The outlook for Iceland's sovereign creditworthiness is crumbling together with its banking sector, as the country's international relationships also start to suffer as a result of banking woes. Rating Agencies on Iceland-
Standard and Poor's (S&P) last week cut its long-term foreign currency sovereign rating to A- (25 on the Global Insight scale), placing the country on Credit Watch with negative implications, following the announcement that the Icelandic government had acquired a 75% stake in Glitnir Bank, Iceland's third-largest bank, for 600 million euro (US$860 million; 30 September 2008: S&P Downgrades Sovereign as Government Acquires Majority Stake in Iceland's Third-Largest Bank). Fitch then downgraded its own rating to A+ to A- (25 on the Global Insight scale; 1 October 2008: Fitch Downgrades Icelandic Sovereign on Rising Banking Sector Distress) and we enacted a downgrade from 15 to 20 (A on the generic scale) as liquidity position further worsened (2 October 2008: Global Insight Downgrades Icelandic Sovereign Ratings on Rising Contingent Liability Risk). Materialising contingent liability risk then further led to a two-notch downgrade to 30 (BBB+ on the generic scale) in our assessment of Iceland's medium-term sovereign creditworthiness, while S&P also further cut its own rating by two steps to BBB (35 on the Global Insight scale).
Standard and Poor's (S&P) last week cut its long-term foreign currency sovereign rating to A- (25 on the Global Insight scale), placing the country on Credit Watch with negative implications, following the announcement that the Icelandic government had acquired a 75% stake in Glitnir Bank, Iceland's third-largest bank, for 600 million euro (US$860 million; 30 September 2008: S&P Downgrades Sovereign as Government Acquires Majority Stake in Iceland's Third-Largest Bank). Fitch then downgraded its own rating to A+ to A- (25 on the Global Insight scale; 1 October 2008: Fitch Downgrades Icelandic Sovereign on Rising Banking Sector Distress) and we enacted a downgrade from 15 to 20 (A on the generic scale) as liquidity position further worsened (2 October 2008: Global Insight Downgrades Icelandic Sovereign Ratings on Rising Contingent Liability Risk). Materialising contingent liability risk then further led to a two-notch downgrade to 30 (BBB+ on the generic scale) in our assessment of Iceland's medium-term sovereign creditworthiness, while S&P also further cut its own rating by two steps to BBB (35 on the Global Insight scale).
Escalating Turmoil in Iceland-
Iceland's troubles are increasing at an almost daily momentum which is now affecting the country's international relationships. The United Kingdom and Iceland have seen their once-warm relationship rapidly deteriorate after U.K. Prime Minister Gordon Brown said on 08-Oct-2008 that he would sue to recoup money owed to U.K. depositors in Iceland's collapsed banks. Iceland's government is refusing to guarantee the savings of over 300,000 U.K. depositors in the country's two recently nationalised banks Landsbanki and Kaupthing and the collapsed online Icesave bank (part of Landsbanki). Although the U.K. retail sector has the greatest exposure to Kaupthing, the U.K. government is more concerned with protecting the individual depositors, the majority of whom saved with Icesave/Landsbanki. The Icelandic compensation scheme only covers the first 15,000 euro of a deposit, while the U.K. government would be accountable for the rest, including those exceeding the 65,918-euro U.K. limit for compensation.
Iceland: Landsbanki gets £100m loan to pay UK depositors-
Iceland's troubles are increasing at an almost daily momentum which is now affecting the country's international relationships. The United Kingdom and Iceland have seen their once-warm relationship rapidly deteriorate after U.K. Prime Minister Gordon Brown said on 08-Oct-2008 that he would sue to recoup money owed to U.K. depositors in Iceland's collapsed banks. Iceland's government is refusing to guarantee the savings of over 300,000 U.K. depositors in the country's two recently nationalised banks Landsbanki and Kaupthing and the collapsed online Icesave bank (part of Landsbanki). Although the U.K. retail sector has the greatest exposure to Kaupthing, the U.K. government is more concerned with protecting the individual depositors, the majority of whom saved with Icesave/Landsbanki. The Icelandic compensation scheme only covers the first 15,000 euro of a deposit, while the U.K. government would be accountable for the rest, including those exceeding the 65,918-euro U.K. limit for compensation.
Iceland: Landsbanki gets £100m loan to pay UK depositors-
The Bank of England will lend £100m to Landsbanki to help the collapsed and newly nationalised Icelandic bank repay its UK creditors.In a statement to MPs, Alistair Darling said he had told the Icelandic finance minister that both countries needed to work together to help the creditors of failed Icelandic banks, who include many British savers, local authorities and charities.
"Our authorities have set up an arrangement, agreed in principle, for an accelerated payout to depositors," he said. "We are also working with the Icelandic authorities to facilitate claims by UK charities and local authorities on their deposits held at these Icelandic banks.
"In addition, the Bank of England is today providing a short term secured loan of up to £100m to Landsbanki to help maximise the returns to UK creditors." Around 300,000 British depositors were left without their money when Landsbanki's online banking subsidiary, Icesave, collapsed.
Iceland Requested Aid from Russia for $5.5Bln-
"Our authorities have set up an arrangement, agreed in principle, for an accelerated payout to depositors," he said. "We are also working with the Icelandic authorities to facilitate claims by UK charities and local authorities on their deposits held at these Icelandic banks.
"In addition, the Bank of England is today providing a short term secured loan of up to £100m to Landsbanki to help maximise the returns to UK creditors." Around 300,000 British depositors were left without their money when Landsbanki's online banking subsidiary, Icesave, collapsed.
Iceland Requested Aid from Russia for $5.5Bln-
Iceland's delegation started talks in Moscow today to secure an emergency loan of as much as 4 billion euros ($5.47 billion) from Russia after the island's three largest banks collapsed.Iceland was the first NATO member to appeal for Russian aid after the global financial crisis led to the collapse of Kaupthing Bank hf, Landsbanki Island hf and Glitnir Bank hf with debts equivalent to as much as 12 times the size of the Nordic country's economy.
Dutch firms borrowed €600m from Landsbanki-
Dutch companies borrowed some €600m from Iceland's Landsbanki, the bank's Dutch lawyer Rob Abendroth says in Tuesday's Telegraaf. Abendroth said the money could be used to repay Dutch savers, who have some €1.6bn in savings at Landsbank's internet subsidiary Icesave.'The credit portfolio has not vanished. That money is still available to pay savers,' the paper reportes him as saying. On Monday, a court-appointed receiver took charge of Landsbanki's Dutch operations, including the credit portfolio.
Dutch companies borrowed some €600m from Iceland's Landsbanki, the bank's Dutch lawyer Rob Abendroth says in Tuesday's Telegraaf. Abendroth said the money could be used to repay Dutch savers, who have some €1.6bn in savings at Landsbank's internet subsidiary Icesave.'The credit portfolio has not vanished. That money is still available to pay savers,' the paper reportes him as saying. On Monday, a court-appointed receiver took charge of Landsbanki's Dutch operations, including the credit portfolio.
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