against $120B of liabilities ?

Edited by Dead Spider

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Guest adp
Thank you .

Edit to add :

"Iceland spent a decade punching above its weight as the three biggest banks amassed assets valued last year at nine times the country's $19 billion gross domestic product."

so 9 x $19B = $171B against $120B of liabilities ?

Unfortunately, almost all of Iceland's actual GDP is tied to their bank's international expansion. Without this, they simply have too few people or native assets (barring fishing which is hardly a growth industry) to have an economy at all.

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