Kaupthing Bank ( is, Kaupþing banki; ) was a major international Icelandic bank, headquartered in
Reykjavík
Reykjavík ( ; ) is the capital and largest city of Iceland. It is located in southwestern Iceland, on the southern shore of Faxaflói bay. Its latitude is 64°08' N, making it the world's northernmost capital of a sovereign state. With a po ...
,
Iceland
Iceland ( is, Ísland; ) is a Nordic island country in the North Atlantic Ocean and in the Arctic Ocean. Iceland is the most sparsely populated country in Europe. Iceland's capital and largest city is Reykjavík, which (along with its s ...
. It was taken over by the Icelandic government during the
2008–2011 Icelandic financial crisis
The Icelandic financial crisis was a major economic and political event in Iceland that involved the default of all three of the country's major privately owned commercial banks in late 2008, following their difficulties in refinancing their ...
and the domestic Icelandic based operations were spun into a new bank ''New Kaupthing'', which was subsequently renamed
Arion Banki
Arion Banki hf. formerly ''Nýja Kaupþing hf'' or ''New Kaupthing'' is an Icelandic bank with roots tracing back to 1930. The bank operates in the Greater Reykjavík area as well as in the largest urban areas around the country. In 2016 the bank ...
. 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.
Prior to its collapse, Kaupthing Bank operated in thirteen countries, including all the Nordic countries, the
Netherlands
)
, anthem = ( en, "William of Nassau")
, image_map =
, map_caption =
, subdivision_type = Sovereign state
, subdivision_name = Kingdom of the Netherlands
, established_title = Before independence
, established_date = Spanish Netherl ...
,
Belgium
Belgium, ; french: Belgique ; german: Belgien officially the Kingdom of Belgium, is a country in Northwestern Europe. The country is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeast, France to th ...
,
Luxembourg
Luxembourg ( ; lb, Lëtzebuerg ; french: link=no, Luxembourg; german: link=no, Luxemburg), officially the Grand Duchy of Luxembourg, ; french: link=no, Grand-Duché de Luxembourg ; german: link=no, Großherzogtum Luxemburg is a small lan ...
,
Switzerland, the
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
and the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...
. 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
A branch, sometimes called a ramus in botany, is a woody structural member connected to the central trunk of a tree (or sometimes a shrub). Large branches are known as boughs and small branches are known as twigs. The term ''twig'' usually r ...
in Iceland. As of 31 December 2007, the bank had a total assets of €58.3 billion.
In 2006, it ranked number 1,006 on
Forbes Global 2000 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
''The Banker'' is an English-language monthly international financial affairs publication owned by ''The Financial Times'' Ltd. and edited in London, United Kingdom. The magazine was first published in January 1926 through founding Editor, Bren ...
''. That year Kaupthing Bank had net earnings of €812 million, compared with €986 million in 2006. About 70% of the
operating profit
In accounting and finance, earnings before interest and taxes (EBIT) is a measure of a firm's profit that includes all incomes and expenses (operating and non-operating) except interest expenses and income tax expenses.
Operating income and ope ...
originated outside Iceland (33% in Iceland, 31% in the UK, 26% in Scandinavia, 8% in Luxembourg and 2% in other countries).
On 9 October 2008, following a
major banking and financial crisis in Iceland, the
Financial Supervisory Authority took control of the bank.
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
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...
obtained a moratorium on payments from the District Court of Reykjavík and has been suspended from trading in the
Iceland Stock Exchange
The Nasdaq Iceland, formerly known as the Iceland Stock Exchange (XICE) ( is, Kauphöll Íslands), is a stock exchange located in Iceland. It was established in 1985 as a joint venture of several banks and brokerage firms on the initiative of the ...
.
The name
The bank is known as Kaupthing Bank outside of Iceland.
In Iceland, its official name was ''Kaupþing Banki hf.''
