Kaupthing Bank

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Group.png Kaupthing Bank  
(BankHistory Commons WebsiteRdf-entity.pngRdf-icon.png
Kaupthing Bank.png
Extinction9 October 2008
HeadquartersReykjavík, Iceland
Icelandic bank where the government did not guarantee for assets in branches abroad.

Kaupthing Bank was a major international Icelandic bank, headquartered in Reykjavík, Iceland. It was taken over by the Icelandic government during the 2008–2011 Icelandic financial crisis and the domestic Icelandic based operations were spun into a new bank New Kaupthing, which was subsequently renamed Arion Banki. All the non-Icelandic assets and debts remained with the now defunct Kaupthing Bank. Prior to its collapse it also allegedly loaned money to various parties with the purpose of buying Kaupthing shares.[1]

Prior to its collapse, Kaupthing Bank operated in thirteen countries, including all the Nordic countries, the Netherlands, Belgium, Luxembourg, Switzerland, the United Kingdom and the United States. It was seventh largest bank in the Nordic countries in terms of market capitalization.

The bank had employed over 3,300 people with 36 retail branches in Iceland. As of 31 December 2007, the bank had a total assets of €58.3 billion.[2] In 2006, it ranked number 1,006 on Forbes Global 2000[3] The same year, it ranked number 177 (up by 34 places from 2005) on the list of the world's largest banks composed annually by the international finance magazine The Banker.[4] That year Kaupthing Bank had net earnings of €812 million, compared with €986 million in 2006. About 70% of the operating profit originated outside Iceland (33% in Iceland, 31% in the UK, 26% in Scandinavia, 8% in Luxembourg and 2% in other countries).[2]

On 9 October 2008, following a major banking and financial crisis in Iceland, the Financial Supervisory Authority took control of the bank.[5] The domestic operations of the bank were spun off as a new bank and continue to operate, the rest of the bank although never technically declared bankrupt obtained a moratorium on payments from the District Court of Reykjavík and has been suspended from trading in the Iceland Stock Exchange.

Government takes control

On 8 October 2008, the UK's FSA transferred the UK deposit accounts to ING. In its statement, "The FSA has determined that Kaupthing Singer & Friedlander no longer meets its threshold conditions, and is likely to be unable to continue to meet its obligations to depositors ... The FSA concluded that KSF is in default for the purposes of the Financial Services Compensation Scheme".[6]

On 9 October 2008, the Financial Supervisory Authority took control of Kaupthing after the resignation of the entire board of directors.[5][7] This came about when "Britain transferred control of the business of Kaupthing Edge, its Internet bank, to ING Direct and put Kaupthing's UK operations into administration" placing Kaupthing in technical default according to loan agreements.[8] The prime minister of Iceland, Geir Haarde, has stated that the British government brought down Kaupthing unnecessarily by abusing their power.[citation needed]

The same day the EBK (Swiss Federal Banking Commission) started proceedings under the Swiss Deposit Insurance scheme[9] with respect to the Geneva branch of Kaupthing Bank Luxembourg. EKB requested customers of that branch to contact them so that compensation of up to 30000 Swiss Francs could be paid.

In Finland, the Financial Supervision Authority (Rahoitustarkastus) took control over the Finnish branch to prevent funds being transferred to Iceland. It has said that it believes that no one will lose their money.[10] Finnish branch paid all its liabilities to its customers with debt it got from three major Finnish banks. The Finnish branch then liquidated all of its assets and paid back debt to the Finnish banks. According to Finnish authorities, Kaupthing Edge ended its operations in Finland on 30 January 2009.[11]

WikiLeaks has made available an internal document[12][13] from Kaupthing Bank from just prior to the collapse of Iceland's banking sector, which led to the 2008–2009 Icelandic financial crisis. The document shows that suspiciously large sums of money were loaned to various owners of the bank, and large debts written off. Kaupthing's lawyers have threatened WikiLeaks with legal action, citing banking privacy laws. The leak has caused an uproar in Iceland and may result in criminal charges against the individuals involved.


Related Document

TitleTypePublication dateAuthor(s)Description
File:Kaupthing-claims.pdfclaim23 January 201028167 claims made against Kaupthing Bank