Bloomberg News

Iceland’s Landsbankinn Proposes $85 Million Payout to Government

April 17, 2013

Landsbankinn hf proposed its first payout to Iceland’s government, following a similar move by competitor Islandsbanki hf, after the 2008 banking crisis.

The bank, which is fully owned by the Treasury, proposed a dividend of 9.95 billion kronur ($85 million), according to a statement published on the Reykjavik-based lender’s website. The payout is 0.42 kronur per share, or 39 percent of its 25.5 billion-krona profit.

Landsbankinn was created in 2008 from the domestic operations of Landsbanki Islands hf after it collapsed that year. The creditors of the failed bank were compensated with a 260 billion-krona bond from the new bank and 18.7 percent of the new lender’s shares. Iceland’s Treasury owned more than 80 percent of Landsbankinn until April 11, when it bought the remaining shares from Landsbanki creditors.

Landsbanki’s collapse threatened to wipe out the savings of about 350,000 U.K. and Dutch depositors, before their governments stepped in to cover the losses. The administrators of the failed bank now estimate that the proceeds from the bank’s liquidated assets will be enough to compensate the two countries in full.

Islandsbanki hf, the state-created successor to failed Icelandic lender Glitnir Bank hf, proposed paying 7 billion kronur in dividends on Feb. 27. The last dividend payment by Landsbanki Islands was 4.3 billion kronur for the year 2007.

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

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


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