Looking for the frozen Assets of ICEBANK

After ICEBANK's assets were frozen last week,
the British government has now sent experts
to Iceland to find a solution for the problem.

What a Difference 18 Months make...

Last week everyone - from bankers over politicians to ordinary folk - were shocked by the sudden and total collapse of the Icelandic banking group ICEBANK.

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

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)]

The loan facility, which is for a term of three years, was launched for general syndication on 8 March this year, and the response was immediately strong. The interest premium, 0.46%, is in line with the terms that Iceland’s banks currently enjoy. The loan will be used to refinance older loans and to finance Icebank’s further expansion.

“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

Keep your Geese - give us the Money

You don't normally hear much about Iceland. But today it was mentioned twice on the radio, and for totally different reasons. On the news there was an item about Icelandic banks, and later the BBC had a report about wild geese migrating from Iceland to Ireland for the winter.

There is the odd foreigner who mixes Iceland up with Ireland, but not often. Even though the spelling is identical bar one letter, most people know the difference.

For most Irish Iceland is a big lump of volcanic rocks, covered in snow and ice, somewhere up there in the North Atlantic, half-way to Santa's North Pole and close to oddly named Greenland. That's about it. We don't know much more about Iceland, and we don't really care.

By pure chance I happen to know that Icelanders have no surnames and descend directly from the Vikings. But as there are only about 300,000 of them, you would think there is no danger for Ireland. It's more than a thousand years that they came down raiding our monasteries the last time.

But danger these days comes from different threats, and often from unexpected areas. No longer is it the number of people one country can send to invade another that matters. These days it's all about money, the damned stuff that creeps into every element of life now.

I had no idea that there is a bank in Iceland that offers accounts on the internet to everyone willing to deposit his money with them. Now, call me old-fashioned, but I would never do that.
I've never had much time for the banks, even before they began stealing the country's future. But at least there are branch offices I can walk into, with people I can talk to if I am not happy.

An internet bank has none of this. All you have is a website and a code word, and you never have the slightest idea where your money is or what it is doing.
That sort of thing might appeal to some geeks and high-tech computer wizards, but it's definitely not for me. Could never trust a machine completely.

And going by today's news I am quite right with my suspicion. This Icelandic internet bank has just crashed quietly. Yes, websites - in contrast to buildings - make no noise when they collapse. And it appears that anyone who's put his money in there is now left in the lurch.
The government of Iceland has nationalised the banks, to prevent their country from going bankrupt, and foreigners and their deposits don't matter any longer. Well, Vikings were never shy to take other people's goods and money...

One of my students, a real IT geek who even eats in front of his computer, just asked me for 20 Euros to buy some food. He's probably lost all his savings, which he had put into the Icelandic online bank. I gave him fifty and told him to have more common sense in future.

Then I went home, had my tea and listened to the Nature programme on BBC Radio 4. They had a long report about the wild geese from Iceland now migrating to Britain and Ireland for the winter.

Normally I don't mind foreigners coming into our country, and as long as they behave in a decent way, they are quite welcome.
But tonight I have a little message for the Vikings in Iceland: Keep your geese, but give people back the money they deposited in good faith with your bank!