Landsbanki, officially ,
also commonly known as Landsbankinn (literally
"the national bank") in Iceland, is an
On October 7, 2008 the Icelandic Financial
took control of Landsbanki.
Their total assets were of ISK
3,058 billion (€
33.4 bn) at 31 December 2007
and a market capitalisation
ISK 383 billion (€4.4 bn) at 3 May 2007. Landsbanki is rated by
(Caa1/E/NP/Developing) and Fitch
Since its establishment in 1885 (commenced operations in 1886)
Landsbanki has been instrumental in the economic development of
business and industry in Iceland. Landsbanki served as the central bank
of Iceland from 1927 until 1961.
At the time, this interest was primarily directed towards note
issuance rather than monetary
. It was later replaced in this capacity by the
Central Bank of
Iceland at the behest of the Althing.
While still publicly owned it went
through a state-directed merger with Samvinnubanki (Cooperative
Bank). Landsbanki Íslands was converted to a public limited company
on January 1,
1998. The firm was subsequently privatized
in stages between 1998 and
Landsbanki has positioned itself as Iceland's primary provider of
general and specialised financial services to individuals,
corporate entities and institutions. The bank holds a market share
of over 30% in all major business segments and has the country's
most extensive branch network. At year-end 2006, Landsbanki
provided close to 40% of corporate lending in Iceland, and for
around 60% of companies listed on the OMX Iceland Stock Exchange,
Landsbanki was their principal bank or one of two banks with whom
they did business. The leading provider of M&A
, equity and fixed income
services, Landsbanki also has a
more than 40% market share in FX
addition, Landsbanki provides a full range of asset management
services, with a 34%
market share in domestic funds.
Building on its strong foundation in Iceland, Landsbanki has
extended its financial operations into new markets, focusing on
serving mid-cap corporates in Europe in a transactional setting.
The bank's product line includes access to both debt and equity
markets; its research department includes some 90 analysts covering
more than 800 European stocks locally.
Landsbanki currently has 40 branches and sub-branches throughout
Iceland, plus a wide-ranging network of international correspondent
banks. Landsbanki and its subsidiaries have offices
operating in 15 different countries, including the major financial
centres of Europe, and North American
representation in New
York, Winnipeg and Halifax.
In establishing Landsbanki, the Icelandic
hoped to boost monetary transactions and encourage
the country’s nascent industries. Following its opening on 1 July
1886, the bank's first decades of operation were restricted by its
limited financial capacity; it was little more than a savings and loan society
Following the turn of the 20th century, however, Icelandic society
progressed and prospered as industrialisation
finally made inroads,
and the bank grew and developed in parallel to the nation. In the
1920s Landsbanki became Iceland's largest bank, and was made
responsible for issuing its bank notes. After the issuing of
bank notes was transferred to the newly established Central Bank of
Iceland in 1961, Landsbanki continued to develop as a
commercial bank, expanding its
branch network in the ensuing decades.
of financial services
, beginning in 1986,
opened up new opportunities, which the bank managed to take
advantage of despite some economic adversity. In 1997, Landsbanki
was incorporated as a limited-liability company
, and the
concluded in 2003. Landsbanki then operated as a privately owned
bank, competing in a free market, with substantial international
activities added to its traditional Icelandic operations.
2008 financial crisis
On October 7, 2008 the Icelandic Financial
took control of Landsbanki. A press
release by the IFSA states that all of Landsbanki's domestic
branches, call centres, ATMs and internet operations will be open
for business as usual, and that all domestic deposits are fully
guaranteed. The Guardian
reported that the Government had moved quickly to use the sweeping
powers granted by the Reykjavik parliament, the night before. The
country’s financial regulator said on Tuesday that Landsbanki’s
branches would open as usual and that all “domestic deposits” were
fully guaranteed. The next day the United Kingdom Chancellor of the Exchequer
announced that his
government would foot the entire bill for British Icesave savers,
estimated at £
4 billion, and that he
was taking steps to freeze the assets of Landsbanki under
Landsbanki Freezing Order 2008, passed on 8 October 2008, Her Majesty's
Treasury froze the assets of Landsbanki in the UK, and
assets belonging to the Central Bank of Iceland, and the Government
of Iceland relating to Landsbanki.
