Case Study: Iceland’s Banking Crisis

June 13th, 2017 by Kara in Case Studies

iceland's banking crisisBy: Anh Nguyen


Iceland’s financial collapse in 2008 was the biggest any country had ever suffered relative to its size. At the time of the crisis, total assets of its three largest banks were 10 times the nation’s GDP and 20 times the state budget (“How did Iceland clean up its banks?”). The underlying causes of the downfall lie in reckless behaviors, lack of transparency and greed. However, unlike the US, by February 2016, Iceland had sentenced 29 bankers to prison for their role in the crash.

The Players

Glitnir Bank

The third largest bank in Iceland was the first to collapse. At that time, Glitnir had been having trouble rolling over debts with 1.4 billion euros due in the next six months (The Special Investigation Commission). The bank operated both domestically and internationally. On September 29, 2008, the government announced its plan to take over Glitnir.

Landsbanki Bank

Landsbanki Bank, originally the National Bank of Iceland, was the oldest bank in this country (“History and Premises”). The bank was privatized in the early 2000s. Landsbanki was most well-known for its Icesave account, which offered foreigners high interest rates for their deposits. Its UK branch, in mid-2007, had more than 5.5 billion pounds while the foreign reserve of the Central Bank of Iceland (ICB) amounted to only 1.2 billion pounds (Ward). Hence, when the Icelandic government refused to repay the foreign depositors after taking control of the bank on October 7th, 2008, the UK government activated the Anti-terrorism, Crime and Security Act 2001 to freeze all assets related to Landsbanki in the UK (The Special Investigation Commission). This evoked an ongoing political dispute and legal trials in the international court.

Kaupthing Bank

Kaupthing, Iceland’s biggest bank in 2008, operated aggressively on the international stage. Before the crisis, the bank had a strong British customer base with at least 3 billion pounds (Bowers) deposited in its UK subsidiary – Kaupthing Singer & Friedlander (KSF) in 2008. When the crisis hit the economy, Kaupthing was struggling. The decision by the British government to put KSF under cessation of payment was the last straw. On October 9th, 2008, the Icelandic government took over the bank (The Special Investigation Commission). Kaupthing, at that time, had about $14.8 billion of principal assets and $26 billion of debt, according to a court filing by Olafur Gardarsson (qtd. in Stempel and Orlofsky).

These three banks dominated the sector until their collapse in 2008.

The Special Investigation Commission (SIC)

In December 2008, the Althingi (the Icelandic Parliament) established the Special Investigation Commission to investigate and analyze the cause of the crisis. Its report was delivered in December 2010.

The Financial Supervisory Authority, Iceland (FME)

This organization regulates and supervises financial enterprises in Iceland’s economy, including the banking sector.

A Brief History

It is important to understand the history and traditions of Iceland as they heavily influence entrepreneurship in this country. After regaining independence in 1944, the fishing and export sectors were the driving force of the economy. The government owned most of the banks and imposed strict controls on businesses and imports.

Icelandic society still featured the characteristics of the feudal era with 14 families, known as “The Octopus” controlling every aspect of the society. They owned most of the businesses, influenced domestic and foreign policy, formed their own political parties, and ran the state for almost 60 years. The level of bureaucracy and inequality was high. The trade unions, on the other hand, were growing stronger and more organized to protect real wages (Wade and Sigurgeirsdottir).

This “statist and corporatist political economy” collapsed due to the rise of a new force. In the early 1970s, a group of students established The Locomotive journal to promote free trade and weaken the power of The Octopus (Wade and Sigurgeirsdottir). They gained public attention and support over the next decades. In 1991, Davíð Oddsson, a key figure in The Locomotive won the general election and became the Prime Minister of Iceland. His strategy for Iceland to become an international financial center heavily influenced the vision of a new Icelandic economy, which in turn created the onset of the 2008 crisis.

In 1994, Iceland joined the European Economic Area (EEA). As part of the agreement, trade barriers were mostly eliminated. The government led by Davíð Oddsson and his Independent Party started to privatize the economy. It is worth noting the government did not sell ownership to foreigners but to selected individuals and groups (Sigurjonsson).

At the turn of the twentieth-first century, Iceland had a good reputation and low sovereign debt. With a small population, Icelandic banks turned to the international market and expanded rapidly. The government slashed taxes and deregulated the labor force (Wade and Sigurgeirsdottir).