Formerly, its official name was ''Kaupþing Búnaðarbanki hf.'', but the name was changed as the former name was considered too unwieldy for most people. From 2003 to 2006 the company used the name ''KB banki'' for its retail operations in Iceland. In December 2006, however, the bank started using the old name of ''Kaupþing'' for its network of high-street banks. It was announced that the change was part of the bank's plan to operate under the same name.
In November 2009, the bank's successor ("New Kaupthing") changed its name to
Arion Bank
Arion Banki hf. formerly ''Nýja Kaupþing hf'' or ''New Kaupthing'' is an Icelandic bank with roots tracing back to 1930. The bank operates in the Greater Reykjavík area as well as in the largest urban areas around the country. In 2016 the bank ...
.
The "þ" character is a
thorn/þorn.
History
Established in 1982 as a small agency for financial advisory and securities brokerage, Kaupthing became a major player in the changes in the Icelandic financial market, continually setting trends and being one of the five founding partners of the Icelandic Stock Exchange. In the mid-1990s, Kaupthing widened its focus to include opportunities abroad, and becoming the first Icelandic financial institution to operate outside Iceland.
Under the leadership of
Sigurður Einarsson, Kaupthing was listed on the Icelandic Stock Exchange in October 2000, at which point the original owners of the bank, the savings banks in Iceland, reduced their holdings, and individuals and institutional investors replaced them as shareholders. Kaupthing Bank shares were listed on the
Stockholm Stock Exchange
Nasdaq Stockholm, formerly known as the Stockholm Stock Exchange ( sv, Stockholmsbörsen), is a stock exchange located in Frihamnen, Stockholm, Sweden. Founded in 1863, it has become the primary securities exchange of the Nordic countries. As ...
in 2002.
By 9 October 2008, Kaupthing Bank HF was forced into government receivership – only days after a crisis at
Landsbanki
Landsbanki (literally "national bank"), also commonly known as Landsbankinn (literally "the national bank") which is now the name of the current rebuilt bank (here called "New Landsbanki"), was one of the largest Icelandic commercial banks that f ...
placed it into government control. Due to the crisis throughout the Icelandic financial system, all trading in the country's equity markets was suspended on 13 October 2008. The events were followed by the collapse of Iceland's banking sector, which led to the
2008–2011 Icelandic financial crisis
The Icelandic financial crisis was a major economic and political event in Iceland that involved the default of all three of the country's major privately owned commercial banks in late 2008, following their difficulties in refinancing their ...
.
On 31 July 2009, internal documents
from Kaupthing Bank were leaked:
WikiLeaks
WikiLeaks () is an international non-profit organisation that published news leaks and classified media provided by anonymous sources. Julian Assange, an Australian Internet activist, is generally described as its founder and director and ...
exposed a confidential 210-page document listing Kaupthing's exposure to loans ranging from 45 million to 1.25 billion euros.
The leaked presentation revealed the bank had loaned billions of euros to its major shareholders, including a total of €1.43 billion to
Exista
Klakki (known as Exista until 2011) is an Icelandic financial services group formerly listed on the Iceland Stock Exchange. Its activities are based primarily on insurance underwriting and other financial services, although it is also active in ...
and subsidiaries which own 23% of the bank.
On 9 December 2009, Daniel Thordarsson, former asset manager, and Stefnir Ingi Agnarsson, former stock broker, both of Kaupthing Hf, were sentenced to eight-month prison terms by the Reykjavik District Court.
The pair was charged with putting in offers to buy Exista shares six times in January and February last year shortly before the close of business, so that the offers would affect the end-of-day value of Exista shares. The charges were of submitting false purchase enquiries and of
share price manipulation.
