Should we be Worried by Icelandic Banking Crisis?

Robert Peston explains the extent of the Icelandic banking crisis HERE. Should we be getting worried?

PS Apologies that I have neglected this blog over the last weeks. Work commitments and a family bereavement are to blame. Will try to do better this week!

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22 Responses to Should we be Worried by Icelandic Banking Crisis?

  1. kevin Mousley says:

    it all depends how much cash BG and TG have personally squirralled away. In any crash its the people holding the debt that suffer i.e the ordinary citizens of Iceland- the super rich nearly always escape..bad for Icelandic folk good for west ham..not sure I should feel so happy about that!

  2. Biffo the bear says:

    Sorry to hear about your family bereavement Iain

    BG reckon’s he’s ok and the club is only connected to the bank insofar as he’s a major player in the bank.

    He had a personal fortune of 1.2 billion, it may be 1.1 billion now. Let’s not forget exactly how much a billion is. I don’t think we should worry.

  3. The Telegraph says that that BG has reassured fellow directors that the club’s finances will not be affected by Iceland’s troubled banking sector. Telegrapharticlehere
    The reason for this is that Guðmundsson’s Landsbanki has realized assets worth £300 million by selling them to Straumur-Burdaras, the investment bank.

    One analysis is that there is a problem with our owner’s major economic base after all, however it is trying to be sorted.
    The sale of these assets may be the quickest way to cash in when the wind starts to blow.

    It takes more than BG’s word to make me feel completely at ease.
    Especially since there is a twist to this deal.
    Two of the major shareholders of Straumur-Burdaras are Samson Global Holdings SARL and Landsbanki itself! That means that Landsbanki is voting for a deal with itself…
    The second twist is that Samson Global Holdings SARL is equally owned by Björgólfur Guðmundsson and his son Björgólfur Thor Björgólfsson through holding companies.

    This means that in effect, Guðmundsson/Björgólfsson are moving money around between their own companies.
    Can I sense a bit of bias in this affair?

    When will they need to realize some (or more) of the £85 million they used to buy West Ham?

    According to IcelandReview.com Icelandic Prime Minister Haarde commented on the economic crisis when adressing the parliament saying:

    “It will take the international financial community and the world economy a long time to recover and everything indicates that the situation will worsen until we will see the shore”

    On the topic of Icelandic banking he said that:
    “This was not the last misfortune that will befall the Icelandic bank system”
    and
    “Icelandic banks, like all other banks in the world, are up for a great defensive fight with the aid of governments and public institutions. I assure you that my government will never stray away from its policy of securing economic stability in every way possible and will make the sacrifices necessary,”

    Now are you reassured?

  4. Danny says:

    Just Imagine how cool it could be if the Icelandic government owned West Ham, they could have a vote in parliament on who to buy in the close season

  5. brooking still the best says:

    If believe the club statement from BG. It wont effect the Hammers in the slightest. He brought West Ham with his own personal funds which are and will remain considerable.
    We have to trust him so far, although I was concerned about the players we sold during the summer, it looks like they have been replaced with better for a fraction of the cost. Keep the faith, and lets hope he stuffs Sheff U aswell as any investors! ha ha

  6. If everybody was certain BG’s “private” money was enough and safe, why did he have to reassure the board about the state of Landsbanki?

    (And what does “private money” mean for a businessman anyway?)

  7. jon.london colney says:

    big time business men in these situations just shift and shuffle money to put it in the right places.im sure bg knows what hes doing with his money….errr he bought west ham…maybe he has no idea what hes doing with his money? i mean its not like hes making loads of money out off the club is it?

    Maybe he will off load and cash in,thats why he sold those players to cash in? thats what the spudlies are saying that the club cashed in on berbatov and defoe and keen coz there selling !

    its never dull being a hammer is it !!!

  8. Doc H Ball says:

    Landbanski is Scandanavia’s largest bank, not just Iceland’s. I also wouldn’t worry about the Icelanders if I were you, they have a population smaller than Merseyside, some of the wealthiest resources in Europe and a very modern infastructure. Put it this way, I’d much rather be in their economic system than ours and BG doesn’t seem too bothered or else he’d be flogging us around like Ashley and Newcastle.

    What this shows is that it is folly to have a football club dependent on a completely unrelated business sector. We now have a system where the success of your club is more decided on the price of a certain commodity rather than anything else.

    On a unrelated topic, came someone please explain why W Ham don’t take immediate legal action against Sheffield United for the 3 points gained in their game against Watford when Kabba didn’t play as a result of the unlawful agreement? I see no real legal difference between such and their action against us. Unleash a whirlwind on these soft Northern hypocrites I say!
    On a unrelated

  9. Sorry to hear of your loss Iain.

    Should we worry? Having read the bbc piece that you linked to it sounds pretty grim. I guess we have to ask – what’s the worst that could happen? Bankruptcy – points deductions next season. Lack of funds to pay staff wages? Yeah – potentially.

    If LandisBank’s Japanese, and other, Creditors decide to foreclose then it’s more likely that our Icelandic owners will be forced to sell their interest in the club. This could attract the kind of knock down price deal that may attract more affluent investors – or it may prompt TC’s consortium to come back in (I believe that having a Football Person at the helm of a Club is a good thing). Of course Kia Joorabchian may head up another consortium which I personally wouldn’t be in favour of.

    West Ham would be too interesting a proposition to go bankrupt. Someone would come in for us before we came anywhere near imposed solvency deadlines. That kind of thing happens to lower league clubs and not in the Premier League.