Bankers and the management class spent their new found wealth lavishly on overvalued investments. In a short period, Icelandic individuals were behind countless purchases of multi-million dollar businesses. The entire country was transformed dramatically when its citizens were offered cheap financing.

In 2001, the total external debt of Iceland stood at ISK 731,698 million. In 2008, it was ISK 9,778,471 million, which represents a thirteen-fold increase in 7 years (Central Bank of Iceland). In 2001, household debts ranged between ISK 700 and 800 million. In 2008, household debt reached 1900 million (Wade and Sigurgeirsdottir).

In 2004, the government loosened regulation on the mortgage market, allowing loans amounting to 90% of the property value. Banks competed against each other for customers with attractive credit rates (Wade and Sigurgeirsdottir). This further pushed up housing prices and created a property bubble in the economy. Banks also bought shares of each other and gave customers loans to buy the banks’ own shares, hence creating a stock market bubble.

The Financial Supervisory Authority, FME exercised its power very sparingly, limiting itself to mere recommendations. This behaviour illustrated a dominant characteristic of the political environment in Iceland, where those who had economic power could impose their opinion on government policy.

This unstable and seemingly unstoppable growth did not escape the eyes of international watchdogs. Iceland’s current-account deficit reached 20%, one of the highest in the world (Wade and Sigurgeirsdottir). In 2006, Fitch changed its outlook for Iceland to negative. The Krona slumped immediately. Since Icelandic banks borrowed substantially in foreign currency, their liabilities rose. With the immediate intervention of the Central Bank and the government, the Big Three did not face an emergency.

Nevertheless, the banks were finding it harder to obtain funds. Landsbanki then created Icesave, a saving account with an attractive interest rate for foreigners. Its branches in UK and Luxembourg witnessed a massive influx of deposits with high-profile customers such as Cambridge University, the London Metropolitan Police Authority, or the UK Audit Commission. Another risky financial instrument was the “love letter”. The bank issued bonds to its branches, which then used them as collateral to obtain funds from the Central Bank. They even used this dubious transaction in the foreign market, borrowing from the Luxembourg Central Bank and the European Central Bank (Wade and Sigurgeirsdottir).

The Events

In the year leading to the crisis, Icelandic investment firms met with continuous losses. The size of Iceland’s banking sector was too large compared to the size of the economy and there was not enough liquidity. Prices on the stock market took a dip as did the value of collateral. Icelandic firms faced margin calls from their foreign lenders. They were required to provide more collateral, in the form of securities issued by the banks, which they successfully obtained. In the spring of 2008, Kjalar and Egla Invest, for example, received 400 million EUR to pay their debts to Citibank from Glitnir and Kaupthing (The Special Investigation Commission 56-58). This created more liquidity risk for the banks as they were dependent on high risk debtors.

The international view on the Icelandic banking sector worsened due to its engagement in the money markets, high exposure risk and the negative global financial outlook. The Krona depreciated substantially. Interest rate differentials decreased. Foreign deposits evaporated. Between February 10 and April 22 in 2008, one billion pounds were withdrawn from Landsbanki. (The Special Investigation Commission 56-58). Foreign investors withdrew their investments and refused to continue credit default swap agreements.

On September 15, 2008, Lehman Brothers went bankrupt. This single event stunned global financial markets. Confidence in the banking sectors and, the economy disappeared. Every bank tried to protect its asset and liquidity, reducing lending and investment. With high levels of short-term debt, risks, and low liquidity, Icelandic banks would fail.

There was a reprieve, which was to receive bailouts from the government. However, at the time of the crisis, the total size of the Big Three’s assets was ten times the size of Iceland’s GDP (Wade and Sigurgeirsdottir). The foreign currency reserve of the Central Bank was inadequate to cover the gigantic operations of the banks abroad. Hence, it was impossible for the CBI to rescue these banks.

Iceland's banking crisisGlitnir

Glitnir had problems raising funds from the beginning of 2008. It had to cancel a bond issue due to lack of investors’ interests, could not sell its assets in their Norway subsidiary and was refused an extension of its EUR 150 million debt with Bayerische Landesbank. The bank took the problem to the CBI. On 29 September, the government announced it would buy a 75% share in the bank at the price of EUR 600 million. (The Special Investigation Commission 79-81)

The situation worsened for Glitnir. Moody lowered its rating and the bank hit various due dates on its debts. The European Central Bank issued a margin call, which was then delayed. At the same time, Landsbanki and Kaupthing showed signs of deterioration and asked for government intervention.