Acquisitions, mergers, subsidiaries
* 1930 Búnaðarbanki Íslands (English: Agricultural Bank of Iceland) founded in Iceland
* 1982 Kaupthing hf. founded in Iceland
* 1998 Kaupthing Luxembourg, S.A. opened
* 2000 Kaupthing Faroe Islands opened, Kaupthing New York opened, Kaupthing Stockholm opened
* 2001 Kaupthing Bank Copenhagen opened, Kaupthing Lausanne opened, Sofi acquired in Finland
* 2002 Aragon acquired in Sweden, JP Nordiska acquired in Sweden, Auðlind acquired in Iceland
* 2003 Kaupthing merges with Búnaðarbanki Íslands to form Kaupthing Bank, Tyren acquired in Norway, Norvestia acquired in Finland, Kaupthing Limited opened in the UK
* 2004 A. Sundvall acquired in Norway,
FIH acquired in Denmark
* 2005
Singer & Friedlander
Kaupthing Singer & Friedlander was a financial services provider offering corporate and investment banking services to small and medium-sized companies, as well as wealth management services for high-net-worth individuals. Primary areas of act ...
acquired in the UK
* 2006 Kaupthing Limited merges with Singer & Friedlander to form
Kaupthing Singer & Friedlander in the UK
* 2007 Kaupthing buys Dutch merchant bank NIBC for €3 billion (as of late January 2008, Kaupthing decided to cancel the acquisition of NIBC)
* 2007 Kaupthing acquired a 20% stake in New Delhi-based Indian investment services company Finoble Advisors with an option to buy the remaining 80% in five years' time
* 2007 Kaupthing buys Belgian private banking and asset management operations of
Robeco
Robeco is an originally Dutch asset management firm, since 2013 part of Orix, founded in 1929 as the Rotterdamsch Beleggings Consortium (Rotterdam Investment Consortium). As of 2014, the company had €246 billion of assets under management. It ...
Bank, for an unspecified amount, further strengthening its position in the
Benelux
The Benelux Union ( nl, Benelux Unie; french: Union Benelux; lb, Benelux-Unioun), also known as simply Benelux, is a politico- economic union and formal international intergovernmental cooperation of three neighboring states in western Europe: ...
market.
* 2007 Kaupthing hf acquired Derbyshire Offshore, the Isle of Man subsidiary of Derbyshire Building Society, continuing Derbyshire Offshore's irrevocable and binding guarantee for all depositors funds in the new subsidiary, Kaupthing, Singer and Friedlander (Isle of Man) Ltd.
* 2007–2008 Kaupthing launches internet based Kaupthing Edge in the UK, Belgium, Norway, Germany, Finland, Sweden, Luxembourg, the Isle of Man, Austria and Switzerland.
* 2008 The UK business of Kaupthing Edge, covering £2.5 billion in deposits and 160,000 customers, is taken over by
ING Direct
The ING Group ( nl, ING Groep) is a Dutch multinational banking and financial services corporation headquartered in Amsterdam. Its primary businesses are retail banking, direct banking, commercial banking, investment banking, wholesale bankin ...
after the
Financial Services Authority closed its London centre of operations.
Kaupthing Edge
Kaupthing Edge was a pan-European retail deposit-taking brand. The purpose of the brand was to diversify liabilities on the Kaupthing balance sheet by currency, customer type (personal/retail) and country. Kaupthing Edge offered two deposit products: a savings account and a fixed-term deposit account. Both were straightforward high-interest products. In
Belgium
Belgium, ; french: Belgique ; german: Belgien officially the Kingdom of Belgium, is a country in Northwestern Europe. The country is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeast, France to th ...
customers could choose a third product which was a current account. Kaupthing Edge savings and fixed-term deposit accounts were managed over the Internet with the support of telephone call centers.
Kaupthing Edge was available in ten countries in Europe:
*
Finland
Finland ( fi, Suomi ; sv, Finland ), officially the Republic of Finland (; ), is a Nordic country in Northern Europe. It shares land borders with Sweden to the northwest, Norway to the north, and Russia to the east, with the Gulf of B ...
– available since October 2007; liabilities taken over by the Finnish Financial Supervision Authority on 9 October 2008
*
Sweden – available since November 2007; accounts closed and all deposits repaid by 20 October 2008.
*
Norway
Norway, officially the Kingdom of Norway, is a Nordic country in Northern Europe, the mainland territory of which comprises the western and northernmost portion of the Scandinavian Peninsula. The remote Arctic island of Jan Mayen and the ...
