Magda Hassan Wrote:There is talk about the UK government going in the not too distant future. Exiled to the Isle of Mann

Quote:Glitnir recruits Kroll to probe fresh £670m hole in accounts
Glitnir, one of the three collapsed Icelandic banks, has launched an investigation into a missing £670m liability that was not recorded on its balance sheet when it failed last year.

By Rowena Mason
Published: 6:50PM GMT 08 Nov 2009

The bank, which owes £160m to local councils in the UK, plus hundreds of millions more to British charities, universities and private companies, has now asked the financial investigation firm Kroll to begin tracing the money. It is more than a year since the implosion of the Icelandic financial system, but Glitnir has only just discovered the hole in its balance sheet after a single new creditor filed the huge claim against the bank.

The discovery makes it possible that Glitnir's other known creditors, such as Nottingham City Council with £11m and Kent County Council with £14.5m in the collapsed bank, will receive less cash back when claims are eventually settled.

Glitnir refused to disclose the identity of the new creditor, but it is thought to be a claim by a foreign entity. Royal Bank of Scotland, the bank majority-owned by the Government, is understood to be one of its major creditors.

Glitnir already owes an estimated £13bn, suggesting that the extra liability will add 5pc to its overall debt levels. However, the deadline for claims has not yet passed, making it possible that more off-balance-sheet liabilities could come to light. A spokesman for Glitnir's winding-up committee, said the bank does not appear to have recorded the fact that it owed £670m to a single source in a transaction "not conducted in the open market".

He added that it was "not impossible" the amount may ultimately be accounted for, but that it was prudent to launch a full investigation into the circumstances of the liability.

Kroll, which is known for tracing the hidden assets of Saddam Hussain, the Iraqi dictator, was hired by Glitnir earlier this year to start looking into "potential irregularities" in the months before the bank collapsed. The accounting problem comes as Glitnir faced domestic controversy in Iceland over revelations that it had lent money to children to buy shares in one of its units, a small savings bank called Byr.

Glitnir, along with bigger collapsed rivals Landsbanki and Kaupthing, are all under investigation by the Icelandic authorities looking into "suspicions of criminal activity" in the banking sector. The Serious Fraud Office in the UK is also probing links between the Icelandic banks and London, although it has not launched a formal investigation.

Last month, the Icelandic government agreed to hand 95pc of Islandsbanki, a domestic bank created from the ashes of Glitnir, to the old banks's creditors, keeping a 5pc stake for the state.

Magda Hassan Wrote:Iceland government falls. It wont be long before Ukraine, Greece, Latvia, Lithuania join them. Maybe more. There is talk about the UK government going in the not too distant future. Exiled to the Isle of Mann


http://www.smh.com.au/news/world/icelandic-government-resigns-as-crisis-takes-its-toll/2009/01/27/1232818379247.html

Quote:The Serious Fraud Office in the UK is also probing links between the Icelandic banks and London, although it has not launched a formal investigation.

Helen Reyes Wrote:The Lithuanian pension system today forecast a vast deficit for this year with accelerating deficits for the next 5 years and beyond. The IMF was very active in "pensions reform" in Lithuania in 1999/2000. The birth/death ratio is definitely listing toward the aged, while the self-proclaimed conservative government engages in a subtle form of whipping up anti-Semitic sentiments, despite the almost total lack of any resident living Jews to target. The Latvian economy was almost totally dependent on foreign leveraging and cheap debt.

Mark Stapleton Wrote:

Helen Reyes Wrote:The Lithuanian pension system today forecast a vast deficit for this year with accelerating deficits for the next 5 years and beyond. The IMF was very active in "pensions reform" in Lithuania in 1999/2000. The birth/death ratio is definitely listing toward the aged, while the self-proclaimed conservative government engages in a subtle form of whipping up anti-Semitic sentiments, despite the almost total lack of any resident living Jews to target. The Latvian economy was almost totally dependent on foreign leveraging and cheap debt.

Well that's just terrible.

Quote:Iceland Lawmakers Threaten to Reject Icesave Bill a Second Time

Dec. 21 (Bloomberg) -- Iceland’s parliament may reject a foreign depositor bill for a second time in a move that would sour relations with the U.K. and Netherlands and that Fitch Ratings has signaled will weaken the sovereign’s credit grade.

“It’s difficult to think through what will happen if Iceland doesn’t pass the Icesave agreement,” Economic Affairs Minister Gylfi Magnusson said in a Dec. 18 telephone interview.

The depositor accord, which polls show almost 70 percent of Icelanders oppose, is the last milestone the government must reach to repair international relations. Settling claims stemming from Icesave, as the deposit accounts were known, is “key to everything else” and needs to be “resolved pretty shortly,” Fitch senior analyst Paul Rawkins said in an Oct. 21 interview. Fitch ranks Iceland BBB-, one notch above junk.

All 28 opposition lawmakers in the 63-seat parliament will try to block a bill that obliges Iceland to cover the depositor claims using borrowed funds from the U.K. and Netherlands, party leaders told Bloomberg. Thrainn Bertelsson, an independent member of parliament who used to be in the opposition, said in an interview he can’t guarantee he will support the bill.

In the government, Left Green lawmaker Lilja Mosesdottir, who sided with the opposition in an earlier vote, said in an interview she remains “skeptical.” Left Green lawmaker Ogmundur Jonasson declined to say he won’t reject the legislation a second time and fellow Left Green lawmakers Atli Gislason and Asmundur Einar Dadason indicated to local media they may reject the second bill after it was presented to parliament on Oct. 22.