On 8 October, the government decided to rescind the agreement to buy shares in Glitnir and took over the bank using the Emergency Act. (The Special Investigation Commission 79-81)


For Landsbanki, the illiquidity of its foreign reserves was the most prominent issue. The bank met with a large amount of withdrawals from its branches abroad, especially in the UK. It needed huge funds in British pounds to meet this demand. Yet Landsbanki’s application to the CBI was declined on October 6. On October 7, the Government took over the bank (The Special Investigation Commission 85-87).

Later that month, the UK government froze Landsbanki’s assets using the Anti-terrorism, Crime, and Security Act when the Icelandic government refused to honor its debts to foreign investors. This meant that 400,000 British and Dutch savers would lose their money. The UK and Dutch governments had to compensate these savers using taxpayer money (Rankin).


On October 6, Kaupthing received a loan of EUR 500 million from the CBI (The Special Investigation Commission 87). On October 8, the British authorities placed its UK subsidiary under cessation of payments. This sealed the fate for Kaupthing. The FME appointed a new governing board for the bank under the Emergency Act (The Special Investigation Commission 87).

In sum, the Big Three collapsed and the government let them collapse. There was no bailout offered to the banks and all foreign creditors and investors lost their money in 2008. Later, the 2010 referendum also rejected the proposal of paying the UK and the Netherlands 4 billion euros to compensate for the collapse of Icesave (Rankin).

Ethics Analysis

Conflicts of Interest

A conflict of interest, as defined by the United Nations Ethics Office, occurs when it is impossible for a person or an organization to make an unbiased judgment or provide impartial services due to the entity’s personal activities, relationships, or financial motives. It is common to see conflicts of interests arise, not only in the banking sector but also in health services and politics. Particularly, conflicts of interest raise serious issues on corporate governance as biased judgment leads to wrong strategy and inefficiency.

Conflicts of interest link directly to the value of “justice” and “fairness”. Aristotle states that “equals should be treated equally and unequals unequally” (Wenar). His theory objects to corruption and implies a person should not be given an unfair advantage just because of her role or position. Hence, every shareholder should be treated equally per the company’s policy and the legal regulations. Rawls’ principles of justice as fairness also include “Each person has the same indefeasible claim to a fully adequate scheme of equal basic liberties; which scheme is compatible with the same scheme of liberties for all” (Wenar). As we shall see, the banking activities in Iceland violated these ethical values.

In the Icelandic banking sector, the biggest shareholders of the banks were also their biggest debtors. Exista hf. was the biggest shareholders of Kaupthing holding 20% of the total share. In 2007, the amount lent to Exista by Kaupthing went up to 1,000 million euros, accounting for 20% of the bank’s total assets. Landsbanki’s biggest shareholder was Samson Holding Company owned by the father and son of the Björgólfsson family. Mr. Björgólfur Thor Björgólfsson was the biggest debtor of Landsbanki Luxembourg, accounting for 23.1% of the total loan of the branch. (The Special Investigation Commission 6-10).

The fact that large shareholders also ran multiple large scale businesses with debts to the banks was alarming. And as evidence shows, these owners took advantage of their position and authority, sometimes even exercised undue influence to use the funds and the assistance of the banks for their personal interests, ignoring the risks and loss imposed on other stakeholders, shareholders, and the banks.

In 2007, Baugur Group and its related parties increased their shares in Glitnir substantially. Over one year after that, the amount lent to Baugur doubled, increasing from EUR 900 million to nearly EUR 2 billion (The Special Investigation Commission).

In 2008, Glitnir was concerned about the activities of Landic Properties ehf, one of its debtors. The largest owner of this firm was Mr. Jón Ásgeir Jóhannesson, who was the principal of Stoðir. Stoðir was the largest shareholder of Glitnir. On September 12, 2008, Glitnir sent an email indicating its intention to participate more in the governance of Landic Properties. Mr. Jóhannesson replied, “Do the directors [of Glitnir] realise that Stoðir, the principal owner of Landic, also has the approval of the FME to control a significant share of Glitnir, and what do you think this letter will look like from that viewpoint? “(qtd. in The Special Investigation Commission 6-7).

It is this excessive abuse of power and privilege that directly led the Big Three’s downfall. In January 2008, when the situation was getting worse for the Icelandic economy, Exista needed liquidity and used shares in Bakkavör as collateral to borrow funds. The firm was able to withdraw in cash its loan of ISK 14 billion from Kaupthing. In May 2008, the bank even agreed to give up this collateral per Exista’s request. The SIC also found that half of the loans granted by Kaupthing from the beginning of 2007 did not have any collateral (8).

