REYKJAVIK, July 7 Iceland aims to sell as much
as 30 percent of New Landsbanki, one of the banks to emerge from
the 2008 financial crisis, to help reduce government debt.
Iceland's three main banks had assets worth around 10 times
the value of the economy when they buckled under a weight of
debt, sending its currency and economy into a tailspin.
New Landsbanki was the only one of the three domestic
lenders created out of the financial ruin to be majority-owned
by the state.
Icelandic Finance Minister Bjarni Benediktsson said on
Monday he would like the government, which owns nearly 98
percent of the bank, to retain a 40 percent share and that other
shareholders should not be allowed to own more than 10 to 20
"Parliament has given the authority to sell up to 30 percent
of the bank's shares," he said. "It is very important that we
sell part of these shares in order to help ease the great debt
that the treasury faces. Loans were taken out to acquire these
shares, and it makes sense to sell them."
Central government liabilities amounted to nearly 1.9
trillion Icelandic crowns ($16.7 billion), or around 101.4
percent of its gross domestic product, at the end of the first
quarter, according to a government statement. After subtracting
the value of its financial assets, its net liabilities amounted
to 47.5 percent of GDP.
Iceland's long-term debt is rated BBB- by Standard & Poor's
and Baa3 by Moody's, the lowest investment-grade ratings.
($1 = 114.0150 Icelandic kronas)
(Reporting by Robert Robertsson, writing by Mia Shanley;
editing by Jane Baird)