Iceland on brink of national bankruptcy

Iceland has warned it is close to national bankruptcy after an attempt to
nationalise the country’s third-biggest bank, Glitnir, failed yesterday and the
bank had to be placed in receivership, in the absence of any significant support
from the rest of Europe.

A government receivership committee appointed by the Icelandic Supervisory
Authority replaced Glitnir’s board and immediately started to restructure the
bank for onselling to its Finnish and Swedish businesses,
Associated
Press reports.

Glitnir is the second Icelandic bank, after Landsbanki, to be placed in
receivership. The threat from the country’s heavily exposed banks is putting the
country at risk, prompting Prime Minister Geir Haarde to warn of ‘national
bankruptcy’.

Iceland has been forced to turn to Russia for a €4bn loan after the only
support from EU was a $US702m loan from the Swedish central bank to provide
liquidity assistance to the Swedish arm of another troubled Icelandic bank
Kaupthing and intervention from the UK government to offer ?4.9bn in guarantee
of the deposits of 300,000 Landsbanki customers in the UK.