On 30 September 2008, one day after the government announced it would buy 75% of Glitnir shares and when the entire banking sector was on the brink of collapse, Landsbanki lent EUR 153 million to a company owned by Mr. Björgólfur Thor Björgólfsson. As noted by the SIC, it seemed shareholders just cared about their stakes and ignored the situation of the banks (86).

Principle Agent Problem

The agency theory is about the problems arising in the relationship between agents and the principals they represent when they do not have the same goals. An agent (board of directors) represents a principal (shareholders) and works for her interests. A risky project can bring an opportunity to enrich the board but also threaten the best interests of the shareholders. Hence, this difference in the level of risk aversion and goals reduces the agent’s alignment to the principal’s interest. The managers and their employees work for the shareholders. In the case of the Icelandic banks, we see the misuse of incentive schemes led to excessive risk taking, ignorance of externalities, and finally the destruction of the firm.

The payment scheme in the Icelandic banking sector included variable wages, bonus payments, and loans to the employees. The banks set unrealistic goals and granted loans to their employees to buy shares of the banks. They created an incentive to make risky, aggressive borrowing, and investment policies. With a scheme linked directly to the price of the stock, this further encouraged reckless behaviors and pushed up the stock market. Glitnir’s loans to employees reached ISK 55 billion in September 2008, which was equal to 17% of the equity of the bank. In the fall of 2007, Landsbanki paid ISK 194 million in bonus payments to security brokers while the earnings of the department were just 178 million (49-54). The banks also owned many investment funds. As their payments were directly linked to the parent banks, the employees cared more about the banks, its stock price, the benefits for the banks’ owners than the customers.

Irresponsible Banking Practice

In modern finance, the concept of corporate social responsibility (CSR) is becoming more important but also more complex and vague. The author David Sigurthorsson in the December 2012 Journal of Business Ethics described CSR as involving both negative duties and positive duties. Positive duties entail people to contribute to society and do good deeds. Negative duties mean people must refrain from doing things that could harm others. He suggests the Icelandic banks mostly conceived CSR in term of positive duties only, and used it as a PR instrument.

Landsbanki, Kaupthing, and Glitnir all reported enormous contributions to society. However, Sigurthorsson found in his report that from 2004 to 2008, Kaupthing contributed ISK 107.1 million to support sporting and miscellaneous events yet their spending on guest receptions was 216.7 million. Landsbanki contributed 473.9 million to sporting and miscellaneous events but spent 576.3 million on invitational tours.

Not only were the Big Three not thoughtfully committed to positive duties, they also ignored negative duties because of their irresponsible banking practices. They borrowed short-term but lent long-term, leveraged the capital base to buy assets worth several times Iceland’s GDP and made risky decisions on inadequate due diligence. Their shareholders tried to benefit themselves by taking advantage of their access to funds. There was extremely loose risk management. Society, as a whole, suffered from the consequences of their reckless behavior.

The most common criticism of the Icelandic banking crisis is its rapid and unstable growth. In the beginning of 2003, the total assets of the three banks were approximately 10 billion euros. In just 6 years, that number increased 12 times, reaching almost 120 billion euros at the end of 2008. By 2007, its total assets were worth nine-fold the national GDP (The Special Investigation Commission 1). The banks expanded both internally and externally. Between 2004 and 2005, the three banks bought assets worth of ISK 834 billion. From early 2007 to mid-2007, lending to foreign companies increased by 120% (The Special Investigation Commission 2-3).

Prior to 2005, Icelandic banks received reasonable interest rates on the European debt securities market because of their membership in EEA and good state credit ratings. In 2006, Fitch reduced the rating for the Icelandic Treasury and gave a negative outlook on the banks. Interest rates increased and banks found it harder to obtain funds. From 2005 to 2006, the amount borrowed from the European market decreased by 66%. The banks turned to the American debt securities market and used collateralized debt obligations (CDOs) with high-interest rates. 6 billion euros were borrowed on the American market in 2006 (The Special Investigation Commission 4). In 2007, the debt security market no longer favored Icelandic banks. They then turned to foreign deposits and short-term collateralized loans. As the SIC concluded, the operation of the banks showed “too much haste, when it was evident that sooner or later the interest rate would go up and access to borrowing would become more difficult”.