On 9 October 2008 the domestic, Icelandic branch was split off into
the "Nýi (= new) Landsbanki" and on 27 October 2008 the inability
to render payment of deposits was declared for the remaining parts
2007 operations and profit
- Profit in 2007 amounted to ISK 39.9 billion (bn) (€456m) The
bank's pre-tax profit was ISK 45.6 bn (€520m). After-tax ROE was
- The group's core income (net interest income plus fees and
commissions) amounted to ISK 93.4 bn (€1.1bn) in 2007, an increase
of 34% over the previous year.
- Core earnings generation is steadily becoming more diversified;
the share of core earnings originating abroad in 2007 was 52%,
compared with 49% in 2006.
- Fees and commissions amounted to ISK 39.4bn (€449m) compared
with ISK 28.4bn in 2006.
- Trading and investment income amounted to ISK 16.6bn (€189m)
compared with ISK 19.6bn in 2006.
- The bank's liquidity position is very strong, with liquid
assets of close to €9bn at year-end 2007. Foreign debt maturing in
2008, however, amounts to only €0.8bn.
- The bank's total assets amounted to ISK 3,058bn (€33.4bn) at
year-end 2007 compared with ISK 2,173bn at the beginning of the
- Loans to customers at year-end 2007 totalled ISK 2,023bn
(€22.1bn). Customer deposits, on the other hand, amounted to ISK
1,421bn (€15.5bn) or close to ¾ of total lending. Customer deposits
have increased by 108% during the year.
- Landsbanki has no direct or indirect exposure to structured
credit obligations (such as CDOs, SIVs and CLOs) in its loan
- The bank's capital ratio (CAD
rules) was 11.7% at year-end 2007. Tier 1 capital was 10.1%
2006 operations and profit
- The bank’s after-tax profit in Q1 2007 was ISK 13.8bn (€154m),
as compared with ISK 14.3bn in Q1 2006. Profit in Q4 2006 was ISK
14.1 billion (bn).
- After-tax return on equity
(ROE) in Q1 was 45.2% as compared with an ROE of 36.3% for 2006 as
- The group’s core income (interest margin plus commission
income) was ISK 20.6bn (€230m), a YoY quarterly increase of ISK
4.8bn (€54m) or 31%, and an increase of ISK 3.1bn (€35m) or 17%
from Q4 2006.
- Revenue from operations abroad was ISK 12.3bn (€137m), or 42%
of total operating revenue.
- Core income from operations abroad was ISK 10.7bn (€119m) or
52% of the Group’s core income in Q1 2007.
- The cost-income ratio for the period was 42.2%.
- Trading gains and investment income amounted to ISK 8.8bn
(€98m), as compared with ISK 11.2bn in Q1 2006.
- Landsbanki’s total assets amounted to ISK 2,317bn as of the end
of March 2007. Converted to euros, the bank’s total assets amounted
to €26.4bn at the end of March, up from €23.2bn at the beginning of
- Customer deposits grew by 34% in Q1 2007 to total ISK 913bn
(€10.4bn) at the end of March. They represent 62% of total customer
lending as compared to 48% at the beginning of this year.
- The bank's capital adequacy ratio (CAD) was 13.4% at the end of
March. Tier 1 capital was 11.7%.
2005 operations and profit
The Bank’s after-tax profit in 2005 was ISK
25 billion. This is an increase of
97% over 2004, when its net profit was ISK 12.7 billion.
After tax return on equity
was 45.8%. The Bank’s equity
rose from ISK 38 billion at the beginning of the year to ISK 110
billion at year-end. Total assets at year-end amounted to ISK 1,405
According to a survey by IMG Gallup in December 2005, Landsbanki
has a leading share of the domestic individual market, as 30% of
individuals surveyed bank with Landsbanki.
