It is a year since the Icelandic banks failed and neither the British nor the Icelandic government have told the whole story of how and why they fell.

“How could a bank apparently be well financed last summer and then go bankrupt in autumn?” asked a big client of one of the Icelandic banks when I spoke to him recently. The short answer is that banking is an elusive business based on trust – and trust was in short supply when the three Icelandic banks, Kaupthing, Landsbanki and Glitnir, failed last October.

The long answer as to why the three Icelandic banks collapsed so spectacularly will hopefully be answered in a forthcoming report by an Icelandic parliamentary commission. The word is already out that the saga will be a sinister one. An office of a special prosecutor set up in Iceland to deal with alleged fraud related to the banks underlines this message. This new Icelandic saga has a UK ramification: the prosecutor now co-operates with the Serious Fraud Office. However, the UK authorities have never clarified their action against the Icelandic banks a year ago.  07-Oct-09.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6270160/One-year-on-questions-about-Icelands-banking-collapse-still-remain.html

When investigators get beyond the secrecy and complexity they may find another Enron, writes Rowena Mason. . .

. . . The state prosecutor has now hired Eva Joly, the Norwegian-French investigator who led Europe’s biggest ever fraud investigations into bribery and corruption at oil group Elf Aquitaine. . . .

“Finding proof will start at home in Iceland, but my instinct is that it will spread,” she said. “If there are things relevant to the UK we will get in touch with the Serious Fraud Office. If there are things relevant to Germany we will get in touch with their authorities.”  The investigators will also look at whether money flowed from Iceland to Luxembourg and the British Virgin Islands, especially Tortola.

“In Iceland, there is more than enough for a starting point for the investigation, given all the talk about market manipulation and unusual loans,” said Ms Joly. “If these are proved they are embezzlement and fraud. The priority is tracing any flow of assets from the banks and getting them back.” 13-Apr-09.

Treasury select committee MPs have criticised the quality of advice given by IFAs in the run-up to the Icelandic bank failures.

In a report into the failure of the Icelandic banks, the committee says: "Bearing in mind the heavy coverage in the financial press of Iceland’s fragility we would have expected offshore savers using independent financial advisers to have been advised of the changing risk profile of their savings.”

The TSC says it will be exploring further the role of advice to customers in its forthcoming inquiry into the banking crisis.   MoneyMarketing website -  04-Apr-09.

http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=183937&d=340&h=341&f=342

The Serious Fraud Office which yesterday launched an inquiry into the British financial arm of AIG, the nationalised US insurer, said it may follow it up with further investigations into the collapsed Icelandic banks Kaupthing and Landsbanki.13-Feb-09.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5721613.ece

Plan for cash-strapped state to become member by 2011

Iceland will be put on a fast track to joining the European Union to rescue the small Arctic state from financial collapse amid rising expectations that it will apply for membership within months, senior policy-makers in Brussels and Reykjavik have told the Guardian.

The European commission is preparing itself for a membership bid, depending on the outcome of a snap general election expected in May. An application would be viewed very favourably in Brussels and the negotiations, which normally take many years, would be fast-forwarded to make Iceland the EU's 29th member in record time, probably in 2011.  30-Jan-09.

http://www.guardian.co.uk/world/2009/jan/30/iceland-join-eu

. . .The toll is going to be extensive and the UK Government will probably have to find well over $US7 billion to bailout individuals, companies, charities, local and regional government bodies who had billions of dollars invested in the two main banking arms of Iceland’s two biggest banks, Icesave (owned by the tottering Landsbanki) and Kaupthing Edge. These were mainly online banking operations run out of Iceland which harvested deposits in the UK.

UK reports said the Government expected Iceland’s depositor compensation scheme to cover about £2.2 billion of the £4.6 billion owed to about 300,000 Landsbanki depositors, with £1.4 billion coming from the UK industry financial services compensation scheme and the remainder from the government. That of course presupposes that Iceland has the money to meet the cost of the guarantees. . . .  Australasian Investment Review (AIR) reprinted on Real Estate Resources website - 19-Jan-09.

http://www.jjrealestatebg.com/overseas-real-estate/iceland-a-metaphor-for-the-crisis

REYKJAVIK, Iceland:  As recently as last year, Iceland was considered an economic success story . . .

. . .Then, in the first week of October 2008, all went wrong. The three main Icelandic banks collapsed and the government took over their domestic branches. It is still unclear what will happen to their foreign operations.. . 

. .  . One or two of the Icelandic banks might have survived, though, if on Oct. 8 British Prime Minister Gordon Brown had not used the country's antiterrorist law to take over the assets and operations of two Icelandic banks in the U.K., Kaupthing and Landsbanki.  Wall Street Journal website - 17-Nov-08.

http://online.wsj.com/article/SB122695569056034695.html

Interesting article containing some hitherto unreported details of events leading up to the collapse of Landsbani.

REYKJAVIK: As Iceland struggles to stave off bankruptcy after the collapse of its financial sector, banks and the government have pointed the finger at each other, with some insisting the crisis could have been averted. The Economic Times, India Times website 16-Nov-08.

http://economictimes.indiatimes.com/News/International_Business/Could_Icelands_crisis_have_been_averted/articleshow/3718963.cms

Very interesting personal experience commentary from Sarah O'Connor, on the background to the Icelandic banks' melt-down.  15-Nov-08.

http://www.ft.com/cms/s/0/b2a7decc-b2b3-11dd-bbc9-0000779fd18c.html

WASHINGTON, Nov 13 (Reuters) - The International Monetary Fund on Thursday acknowledged that its rescue package for Iceland is being delayed in part by deposit issues between the country and potential creditors.  13-Nov-08.

http://www.reuters.com/article/bondsNews/idUSN1338579220081113