– available since January 2008; liabilities taken over by the Norwegian government on 12 October 2008
*
Belgium
Belgium, ; french: Belgique ; german: Belgien officially the Kingdom of Belgium, is a country in Northwestern Europe. The country is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeast, France to th ...
– available since January 2008, all accounts were frozen on 9 October 2008. The amount above €20,000 came available after a takeover by Keytrade bank on 29 March 2009.
*
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the European mainland, continental mainland. It comprises England, Scotlan ...
– available since February 2008; accounts transferred to Dutch bank
ING Direct
The ING Group ( nl, ING Groep) is a Dutch multinational banking and financial services corporation headquartered in Amsterdam. Its primary businesses are retail banking, direct banking, commercial banking, investment banking, wholesale bankin ...
on 8 October 2008
*
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
– available since March 2008; 30,000 depositors in Germany are still awaiting repayment of their deposits by the bank. Kaupthing Bank Liquidation Committee has announced that it has secured funds to repay German depositors. German depositors started to get their money back on the 22 of June and are to be paid in full.
*
Luxembourg
Luxembourg ( ; lb, Lëtzebuerg ; french: link=no, Luxembourg; german: link=no, Luxemburg), officially the Grand Duchy of Luxembourg, ; french: link=no, Grand-Duché de Luxembourg ; german: link=no, Großherzogtum Luxemburg is a small lan ...
– available since April 2008
*
Isle of Man
)
, anthem = "O Land of Our Birth"
, image = Isle of Man by Sentinel-2.jpg
, image_map = Europe-Isle_of_Man.svg
, mapsize =
, map_alt = Location of the Isle of Man in Europe
, map_caption = Location of the Isle of Man (green)
in Europe ...
– available since April 2008
*
Switzerland – available since June 2008; in liquidation from 17 November 2008. Depositors partially repaid.
*
Austria
Austria, , bar, Östareich officially the Republic of Austria, is a country in the southern part of Central Europe, lying in the Eastern Alps. It is a federation of nine states, one of which is the capital, Vienna, the most populous ...
– available since September 2008; accounts frozen on 9 October, accounts transferred to other banks on 29 October
Kaupthing Edge accounts were protected within the EU by compulsory depositors protection schemes. These schemes are financed by a levy on the respective countries financial industry. In the case of the UK, the government would forward a loan to the scheme against future increased payments in case of a shortfall.
Kaupthing Edge is a
word play
Word play or wordplay (also: play-on-words) is a literary technique and a form of wit in which words used become the main subject of the work, primarily for the purpose of intended effect or amusement. Examples of word play include puns, pho ...
on '
cutting edge'.
Ownership
Meidur (later renamed to ''Exista'') acquired a 12% stake of Kaupthing Bank in October 2002.
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".
On 9 October 2008, the
Financial Supervisory Authority took control of Kaupthing after the resignation of the entire board of directors.
This came about when "Britain transferred control of the business of Kaupthing Edge, its Internet bank, to
ING Direct
The ING Group ( nl, ING Groep) is a Dutch multinational banking and financial services corporation headquartered in Amsterdam. Its primary businesses are retail banking, direct banking, commercial banking, investment banking, wholesale bankin ...
and put Kaupthing's UK operations into administration" placing
Kaupthing
Kaupthing Bank ( is, Kaupþing banki; ) 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 b ...
in technical default according to loan agreements. The prime minister of Iceland,
Geir Haarde
Geir Hilmar Haarde (; born 8 April 1951) is an Icelandic politician, who served as prime minister of Iceland from 15 June 2006 to 1 February 2009 and as president of the Nordic Council in 1995. Geir was chairman of the Icelandic Independence Pa ...
, has stated that the British government brought down Kaupthing unnecessarily by abusing their power.
The same day the EBK (
Swiss Federal Banking Commission
The Swiss Financial Market Supervisory Authority (FINMA) is the Swiss government body responsible for financial regulation. This includes the supervision of banks, insurance companies, stock exchanges and securities dealers, as well as other fi ...
