For years that bank had grown and grown, out of all proportions, and no-one seemed to have realised that Iceland is a small country with only 300,000 people, no heavy industry and - apart from fishing and whaling - not much industry at all. So why was this tiny country with very few resources suddenly so attractive as a banking place?
The answer is risk. ICEBANK was willing to take more and higher risks than most other banks, and in exchange they offered higher interest rates to their customers. Many of the small deposits are safeguarded by various national guarantee schemes. But no-one has any idea what is going to happen to larger investors, including 'Transport for London' (which deposited over £ 40 million), more than 100 UK county councils and - wait for it - also several UK police authorities.
You wonder why all these official British institutions did not trust British banks and put their money into off-shore accounts in Iseland?
I just came across an ICEBANK press release, less than 18 months old. Read it for yourself, and you will undertstand why we are in a crisis. (The original text was set in plain type. Emboldened parts and those set in red are my way of highlighting important points. Green text is added by me.)
Hint: Pay special attention to the list of other banks that are involved in the interconnected and multi-nationally entangled financial transaction. If you have any money left in any of the banks listed, then take it out as soon as you can.
Largest syndicated loan facility
in Icebank’s history
Reykjavík, 26 April 2007
in Icebank’s history
Reykjavík, 26 April 2007
ICEBANK today signed a syndicated term loan facility for € 217,000,000 - which is equivalent to ISK 19 billion - provided by 34 European banks. Owing to heavy oversubscription and the number of investors who showed interest, the final figure is more than twice what Icebank originally sought. This is indicative of the high level of confidence that Icebank enjoys abroad, and is seen by its management as an encouragement to further expansion both in Iceland and abroad.
The signing of the loan facility took place in Berchtesgaden, Germany. [Why? Was Reykjavík not good or posh enough? No, that's not it. Icebank combined the signing of the new scheme with a happy day-out of food, fun and games for its staff, visiting the world-famous Berchtesgaden salt mines in passing as well. (see photos below)]
“This high level of oversubscription by European investors reflects the high level of confidence they have in the bank,” says Finnur Sveinbjörnsson, CEO of Icebank.
“Their response is an encouragement to us, and opens up a lot of interesting possibilities in accordance with our strategy. Last year saw the best performance in Icebank’s history, and it is well prepared for further expansion.”
Four prominent European banks acted as mandated lead arrangers: BayernLB (which had its own scandal already earlier and is now deeply affected by the collapse of Hypo Real Estate) in Germany, Fortis Bank (which collapsed a few days ago and had to be rescued by the governments of France, Belgium, the Netherlands and Luxembourg) in Belgium, HSH Nordbank in Germany and the Austrian bank Raiffeisen Zentralbank. A list of other providers is appended below.
For further information please contact:Finnur Sveinbjörnsson, CEO of Icebank, tel. 540 4000.
Agnar Hansson, Managing Director, Treasury and Capital Markets, tel. 540 4000.
ICEBANK is a commercial bank, focusing on wholesale and investment banking services to savings banks, Icelandic and foreign financial institutions and other large customers. It is owned by the savings banks in Iceland (a miniscule country of only 300,000 people).
Other providers:
Lead Arrangers:- Commerzbank International S.A.
- Landesbank Baden-Württemberg, London Branch
- Natixis
- Norddeutsche Landesbank Luxembourg S.A.
- The Bank of Tokyo-Mitsubishi UFJ, Ltd.
- Zürcher Kantonalbank
Arranger: Sumitomo Mitsui Banking Corporation Europe Ltd.
Lead Manager:
- Banca Monte dei Paschi di Siena SpA, London Branch
- Banque et Caisse d'Epargne de l'Etat, Luxembourg
- Bayerische Hypo- und Vereinsbank AG
- Chang Hwa Commercial Bank, Ltd., London Branch
- Geral de Depósitos, S.A. – Sucursal Financeira Exterior
- DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main
- Landesbank Saar
- WGZ Bank AG Westdeutsche Genossenschafts-Zentralbank
Manager:
- American Express Bank GmbH
- Arbejdernes Landsbank
- BRE Bank SA
- Dresdner Bank AG
- Erste Bank der österreichischen Sparkassen AG
- Mega International Commercial Bank Co. Ltd. Offshore Banking Branch
- National Bank of Egypt (UK) Limited
- Oberbank AG
- Raiffeisenlandesbank Burgenland und Revisionsverband (registrierte Genossenschaft mit beschränkter Haftung)
- Salzburger Landes-Hypothekenbank Aktiengesellschaft
- Sparebanken Øst
- Raiffeisenlandesbank Kärnten
- Banco Popolare di Verona e Novara S.c.r.l., London Branch
- Raiffeisenlandesbank Niederösterreich-Wien AG
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