| Former type | Private (2003-present) Government-owned corporation (prior to 2003) |
|---|---|
| Industry | Banking |
| Founded | Reykjavík, Iceland, 1885 (commenced operations on 1 July 1886) |
| Defunct | Entered into receivership 7 October 2008, awaiting dissolution remaining assets |
| Headquarters | Reykjavík, Iceland |
| Key people | Björgólfur Guðmundsson (Chairman of the board), Halldór J. Kristjánsson (co-CEO), Sigurjón Þ. Arnason (co-CEO) |
| Profit | ISK 39,949 million (2007)[1] |
| Total assets | ISK 3,058 billion (2007)[1] |
| Employees | 2,770 (2007)[1] |
| Website | http://www.landsbanki.is/ |
Landsbanki, also commonly known as Landsbankinn (literally "the national bank") in Iceland, is a private Icelandic bank with international operations. On October 7, 2008, the Icelandic Financial Supervisory Authority took control of Landsbanki.[2]
Their total assets were of ISK 3,058 billion (€33.4 bn) at 31 December 2007 and a market capitalisation of ISK 383 billion (€4.4 bn) at 3 May 2007. Landsbanki is rated by Moody's (Caa1/E/NP/Developing) and Fitch (D/D/F/Evolving).
Since its establishment in 1885 (commenced operations in 1886) Landsbanki has been instrumental in the economic development of business and industry in Iceland. Landsbanki served as the central bank of Iceland from 1927 until 1961. At the time, this interest was primarily directed towards note issuance rather than monetary policy. It was later replaced in this capacity by the Central Bank of Iceland at the behest of the Althing. While still publicly owned it went through a state-directed merger with Samvinnubanki (Cooperative Bank). Landsbanki Íslands was converted to a public limited company on January 1, 1998. The firm was subsequently privatized in stages between 1998 and 2003.
Samson Holdings became the main shareholder. Samson Holdings was owned by Bjorgolfur Thor Bjorgolfsson and his father.[3]
Landsbanki has positioned itself as Iceland's primary provider of general and specialised financial services to individuals, corporate entities and institutions. The bank holds a market share of over 30% in all major business segments and has the country's most extensive branch network. At year-end 2006, Landsbanki provided close to 40% of corporate lending in Iceland, and for around 60% of companies listed on the OMX Iceland Stock Exchange, Landsbanki was their principal bank or one of two banks with whom they did business. The leading provider of M&A, derivatives, equity and fixed income services, Landsbanki also has a more than 40% market share in FX. In addition, Landsbanki provides a full range of asset management services, with a 34% market share in domestic funds.
Building on its strong foundation in Iceland, Landsbanki has extended its financial operations into new markets, focusing on serving mid-cap corporates in Europe in a transactional setting. The bank's product line includes access to both debt and equity markets; its research department includes some 90 analysts covering more than 800 European stocks locally.
Landsbanki currently has 40 branches and sub-branches throughout Iceland, plus a wide-ranging network of international correspondent banks. Landsbanki and its subsidiaries have offices operating in 15 different countries, including the major financial centres of Europe, and North American representation in New York, Winnipeg and Halifax.
Contents |
In establishing Landsbanki, the Icelandic parliament hoped to boost monetary transactions and encourage the country’s nascent industries. Following its opening on 1 July 1886, the bank's first decades of operation were restricted by its limited financial capacity; it was little more than a savings and loan society. Following the turn of the 20th century, however, Icelandic society progressed and prospered as industrialisation finally made inroads, and the bank grew and developed in parallel to the nation. In the 1920s Landsbanki became Iceland's largest bank, and was made responsible for issuing its bank notes. After the issuing of bank notes was transferred to the newly established Central Bank of Iceland in 1961, Landsbanki continued to develop as a commercial bank, expanding its branch network in the ensuing decades.
Liberalisation of financial services, beginning in 1986, opened up new opportunities, which the bank managed to take advantage of despite some economic adversity. In 1997, Landsbanki was incorporated as a limited-liability company, and the ensuing privatisation finally concluded in 2003. Landsbanki then operated as a privately owned bank, competing in a free market, with substantial international activities added to its traditional Icelandic operations.
