REYKJAVIK, March 21 (Reuters) - The Icelandic government said on Saturday its financial watchdog had taken over the country's top two savings banks, the latest part of the nation's banking sector to buckle under a weight of debt.
The government said discussions with creditors of both Reykjavik Savings Bank (SPRON) and Sparisjodabanki, formerly Icebank, had been unsuccessful and that their liquidity positions had continued to deteriorate, warranting such a move by the Financial Supervisory Authority (FSA).
'The Government of Iceland underlines that deposits in domestic commercial and saving banks and their branches in Iceland will be fully covered,' the Ministry of Business Affairs said in the statement.
Eleven other savings banks would also receive liquidity support, it said.
The financial system and currency of the North Atlantic island nation were shattered five months ago when Iceland's main commercial banks collapsed in a matter of days.
Earlier this month the FSA took over Straumur Burdaras , the last major Icelandic bank left standing from the crisis in October.
Gudjon Gudmundsson, general manager of the Association of Icelandic Savings Banks, told state radio this week the government would probably become half owner of the country's 14 savings banks.
That would mean the number of savings banks, mostly small and scattered across the country, would fall from 14 to six or eight, he said.
SPRON had total assets of 267 billion Icelandic crowns (about $880 million) at the end of September 2008, including 212 billion crowns of loans listed as assets. Sparisjodabankinn had assets worth 289 billion crowns, with 105 billion crowns in loans and advances listed as assets at the end of June last year. Keywords: ICELAND/BANKS (Reporting by Omar Valdimarsson; writing by Mia Shanley, Editing by Jonathan Wright, tel: +46-8-700 1017, e-mail: stockholm.newsroom@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The government said discussions with creditors of both Reykjavik Savings Bank (SPRON) and Sparisjodabanki, formerly Icebank, had been unsuccessful and that their liquidity positions had continued to deteriorate, warranting such a move by the Financial Supervisory Authority (FSA).
'The Government of Iceland underlines that deposits in domestic commercial and saving banks and their branches in Iceland will be fully covered,' the Ministry of Business Affairs said in the statement.
Eleven other savings banks would also receive liquidity support, it said.
The financial system and currency of the North Atlantic island nation were shattered five months ago when Iceland's main commercial banks collapsed in a matter of days.
Earlier this month the FSA took over Straumur Burdaras , the last major Icelandic bank left standing from the crisis in October.
Gudjon Gudmundsson, general manager of the Association of Icelandic Savings Banks, told state radio this week the government would probably become half owner of the country's 14 savings banks.
That would mean the number of savings banks, mostly small and scattered across the country, would fall from 14 to six or eight, he said.
SPRON had total assets of 267 billion Icelandic crowns (about $880 million) at the end of September 2008, including 212 billion crowns of loans listed as assets. Sparisjodabankinn had assets worth 289 billion crowns, with 105 billion crowns in loans and advances listed as assets at the end of June last year. Keywords: ICELAND/BANKS (Reporting by Omar Valdimarsson; writing by Mia Shanley, Editing by Jonathan Wright, tel: +46-8-700 1017, e-mail: stockholm.newsroom@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.