The third and final debate will take place before the New Year, Deputy Chairman of the budget committee Bjorn Valur Gislason said in a Dec. 17 interview.

Anti-Icesave Petition

“Failure to pass the agreement will delay the resurrection of the economy and stall any progress in Iceland’s international relations,” Magnusson said. “It would also delay Iceland’s access to international financial markets.”

Moody’s Investors Service rates Iceland’s debt Baa3, and Standard & Poor’s gives the sovereign a BBB- grade, both ratings are one level above junk. Magnusson said on Nov. 12 he was “optimistic” the island will keep its investment grade status.

Even if the depositor bill does pass through parliament, it must still be ratified by President Olafur Ragnar Grimsson. More than 34,000 people have signed a petition calling on him not to sign the law. If he bows to public pressure, as he did in 2004 on a media ownership bill in response to a petition carrying 32,000 signatures, the bill will be put to a referendum.

‘Healthy’ Banks

Progress on other parts of Iceland’s economic reconstruction has helped improve investor sentiment. The government on Dec. 17 said it spent 250 billion kronur ($2 billion) less than planned in recapitalization costs for the state-created units of the three failed banks after creditors agreed to take on equity stakes. Finance Minister Steingrimur Sigfusson said then Iceland now has three “healthy and fully financed banks.”

Credit default swap spreads on Icelandic debt have narrowed to 420 basis points on Dec. 18 from a peak of 1,096 basis points on March 9. A lower CDS spread reflects investor perceptions of improved credit quality.

The Icesave bill has received more media attention than the island’s other creditor disputes after the failure of Iceland’s banking system last year meant thousands of U.K. and Dutch depositors risked losing their life savings. The U.K. deployed anti-terror legislation to freeze Icelandic assets as uncertainty about cross border banking rules left doubts about which country should bear the cost of covering the claims.

Prime Minister Johanna Sigurdardottir on Oct. 19 presented an accord between her coalition of Social Democrats and Left Greens providing Iceland with a 2.35 billion-pound ($3.78 billion) loan from the U.K. and 1.2 billion euros ($1.71 billion) from the Netherlands to cover the claims.

Eight Times GDP

The October agreement was an amended version of a June accord after lawmakers rejected the first bill.

The failure of Glitnir Bank hf, Kaupthing Bank hf and Landsbanki Islands hf in October 2008 left creditors seeking to recoup about $80 billion in debt, almost eight times Iceland’s gross domestic product. The island has relied on a $4.6 billion International Monetary Fund-led loan since last year to rebuild its economy.

Failure to pass the depositor bill will disrupt the island’s economic program with the fund, Mark Flanagan, head of the IMF’s mission to Iceland, said in an interview. Earlier delays in resolving creditor claims prompted the IMF to push back until October a loan payment due in February.

Opposition Resolve

The chairman of the opposition Independence Party Bjarni Benediktsson said all 16 lawmakers in his party will vote against the bill, while Gunnar Bragi Sveinsson of the opposition Progressive Party said all nine parliamentry members of his party were opposed. Birgitta Jonsdottir, a spokeswoman for the opposition party calling itself The Movement said none of her party’s three members will back the bill.

The deal requires Iceland to pay back the loan, which carries an interest rate of 5.5 percent, over 15 years. It will be interest-only for the first seven years.

Quote:Iceland's president blocks Icesave compensation to UK
Olafur Grimsson refuses to sign bill that would hand £3.4bn to Britain and Netherlands after anger from the Icelandic people

Graeme Wearden guardian.co.uk, Tuesday 5 January 2010 12.17

The president of Iceland has refused to sign a bill to repay more than €3.8bn (£3.4bn) to Britain and the Netherlands following the collapse of the country's Icesave bank in 2008.

Olafur Grimsson threw the long-running issue into fresh uncertainty today when he declared that a national referendum must be held to determine whether or not the legislation is passed.

This is thought to be only the second occasion when the president of Iceland has refused to ratify a bill passed by the country's parliament. Grimsson took the decision after hearing the depth of public anger in Iceland against the bill, which was narrowly approved by MPs on 30 December.

"The cornerstone of Iceland's constitution is that the nation is the highest judge for the validity of law," said Grimsson. "Now the nation has the power and the responsibility in its hands."

The issue centres on the compensation paid to Icesave account holders by the UK and Dutch governments after the online bank, part of Landsbanki, collapsed in October 2008. Both governments have demanded that Iceland repay this debt. However opponents have claimed that Iceland, whose economy has been badly damaged by the financial crisis, cannot afford the repayments.

A petition urging Grimsson not to sign the bill had attracted 62,000 signatures by last night – a fifth of Iceland's population. Opinion polls suggest that a majority of Icelanders are opposed to the deal.

It is not clear when the referendum will be held. Analysts have warned that Iceland's aid payments from the International Monetary Fund may be frozen until the issue is resolved. Supporters of the legislation have also warned that if Iceland does not repay the money then its efforts to join the EU could be badly damaged.

Yesterday, UK chancellor Alistair Darling said it was vital for Iceland's economic future that the Icesave compensation was repaid.

"I would say to people in Iceland I know this is difficult, but you have to realise that the British government had to step in to deal with a very difficult situation with savers in Icelandic banks," Darling told reporters in London.