The Icelandic government has seized control of Kaupthing Bank in the midst of a financial quagmire in Iceland.
The entire board of directors of Iceland’s largest bank have resigned; replaced by the country’s Financial Services Authority. They will have the full power of the board to resolve
Kaupthing turned to the FSA after depositors alarmed by the failure of Icesave and the rumor that Icelandic banks did not insure deposits began rapidly pulling savings from the firm. This, along with increasing foreign debt and an overheated Krona, forced Kaupthing into action.
In a statement on the bank’s Web site, former Executive Chairman Sigurdur Einarsson asserted that the bank had adequately prepared for a downturn in markets by writing down portfolios, decreasing market shares and hedging their equity risks, but that “dark clouds began to form in the international financial markets.”
He seemed to place the blame on the Icelandic government, particularly its decision to acquire a 75 percent stake in Glitnir.
“This triggered a series of events which nobody predicted or was able to control. This had an effect on the Icelandic economy and the krna went into freefall,” he said.
Einarsson added that branches of the bank will remain open, but has not commented about other divisions within the bank.