Russian Financial Aid to Iceland
Delegation from Iceland will recently arrive at Moscow to negotiate an urgent loan
MOSCOW. 8 October. VOSTOK-MEDIA. Russia ‘positively consider” a request from Iceland, a small country on the North of Atlantic, that is in a difficult situation because of bankruptcy of banks that could not resist liquidity crisis.
“We have received a request. Iceland is known to be of strong budget discipline and we positively consider the request. Results will be achieved only after discussions”, - said Finance Minister, Alexey Kudrin.
On Tuesday, Prime-Minister of Iceland, Geyer Horde, announced that a delegation from Iceland would arrive at Moscow to negotiate an issue.
“Today or tomorrow we will send a delegation to Moscow to talk about the request which will help increase our currency reserves and is not directed at any institution crediting”, said the Prime Minister.
Central Iceland Bank reported on its web-site that Russia would grant a € 4 bln credit, though, the Russian Ambassador in Reykjavik did not approve the total sum of the credit.
Ambassador said that at the meetings they discussed principal willingness of financial cooperation” but not the details of a pack.
Bank sector of Iceland experienced a boost in the 1990s and became the greatest area of economy of the country where population accounts for 300 thousand people.
Within the framework of liquidity crisis this sector of the economy suffered the most and found on the edge of bankruptcy.
Regulating authorities had to suspend activity of the three biggest banks - Kaupthing, Landsbanki и Glitnir.
Government urgently passed several laws in order to virtually nationalize the banks: they have given unlimited guaranties on all saving deposits and become a creditor for all given credits.
In turn, the banks promised to sell out, all or in part, their foreign assets. Iceland banks and financial groups invested greatly into retail sector of Great Britain.
They possess several leading nets of Debenhams and House of Fraser, toy shop of Hamleys, pub nets of Mitchells & Butlers, and several nets of down-market shops of frozen goods from Iceland.