Anger at Landsbankinn sale deal “screw-up”
Icelandic PM Sigmundur Davíð Gunnlaugsson has criticised the behind-the-scenes sale of nationalised bank assets – at what now appears to be an excessively low price – as an “obvious screw-up”.
In November 2014, Icelandic bank Landsbankinn – nationalised after the financial crash of 2008 – sold its 31.2% share in credit-card company Borgun for a price of just under ISK 2.2 billion (approx. €15.4 million).
The recent acquisition of Visa Europe by Visa Inc. is likely to see the new owners of these Borgun shares profit by millions of euros. These new owners include the uncle and cousin of Icelandic Finance Minister Bjarni Benediktsson.
In a similar sale – of credit card company Valitor – Landsbankinn had written into the sale contract that it would, on top of the sale price, receive a share of any profit made in the Visa Inc. takeover, protecting itself to some extent from any initial underestimation of Valitor’s value.
No such provision was put in place for the sale of Borgun.
There are, indeed, suggestions in some quarters that Borgun was sold at far too low a price. “This must be the deal of the century in Icelandic business,” Árni Páll Árnason MP (Social Democratic Alliance) told fellow MPs in the Icelandic parliament (‘Alþingi’) last week, and called for an investigation into how Landsbankinn valued its share in Borgun.
“I have nothing to do with the management of the bank,” says Finance Minister Bjarni Benediktsson, whose close relatives stand to profit handsomely from the sale of Visa Europe. “But, of course, if people want to investigate this matter in any way, I support that.”
Landsbankinn has since acknowledged that it was not ideal to sell Borgun by means of a closed procedure and that it would do things differently in the future.
Benediktsson, together with Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson. Photo: Eggert Jóhannesson
In Alþingi today, the Prime Minister stressed the importance of getting the highest possible price for the sale of State assets and told MPs that it was vital to trace the steps and decisions taken in this case.
A group of protestors congregated at Landsbankinn headquarters in central Reykjavik this lunchtime to demand the resignation of the bank’s CEO Steinþór Pálsson. They brandished signs reading such things as “Closed due to corruption”, “Steinþór, you’re fired!” and “Another crash? No!”