At the end of 2005, Landsbanki provided close to 40% of corporate
lending in Iceland and for around 60% of companies listed on the
Iceland Stock Exchange
Landsbanki was the principal bank or one of two banks with whom
they did business. Landsbanki’s share of equity brokerage in 2005
was 32% and for bonds
The relatively limited size of the Icelandic market
prompted Landsbanki, first among Icelandic
commercial banks, to expand and diversify outside of Iceland when
it acquired the London-based Heritable
in 2000. In 2005, Landsbanki acquired three European securities houses: Teather & Greenwood,
located in London and Edinburgh; Kepler Equities, headquartered in Paris; and Merrion
Capital Group in Dublin.
these subsidiaries deal in securities and prepare equity research
in London, Paris, Frankfurt, Zurich, Geneva, Milan, Madrid and Amsterdam.
Landsbanki's own branches in London and
Amsterdam specialise in structured
and commercial finance (asset-based lending
), while Landsbanki
Luxembourg handles private banking
and wealth management
, as well as
On 9 August 2007 Landsbanki completed its acquisition of UK
investment bank Bridgwell plc. The operations of Teather &
Greenwood were combined with those of Bridgewell under the brand
name Landsbanki Securities (UK). The acquisition of Bridgewell
makes Landsbanki the second largest broker to listed companies on
the London Stock Exchange measured by number of clients.
The bank’s major subsidiaries
operates branches in London, Amsterdam, Oslo and Helsinki and representative offices in Halifax and Winnipeg, Canada; and
Islands. Since 2006, it has offered online savings to
Kingdom customers, trading as Icesave .
it expanded this service to the Netherlands, also under the Icesave name. 
- Heritable Bank  (London) -
Residential Development Finance, Mortgages, Specialty Finance
- Landsbanki Securities (UK)  (London)
- Corporate and Institutional Broking, Corporate Finance, Equity
- Landsbanki Kepler 
(Paris, Frankfurt, Amsterdam, Milan, Zürich, Geneva and Madrid) -
Institutional Broking, Asset Management, Corporate Finance,
- Landsbanki Luxembourg (Luxembourg)
– Private Banking, Asset Management
- Merrion Landsbanki 
(Dublin) - Corporate and Institutional Broking, Corporate Finance,
A deposit programme for the UK market, Icesave 
launched in October 2006. An easy-access, on-line savings account,
Icesave became an instant success, transforming Landsbanki’s
balance sheet and funding profile. Since launched, Icesave grew
rapidly and at 31 March 2007 Icesave deposits totalled £2.8 bn with
over 80,000 accounts opened.
factor in Icesave’s appeal to savers was its interest rate
guarantee: The gross Annual Equivalent Rate of Interest (AER) paid
on balances over £250 was guaranteed to exceed the Bank of
England Base Rate by at least 0.25% until 1 October 2009
and thereafter not to be lower than the Bank of England Base Rate
until 1 October 2011.
As a result, Icesave quickly became
the market leader in internet deposit savings accounts in UK in
terms of interest rates.
was operated in the Netherlands since May 2008 till October
On 7 October 2008 the Icesave UK website announced: "We are not
currently processing any deposits or any withdrawal requests
through our Icesave internet accounts. We apologise for any
inconvenience this may cause our customers. We hope to provide you
with more information shortly."
Icesave was declared in default on 8 October 2008.
Sponsorship of sports: Landsbankadeildin
Landsbanki’s support for Icelandic football
is an important aspect of the
and image policy. In
September 2005, an agreement was concluded with the Football Association of
, under which the Icelandic premier league for both men
and women will be called the Landsbanki Premier League (Landsbankadeildin
) for the next four
seasons. The financial backing for football is, however, primarily
directed towards supporting sports
children and youth divisions.