SFO investigating Iceland's collapsed Kaupthing Bank
The Serious Fraud Office is investigating the collapsed Kaupthing Bank and its ‘high yield’ Kaupthing Edge account and whether the bank misled savers to encourage deposits.
Over 30,000 accounts were opened by UK investors and the SFO is also investigating why massive amounts disappeared in the days before it crashed. The failures of Northern Rock, Landsbanki, Kaupthing Bank and Lehman Brothers created enormous difficulties for investors and hard lessons were learned about lenders going bust.
Many investors claimed they didn’t know that their investments weren’t covered by the Financial Services Compensation Scheme. When the UK government compensated UK retail investors it then demanded recompense from the Icelandic government, which grudgingly agreed a repayment schedule with the UK but the two governments have yet to agree on billions lost in the retail arm of Landsbanki.
David Oddsson, Iceland's former bank governor and prime minister and listed among TIME magazine's choice of 25 people to blame for the financial crisis – was appointed in September as the editor of the country’s only broadsheet daily, Morgunbladid. During his 13 years as prime minister and seven as head of the central bank, Oddsson oversaw the privatisation of Iceland's three banks that collapsed last October.
The other daily newspaper, Frettabladid, and the only non-state television channel, are controlled by companies linked to Jon Asgeir Johannesson, the financial force behind , Glitnir, another failed bank. UK councils are now threatening legal action against Glitnir, which they suspect will not repay £150m.
Icelandic authorities are winding up Glitnir and have classified the local authority claims as general unsecured rather than priority.
With superb understatement, the SFO said, “this is a complex investigation which crosses numerous jurisdictions”.
The Bottom Line:If Mr Cable has his way...
"If Mr Cable had his way, all the big banks would be broken up and bonuses would be virtually eliminated - a sure-fire way in my view of guaranteeing an end to the UK’s ability to compete as an international financial centre. Let’s not forget that this is a man who is on record as saying that everyone who works in a bank has an ‘aristocratic lifestyle’ clearly demonstrating his lack of understanding of the sector." A tough line on bankers’ bonuses could make a brain drain of financial talent a distinct possibility, warns Paul Marsden. Read more