History Landsbanki

1 history

1.1 international expansion
1.2 icesave
1.3 2008 financial crisis

history

in establishing landsbanki, icelandic parliament hoped boost monetary transactions , encourage country’s nascent industries. following opening on 1 july 1886, bank s first decades of operation restricted limited financial capacity; little more savings , loan society. following turn of 20th century, however, icelandic society progressed , prospered industrialisation made inroads, , bank grew , developed in parallel nation. in 1920s landsbanki became iceland s largest bank, , made responsible issuing bank notes. after issuing of bank notes transferred newly established central bank of iceland in 1961, landsbanki continued develop commercial bank, expanding branch network in ensuing decades.

while still publicly owned went through state-directed merger samvinnubanki (cooperative bank).

liberalisation of financial services, beginning in 1986, opened new opportunities, bank managed take advantage of despite economic adversity. in 1997, landsbanki incorporated limited-liability company, , ensuing privatisation concluded in 2003. landsbanki operated privately owned bank, competing in free market, substantial international activities added traditional icelandic operations.

international expansion

the relatively limited size of icelandic market prompted landsbanki, first among icelandic commercial banks, expand , diversify outside of iceland when acquired london-based heritable bank in 2000. in 2005, landsbanki acquired 3 european securities houses: teather & greenwood, located in london , edinburgh; kepler capital markets, headquartered in paris; , merrion capital group in dublin. these subsidiaries dealt in securities , prepared equity research in london, paris, frankfurt, zurich, nyon (25 km geneva), milan, madrid , amsterdam. landsbanki s own branches in london , amsterdam specialised in structured finance , commercial finance (asset-based lending), while landsbanki luxembourg handled private banking , wealth management, corporate services.

on 9 august 2007 landsbanki completed acquisition of uk investment bank bridgwell plc. operations of teather & greenwood combined of bridgewell under brand name landsbanki securities (uk). acquisition of bridgewell made landsbanki second largest broker listed companies on london stock exchange measured number of clients.

in december 2008 kepler capital markets sold management , staff through management-led buy-out (mbo).

icesave

a deposit programme uk market, icesave, launched in october 2006. easy-access, on-line savings account, icesave became instant success, transforming landsbanki’s balance sheet , funding profile. since launched, icesave grew rapidly , @ 31 march 2007 icesave deposits totalled £2.8 bn on 80,000 accounts opened.

a key factor in icesave’s appeal savers interest rate guarantee: gross annual equivalent rate of interest (aer) paid on balances on £250 guaranteed exceed bank of england base rate @ least 0.25% until 1 october 2009 , thereafter not lower bank of england base rate until 1 october 2011. result, icesave became market leader in internet deposit savings accounts in uk in terms of interest rates.

icesave operated in netherlands may 2008 until october 2008.

on 7 october 2008 icesave uk website announced: not processing deposits or withdrawal requests through our icesave internet accounts. apologise inconvenience may cause our customers. hope provide more information shortly. , icesave declared in default on 8 october 2008, taking landsbanki in fall.

2008 financial crisis

on october 7, 2008 icelandic financial supervisory authority took control of landsbanki. press release ifsa states of landsbanki s domestic branches, call centres, atms , internet operations open business usual, , domestic deposits guaranteed. guardian reported government had moved use sweeping powers granted reykjavik parliament, night before. country’s financial regulator said on tuesday landsbanki’s branches open usual , “domestic deposits” guaranteed. next day united kingdom chancellor of exchequer alistair darling announced government foot entire bill british icesave savers, estimated @ £4 billion, , taking steps freeze assets of landsbanki using financial freezing-orders provisions of anti-terrorism, crime , security act 2001.

under landsbanki freezing order 2008, passed on 8 october 2008, majesty s treasury froze assets of landsbanki in uk, , assets belonging central bank of iceland, , government of iceland relating landsbanki.

on 9 october 2008 domestic, icelandic branch split off nýi (= new) landsbanki , on 27 october 2008 inability render payment of deposits declared remaining parts of landsbanki.