Straumur has fallen

They keep falling, reminding us that this crisis is maybe just beginning. Here is the press release regarding Straumur Burdaras Investment Bank from the Icelandic Financial Authorities: 

In spite of its strong capital position and the support of funding banks Straumur Burdaras Investment Bank hf. (Straumur) believes that its liquidity position is no longer strong enough to sustain its activities.

The Icelandic Financial Supervisory Authority (IFSA) has therefore decided to assume the powers of a meeting of the shareholders of Straumur and immediately suspend the Board in its entirety. Further, the IFSA hereby appoints a Resolution Committee, which will take over all authority of the Board of Directors.

As a result of this Straumur is closed.

According to a statement from the government of Iceland dated 6 October 2008, all deposits of Icelandic commercial banks are fully secured. Straumur is a licensed commercial bank and is a member of The Depositors’ and Investors’ Guarantee Fund.

Further to this, William Fall, CEO of Straumur, has tendered his resignation for the company, effective immediately.

UPDATE:

The reason for Straumur’s fall was that they needed 18 million Euros from the Central Bank to pay off creditors today. The Central Bank denied the request and it is believed it was the new CB Governor, Sven Harald Oygaard who was instrumental in this decision. 

“The bank was allowed to try to work its problems out but it has become clear that it is unable to do so anymore”, said Gylfi Magnusson, Minister of Business Affairs to Vidskiptabladid. 

Icelandic pension funds stand to lose 1.3 billion ISK in stock from the nationalization of Straumur. Their losses are even bigger because they purchased the stock at a much higher price.

 

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