Icelandic regulator takes possession of Kaupthing
by Gill Montia
Iceland’s Financial Supervisory Authority has taken possession of Kaupthing, the country’s biggest bank.
The move follows the seizure yesterday by the UK Government of the bank’s UK investment arm, Kaupthing Singer & Friedlander, which specialises in corporate and investment banking and operates wealth management services for private banking clients.
Iceland’s fast growing financial services sector has always been heavily dependent on borrowing and the worsening of the credit crisis which began with the collapse of Wall Street investment bank, Lehman Brothers, in mid-September, heralded a desperate period for the country’s banks.
Late last week, the Icelandic government rescued Glitnir, the country’s third-largest bank.
Earlier this week Landsbanki was placed in administration, leaving around 300,000 UK-based savers with its online deposits business, Icesave, unable to withdraw their cash.
Kaupthing has now succumbed; the Icelandic authorities say it is being taken over to ensure the stability of the country’s financial system.
In the UK, it has come to light that a number of local authorities have deposits with Icelandic banks.
Council are waiting to hear whether they will be covered by a similar 100% guarantee to that promised by the Chancellor of the Exchequer to UK savers Landsbanki’s Icesave.
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