On October 7, 2008 the Icelandic Financial Supervisory Authority took control of Landsbanki. A press release by the IFSA states that all of Landsbanki's domestic branches, call centres, ATMs and internet operations will be open for business as usual, and that all domestic deposits are fully guaranteed.[2] The Guardian reported that the Government had moved quickly to use the sweeping powers granted by the Reykjavik parliament, the night before.[4] The country’s financial regulator said on Tuesday that Landsbanki’s branches would open as usual and that all “domestic deposits” were fully guaranteed. The next day the United Kingdom Chancellor of the Exchequer Alistair Darling announced that his government would foot the entire bill for British Icesave savers, estimated at £4 billion,[5][6] and that he was taking steps to freeze the assets of Landsbanki using the financial freezing-orders provisions of the Anti-terrorism, Crime and Security Act 2001.[7]
Under the Landsbanki Freezing Order 2008, passed on 8 October 2008, Her Majesty's Treasury froze the assets of Landsbanki in the UK, and assets belonging to the Central Bank of Iceland, and the Government of Iceland relating to Landsbanki.[8]
On 9 October 2008 the domestic, Icelandic branch was split off into the "Nýi (= new) Landsbanki"[9] and on 27 October 2008 the inability to render payment of deposits was declared for the remaining parts of Landsbanki.[10]
The Bank’s after-tax profit in 2005 was ISK 25 billion. This is an increase of 97% over 2004, when its net profit was ISK 12.7 billion.
After tax return on equity (ROE) was 45.8%. The Bank’s equity rose from ISK 38 billion at the beginning of the year to ISK 110 billion at year-end. Total assets at year-end amounted to ISK 1,405 billion.
According to a survey by IMG Gallup in December 2005, Landsbanki has a leading share of the domestic individual market, as 30% of individuals surveyed bank with Landsbanki.
At the end of 2005, Landsbanki provided close to 40% of corporate lending in Iceland and for around 60% of companies listed on the Iceland Stock Exchange, Landsbanki was the principal bank or one of two banks with whom they did business. Landsbanki’s share of equity brokerage in 2005 was 32% and for bonds 24%.[11]
The relatively limited size of the Icelandic market prompted Landsbanki, first among Icelandic commercial banks, to expand and diversify outside of Iceland when it acquired the London-based Heritable Bank in 2000. In 2005, Landsbanki acquired three European securities houses: Teather & Greenwood, located in London and Edinburgh; Kepler Equities, headquartered in Paris; and Merrion Capital Group in Dublin. These subsidiaries dealt in securities and prepared equity research in London, Paris, Frankfurt, Zurich, Nyon (25km from Geneva), Milan, Madrid and Amsterdam. Landsbanki's own branches in London and Amsterdam specialised in structured finance and commercial finance (asset-based lending), while Landsbanki Luxembourg handled private banking and wealth management, as well as corporate services.
On 9 August 2007 Landsbanki completed its acquisition of UK investment bank Bridgwell plc. The operations of Teather & Greenwood were combined with those of Bridgewell under the brand name Landsbanki Securities (UK). The acquisition of Bridgewell made Landsbanki the second largest broker to listed companies on the London Stock Exchange measured by number of clients.
The bank’s major subsidiaries were:
Landsbanki operated branches in London, Amsterdam, Oslo and Helsinki and representative offices in Halifax and Winnipeg, Canada; and Tórshavn, Faroe Islands. Since 2006, it offered online savings to United Kingdom customers, trading as Icesave [7]. In 2008, it expanded this service to the Netherlands, also under the Icesave name.[12]
A deposit programme for the UK market, Icesave, was launched in October 2006. An easy-access, on-line savings account, Icesave became an instant success, transforming Landsbanki’s balance sheet and funding profile. Since launched, Icesave grew rapidly and at 31 March 2007 Icesave deposits totalled £2.8 bn with over 80,000 accounts opened.
A key factor in Icesave’s appeal to savers was its interest rate guarantee: The gross Annual Equivalent Rate of Interest (AER) paid on balances over £250 was guaranteed to exceed the Bank of England Base Rate by at least 0.25% until 1 October 2009 and thereafter not to be lower than the Bank of England Base Rate until 1 October 2011. As a result, Icesave quickly became the market leader in internet deposit savings accounts in UK in terms of interest rates.
Icesave operated in the Netherlands from May 2008 until October 2008.
On 7 October 2008 the Icesave UK website announced: "We are not currently processing any deposits or any withdrawal requests through our Icesave internet accounts. We apologise for any inconvenience this may cause our customers. We hope to provide you with more information shortly."[13]
Icesave was declared in default on 8 October 2008, taking Landsbanki with it in its fall.
Landsbanki’s support for Icelandic football is an important aspect of the Bank’s marketing and image policy. In September 2005, an agreement was concluded with the Football Association of Iceland, under which the Icelandic premier league for both men and women will be called the Landsbanki Premier League (Landsbankadeildin) for the next four seasons. The financial backing for football is, however, primarily directed towards supporting sports for children and youth divisions.