The banks’ aggressive operations on the international market led to serious exchange rate risks. They had large liabilities in foreign currency while the CBI had limited foreign reserves. Their assets and income became heavily dependent on the international exchange rate market.

The European Union ruled that “financial undertakings are not permitted to incur exposure in relation to one customer, or a group of customers, that are related in a certain way, in excess of 25% of their equity base at any time”. Iceland, however, implemented this very loosely (The Special Investigation Commission 11).

In 2007, Mr. Björgólfur Thor Björgólfsson, the largest shareholder of Landsbanki, owned a 38.84% share in Actavis Group hf. FME, hence, in 2017, required Landsbanki to recognize Mr. Björgólfsson, his relatives, and Actavis as related. If this had been applied, Mr. Björgólfsson’s equity in Landsbanki would have reached ISK 51.3 billion, accounting for 49.7% of the bank’s equity as defined by Capital Adequacy Directive. Landsbanki ignored this suggestion and reported them as separate entities in June 2007 (The Special Investigation Commission 11-12).

The purpose of risk diversification is to reduce the impact of a single person or a group on the bank’s performance. With one shareholder owning most shares, he will demand help, when in financial distress, from the bank and drag the bank’s performance down. If the bank is heavily connected to that individual (i.e. lent a large amount to him), the bank is dependent on that person’s financial situation and will do whatever it takes not to let him default. This exposes creditors and depositors to serious risks.

Lack of Transparency

“The lack of tradition and consideration toward the set of explicit and implicit rules that facilitate business interactions in a society” (Vaiman et al.) violates numerous virtues including honesty and integrity.

Cross-ownership was a prevalent practice. A bank could own shares of another bank. A person owned multiple firms, all of which bought shares in the bank. And that bank, in turn, bought shares of the companies of that individual. A 2009 study interviewed people working in high positions in the Icelandic banking sector and asked them about its business culture (Vaiman et al.). The result was published in the Oxford Journal. According to the study, the 10 largest business owners in Iceland owned 40 out of the 100 largest corporations. Furthermore, many individuals used offshore companies to hide their identity when buying shares in large firms. This led to uncontrollable risks and unstable development. The biggest firms kept getting bigger. The bank also issued many loans to customers, employees to buy its shares and the shares of the other banks. Banks hence grew more interconnected and highly leveraged.

Backed by the government, the banks mostly ignored regulations. The aforementioned study found that in lending to buy shares, major shareholders received loans worth 100% of the shares value while the rules prohibited loans exceeding 60% of the shares values. Most alarming was the banking sector’s poor adoption of the equity base rule.

FME implemented Basel II rules in banking operations. Accordingly, the capital base must cover at least 8% of the risk base. The objective is to protect depositors and creditors, ensuring the banks have enough liquidity to fulfill their obligations. The Big Three always exceeded this threshold by a small margin (The Special Investigation Commission 15-18).

However, as the SIC pointed out in its report, most of the banks’ equity came from the banks themselves. In particular, they offered people loans to buy their shares or loans secured with its own shares. The SIC defined these loans and forward contracts on the banks’ shares as weak equity. Weak equity increases exposure risk significantly. When the bank incurs a loss in operation, not only does its stock value plummet, the bank will also lose these loans as the value of their collaterals decreases. Hence, the ability of a bank to repay its debt and honor its duty to depositors will be impaired.

Weak equity rose from ISK 20 billion to 60 billion in the equity of Glitnir between 2006 to 2008. In 2008, it accounted for 20% of the capital base of Glitnir. Landsbanki had ISK 80 billion of weak equity in mid-2007. In 2008, 30% of Kaupthing’s capital base was weak equity. In total, in 2008, 25% of the capital base of the Big Three was filled with weak equity (15-18).

All of this became known after the collapse. The public in Iceland was hardly aware of the state of the banks because monopolists dominated the media. The banks or their owners owned most of the networks (Wade and Sigurgeirsdottir). In 2006, when Fitch lowered its rating, both the government and the media were quick to clear the tension. The government toned down the news published by the international press and IMF’s pessimistic reports. The Chamber of Commerce, in a 2006 meeting, said: “[Iceland should] stop comparing itself with the other Nordic countries—after all we are in many ways superior to them” (qtd. in Wade and Sigurgeirsdottir). It was this kind of ignorance, greed, arrogance, and negligence that led to the downfall of the economy.

