REYKJAVIK, July 7 (Reuters) - 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 percent each.
“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