* The government of Iceland pays 600 million euros for a 75% share in Glitnir Bank.
* New equity will be issued.
* Customers, bond holders and employees will not be affected.
* The measure strengthens Glitnir’s capital ratio and liquidity.
* Lárus Welding has been asked to continue in his role as CEO and has agreed to do so.
* The funding position of the bank deteriorated in a few days.
* The Board of Directors and the Bank’s largest shareholders have accepted the government‘s offer.
The government of Iceland has announced that it will acquire a 75% stake in Glitnir Bank at the price of 600 million euros. This new equity will be issued today. The Board of Directors and largest shareholders of Glitnir have accepted the offer subject to the approval of a shareholders’ meeting. Glitnir’s funding has been successful this year despite very challenging market conditions. Nonetheless, the events unfolding in international financial markets in the past two weeks have had unforeseen consequences drastically changing the conditions of Glitnir’s short-term funding. In light of this, the Board of Directors of Glitnir Bank had meetings with the Central Bank of Iceland to discuss possible solutions to the challenge that the Bank was facing. These discussions led to the government of Iceland posing an offer to buy a 75% stake for 600 million euros. The government has asked Lárus Welding to remain in his role as CEO which he has agreed to. The offer was posed late last night and a Board meeting was called in Glitnir this morning. At that meeting it was decided to accept the offer, thus securing a very strong owner and principal shareholder for the bank.
Glitnir’s core operations are solid and the Bank has placed great emphasis on increasing its core earnings this year. Furthermore this year the Bank has successfully increased efficiency and cut costs.
Lárus Welding, Glitnir CEO
,,The Board and Management of Glitnir have diligently worked at securing the bank’s funding in the past months’ turbulent markets but unfortunately the bank saw adverse development in the past few days. Having the government as an owner strengthens the capital base of the bank and removes all doubt about Glitnir’s financial strength. We have seen similar things happen in the countries around us, which reflects the tough position that currently prevails in international financial markets. Our customers will not be affected by these changes and Glitnir will continue to place primary emphasis on providing good and reliable services. I also believe I can state that the measures reflect the authorities’ strong faith in Glitnir and are an important part of securing financial stability in the country. This has changed the landscape of the Icelandic financial market. Glitnir remains strong as a result.”
Thorsteinn Már Baldvinsson, Chairman of Glitnir Bank
“I have emphasised incresing efficiency in the bank’s operations. I am sorry that we were not able to solve this as we had initially planned. This conclusion, however, secures the bank’s future and the interests of its customers and employees. This is very important to me. Our people have done a tremendous job in very difficult market conditions.”
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