Bloomberg News

Iceland’s Special Prosecutor Conducts Searches in Glitnir Probe

November 30, 2011

Nov. 30 (Bloomberg) -- Iceland’s special prosecutor searched houses and arrested an unspecified number of individuals in its investigation into loans and share transaction at failed lender Glitnir Bank hf.

“Among the matters being investigated are the purchases by Glitnir’s proprietary trading of shares issued by the bank,” prosecutor Olafur Hauksson said in an e-mailed statement from Reykjavik. “Also the bank’s purchases and arrangements of shares issued by FL Group.”

A total of 10 cases related to Glitnir are being investigated, including nine that were initiated today. In addition to Glitnir’s proprietary trading, matters under investigation include share issues in 2007 and 2008 and transactions related to future contracts, according to the statement.

Glitnir was the first of Iceland’s biggest banks to fail in October 2008, precipitating the collapse of the island’s financial system and sending the krona down as much as 80 percent against the euro on the offshore market. Kaupthing Bank hf, Landsbanki Islands hf and Glitnir together left $86 billion in debt, compared with Iceland’s 2010 gross domestic product of $13.3 billion.

Glitnir creditors have brought a total of $29.7 billion in claims against the bank, its 2010 financial statement showed. Investors who bought bonds in the bank can expect 25 cents back on the euro, data provided by brokerage H.F. Verdbref hf show.

--Editor: Jonas Bergman

To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net


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