Landsbanki executives 'being chased for $2 billion'

17 May 2010

Investigators looking into the collapse of Landsbanki are seeking up to $2 billion in damages from the former owners and directors of the failed Icelandic bank.

A team from Deloitte have been looking into how the bank was operating in the run-up to its bankruptcy in 2008, with demands for damages expected to materialize within the next few months, reports the Guardian.

Among those expected to face compensation claims are two former Landsbanki chief executives - Sigurjon Arnason and Halldor J Kristjansson.

Three of its former owners - Thor Bjorgolfsson, Bjorgolfur Gudmundsson and Magnus Thorsteinsson – are also expected to be named in the lawsuits.

However, the situation may be complicated by the fact that both Mr Thorsteinsson and Mr Gudmundsson have been declared legally bankrupt.

The banking meltdown which afflicted Iceland two years ago saw Landsbanki, Kaupthing and Glitnir collapse, while several other investment businesses also went bust.

In its most recent report on Iceland, credit ratings agency Moody's stated that the economic situation has begun to stabilize, despite several major issues remaining unsolved in the wake of the crisis.

This includes Iceland's failure to reach an agreement with the UK and the Netherlands over a repayment package for investors from the two countries who lost their savings in the collapse of Icesave, a subsidiary of Landsbanki.

While a reimbursement deal had been provisionally agreed by the Icelandic government, a referendum on the issue saw voters in the country reject the proposals with a 'No' vote of more than 90 per cent.

This is set to affect a $4.6 billion bailout package due to be provided to the country by the International Monetary Fund, money that was being put up on the proviso that Iceland repays its international creditors.

Around 340,000 people in Holland and the UK had money invested in Icesave at the time of its failure.

By Gary Cooper

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