    Potentially this could be good or bad. So in answer to the question “Should we be worried” I’d say no – why worry about something so difficult to call. Besides which – we should count our blessings – we could be Sp#rs or Newcastle fans (sorry if that mental image has left you scarred).

  10. BTW – Congrats on the millionth Blog hits – WOW! It’s not been going that long has it?

  11. Paul Nixon says:

    I don’t think we should be worried, Iain, for two reasons:

    1. According to the Guardian, BG recently refused an unsolicited offer to purchase the Hammers

    2. The worse that can happen is the Hammers are sold…so what? A new buyer will likely inject cash…it doesn’t look bad for Man City. And at 100 – 150 million, the Hammers are a snip compared to 300 – 450 million for Newcastle…or Spurs…

    We’re in good shape. If I’m worried, it’s about Bolton…I have a feeling in me water…

    Paul

  12. me says:

    West Ham have secured Maurice Watkins to squish that irritating bug sheff utd. As for our chairman, too many fingers in too many pies does not bode well for us at all. He has been convicted before for shady dealings, he faced like 400 odd charges.

  13. Iron Lung says:

    welcome back Ian, we missed you. Our condolences for your loss.
    I think every club is going to struggle in the credit starved market. Much of football finance is leveraged on assumptions of future success; assets (player calues) are notoriously unreliable; the fan support is based on assumption of disposable income. Not exactly a solid platform to build on.

  14. Swedish Handelsbanken is considered the biggest Scandinavian bank at the moment as far as I know, but I agree Landsbanki is big.
    But big economic institutions are not immune to this credit crunch as e.g. Lehman Bros. and Fortis has shown us.

    If you prefer a currency in what was the other day called “free fall” and a Central Bank, policy rate set at 15.5 percent. Iceland would be your first choice.

  15. Plaistow54 says:

    Iain, i am sorry to hear about your family. I figured you were busy but my childish sense of humour got away on me. Sorry. Glad you are back. As far as West Ham goes & the global economy, i think that we will be affected the same as everyone else. Gudmundsson has personal wealth, sure, but unless he has it stashed under the bed, it will suffer the same consequences as everyone elses. We are not in as bad a position as some clubs e.g. Spurs, as BG has been prudent. Spurs have invested heavily & unless they get results, i see trouble for them. We all wanted globalism & free trade, well most of us, these are the results. No country is isolated economically now. We cannot bail out another country in trouble because we are all in it together. I believe that if the U.S. sold it’s whole country & everything that they haven’t outsourced, that they cannot pay their debt. Therefore are bankrupt. It has only been oil that has been propping up the dollar. Every nation in history that has tried to print it’s way out of trouble has failed. Unless we want to sell our grandchildren into lifelong debt we need a restructure of the worlds economy, a realistic one. West ham as a football club will survive i believe, no matter who the owner. Some will not.

  16. richo says:

    Why worry about something we have absolutely no control over? Like other people have stated a premier league club would always attract interset from other investors were the current owners to hit troubled times. Sure it wouldn’t be the best situation to be in but since when has stability been a feature of WHUFC.

    Good to see ya back Iain and don’t feel as if you need a reason everytime you go MIA, as much as we love our Hammers blog i’m sure the whiners can find something else in their lives to dedicate their time to! COYI!!!

  17. me says:

    If someone came in tomorrow with a figure that ensured BG a sizeable profit then he would snap their hand off. He didn’t buy a club (which he most probably had never heard of) out of love. He bought it to make money. And so far all it’s done is lost him money, largely because of other peoples incompetence granted. It’s common knowledge he and his business interests are feeling the strain financially. It’s also common knowledge that he is open to decent sized offers for the club.
    He wanted a new toy, and football clubs are the must have toy for any self respecting rich guy nowadays. The toy cost him more than he bargained for and the credit monster crunched him at the same time. Expect a significant bid sooner rather than later (even without a £30m discount West Ham is still the cheapest premier league club on the market).

  18. me says:

    Anyway… West Ham to win 3-1 today (even Bolton won’t give us a clean sheet).

  19. Rob Marrs says:

    Sorry to hear about your bereavement. Yes, I’d be worrying about the Icelandic banking crisis.

    Also, why on Earth don’t you guys have the Bobby Moore Fund advertised on your shirt rather than the shirt numbers?

    RCM

  20. CB says:

    Trouble is there are 12 premiership clubs up for sale !! I am sure however there is someone who is very rich & supports West Ham who would buy if the price was right.

  21. According to the leading Swedish industrial daily magazine “Dagens industri” The Icelandic financial institutions Kaupthing Bank, Exista, Glitnir Bank, Landsbanki Island, Straumur-Burdaras Investment Bank och Sparisjodur Reykavikur were moved to the so called “observation list” earlier today (Monday).

    The reason for this is said to be “substantial insecurity over the pricing of the shares in these banks”
    This means that the trading with these shares are being stopped.

    Both Landsbanki and Straumur-Burdaras Investment Bank are, as the Bubbleview reader already know, substantial parts of Björgolfur Guðmundsson’s economic foundation.

    The board was last week informed by BG that the Club’s finances will not be affected by Iceland’s troubled banking sector.

    This is less and less reassuring to me.

  22. me says:

    Anyone who believes BG’s assurances that he is unaffected is certifiably insane in my book. Icelandic banks are as on the edge of collapse as any bank could be. It’s almost like their mothers didn’t warn them about having eyes bigger than their bellies, or biting off more than they could chew. As i said earlier, expect BG to sell to the next significant bidder, and very soon as well.

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