) started proceedings under the Swiss
deposit insurance scheme 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 30,000 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. 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.
WikiLeaks
WikiLeaks () is an international non-profit organisation that published news leaks and classified media provided by anonymous sources. Julian Assange, an Australian Internet activist, is generally described as its founder and director and ...
has made available an internal document
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 arrests
On 9 March 2011,
Robert Tchenguiz
Robert Tchenguiz (born 9 September 1960) is a British entrepreneur, property investor, activist shareholder and securities dealer. The younger brother of Vincent Tchenguiz, he undertook a series of corporate deals, focusing particularly on proper ...
and his brother,
Vincent Tchenguiz
Vincent Tchenguiz (born 9 October 1956) is an Iranian-British entrepreneur born in Tehran. Robert Tchenguiz is his younger brother. Tchenguiz is known as a major donor to the Conservative Party (UK) and an investor in the controversial company ...
, were arrested in London by the UK's
Serious Fraud Office as part of their ongoing investigation in conjunction with
Iceland's Special Prosecutor's Office into the collapse of Icelandic Bank
Kaupthing
Kaupthing Bank ( is, Kaupþing banki; ) 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 b ...
. However, on 22 December 2011 the SFO and the Treasury Solicitors Department (TSoI) admitted factual errors in the information used to obtain the warrants against Consensus Business Group and Vincent Tchenguiz; stated that the warrants should be quashed; and that material seized under the warrants would be returned that day. Furthermore, the SFO offered to pay reasonable legal costs.
March 2013 saw the opening of new prosecutions in Reykjavík against the bank's former chairman and other leading employees for 'orchestrating five large-scale market manipulation conspiracies', in what was the largest prosecution related to the 2008 Icelandic financial crisis so far.
On 12 December 2013, four former bosses from the bank were sentenced to between three and five and a half years in jail. They are the former chief executive, the former chairman of the board, one of the majority owners and the former chief executive of the Luxembourg branch. The court sentenced them to five and half years, five years, three years and three and half years respectively in jail. These are the heaviest sentences for financial fraud in Iceland's history. The verdict was appealed.
On 12 February 2015, the Supreme Court upheld the 2013 verdicts. In addition, the sentences for majority owner, Ólafur Ólafsson, and Magnús Guðmundsson, former chief executive of the Luxembourg branch, were lengthened to 4.5 years in prison.
Iceland jails former Kaupthing bank bosses
/ref>
See also
* Glitnir
Forseti (Old Norse "the presiding one", "president" in modern Icelandic and Faroese) is the god of justice and reconciliation in Norse mythology. He is generally identified with Fosite, a god of the Frisians.
Name
Grimm took ''Forseti'', "''pr ...
* Icesave dispute
The Icesave dispute was a diplomatic dispute between Iceland, and the Netherlands and the United Kingdom that began after the privately owned Icelandic bank Landsbanki was placed in receivership on 7 October 2008. As ''Landsbanki'' was one of ...
* Landsbanki
Landsbanki (literally "national bank"), also commonly known as Landsbankinn (literally "the national bank") which is now the name of the current rebuilt bank (here called "New Landsbanki"), was one of the largest Icelandic commercial banks that f ...
* Central Bank of Iceland
The Central Bank of Iceland ( is, Seðlabanki Íslands) is the central bank or reserve bank of Iceland. It has served in this capacity since 1961, when it was created by an act of the Alþingi out of the central banking department of Landsbank ...
References
External links
Official website
Official website
Company Profile September 2008
2007 Annual Report
*
Kaupthing Singer Friedlander Depositors Action Group Site Oct 2008
Kaupthing IoM Depositors Memorial Website
Isle of Man site for Kaupthing Edge
Financial Crisis in Iceland: The Icelandic Government Information Center
{{Authority control
1930 establishments in Iceland
2012 establishments in Iceland
Bank failures
Banks established in 1930
Banks disestablished in 2008
Banks of Iceland
Privatised companies in Iceland