The regulatory body could hardly keep up with the growth of the banks. The FME had 45 staff in total in 2006 and had to regulate three of the biggest international banks in the world (Wade and Sigurgeirsdottir). The government’s aim of turning Iceland into a financial center and tax haven further promoted the reckless behaviors of the banks.

A Corrupt Business Culture

Iceland’s corrupt business culture originated from the integration of economics and politics, a tradition of bureaucracy and nepotism.

In early 2000, when the privatization process began, the government did not sell ownership in the bank to foreigners. Instead, ownership went to those who had political influence or connections. These investors usually had no banking or risk management experience and were simply eager to make a profit. In the 2009 study above, the interviewees also reported that most of the members sitting on the Board of Directors had no knowledge about the economy, were vague on strategy, and possessed little regard for risks. It was also reported that 50% of political appointments between 2006 to 2009 to official positions were due to political connections. This led to inefficiency, wasted talents and increased risk of failure.

The Aftermath

The collapse of the three biggest banks considered “too big to fail” sent the entire nation into panic. The krona plummeted by 50% in one week (Amadeo). “80% of the stock market was wiped out”. “97% of the banking sector collapsed in a matter of three days” (“How did Iceland clean up its banks?”). Unemployment soared. Millions of businesses went bankrupt. Icelandic people, who had been borrowing aggressively on the international market, could not repay their huge debt due to krona depreciation. Inflation spiked up. Protesters took to the street. Foreign investors pulled their funds out of the country.

In November, the government imposed strict capital controls to stop the fall of the krona and protect the reserve of foreign currencies. The IMF granted a loan of $2.1 billion to help stabilize the economy and repay domestic depositors (Rankin). Initially, the government refused to repay the debt to UK and Dutch depositors and limited the amount of foreign currency Icelandic people could buy. All Icelandic companies were prevented from buying foreign assets.

In January 2009, the government collapsed as the Prime Minister Geir HaardeHaarde and his cabinet resigned (Blair). In February, the central-left party took power.

The quick recovery of Iceland was largely due to the depreciating krona. The fall in the currency’s value was an opportunity for exports that have always been an advantage for the country. Nominal wages fell and labor became cheaper. The unemployment rate was under control. Iceland became an attractive, budget destination for tourists.

In 2015, 7 years after the crisis, the unemployment rate was 3.8%. GDP growth was 4.1%, making it one of EU’s top performers. Inflation fell back to 2.5%, which was even lower than that before the crisis (Matsangou). With the booming tourism industry, Iceland lifted capital controls and in early 2016, it repaid the total 374 million pounds in compensation to the UK and Dutch depositors (AFP).

Criminal Prosecution of Bankers

This is, however, not the most impressive part of Iceland’s comeback. It became the first country since the financial crisis in 2008 to send bankers to jail and prosecute them as criminals.

When the Big Three failed, committees were established to audit and go through the banks’ operation. A special investigation led by prosecutor Olafur Hauksson found ongoing practices of fraud, market manipulation, legal violations (“How did Iceland clean up its banks?”). Here is a summary of the results.

  • In 2012, Geir Haarde, former Prime Minister was found guilty for one of the three charges relating to the 2008 crisis. However, he was cleared of the other two and did not face punishment (Wilson).
  • In February 2015, the Supreme Court handed down a sentence of five and a half years to Hreiðar Már Sigurðsson, former CEO of Kaupthing and a 4-year sentence to Sigurður Einarsson – the chairman of Kaupthing (Iceland Magazine).
  • In October 2015, Sigurjón Árnason, former CEO of Landsbanki was sentenced for three years. The Supreme Court also sentenced Elín Sigfúsdóttir – former director of corporate lending to one and a half years. And Steinþór Gunnarsson – former director of brokerage received a nine-month sentence for market manipulation (Iceland Magazine).
  • Late 2015, former CEO of Glitnir Bank and two other bankers were sentenced to prison for up to five years with the charge of market manipulation and breach of fiduciary duty (Simanowitz).
  • In October 2016, the Supreme Court gave its guilty verdict to nine bankers involved in the Kaupthing Bank market manipulation case. Among the defendants were former CEO of Kaupthing Luxembourg, former manager, former directors, and former credit representative. The sentences ranged from one year to more than four years. One of the charges involved the illegal loans to a foreign investor to buy Kaupthing’s shares in an attempt to boost market confidence during the pre-crisis months in 2008 (Sims).
  • By February 2016, Iceland had sentenced 29 bankers to prison for their role in the crash (MintPress News Desk).





Works cited

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