Bankers do time in Iceland

Icelandic banker jailed for actions during recession

Former Landsbanki chief Sigurjon Arnason receives a one-year sentence but nine months suspended

Arthur Beesley

Thu, Nov 20, 2014, 01:00

The Icelandic banker who orchestrated the 2005 buyout of stockbroker Merrion Capital and who once had serious designs on Irish Nationwide
has been sent to prison over his actions at the height of his country’s financial collapse in 2008.

Former Landsbanki chief Sigurjon Arnason received a one-year sentence from Reykjavik District Court but nine months were suspended.

He was one of three former Landsbanki figures to be convicted yesterday over the demise of the bank, one of three collapsed lenders whose combined debts of $75 billion (€59.8bn) precipitated Iceland’s economic collapse.

Iceland’s courts previously imprisoned the former chiefs of the two other collapsed banks, Glitnir and Kaupthing.

Share price manipulation

Arnason was convicted of manipulating Landsbanki’s share price and deceiving investors, creditors and the authorities in the bank’s dying days between September 29th and October 3rd, 2008.
He and two former colleagues had pleaded not guilty.

After yesterday’s sentencing, Mr Arnason was quoted by Reuters saying he had not yet decided whether to appeal to the supreme court . “This sentence is a big surprise to me as I did nothing wrong,” he said.

As joint chief executive of Landsbanki in November 2005, Mr Arnason led the €55.3 million acquisition of Dublin broker Merrion. That deal followed Landsbanki’s purchase of London broker Teather & Greenwood and pan-European firm Kepler Equities.

Strategic interest

As the Irish economy boomed, Mr Arnason saw big attractions the growth story telling reporters at that time that the Dublin market was of strategic interest “due to its size, location and characteristics.”
The bank was considered a potential bidder for IIB Bank, later acquired by Belgian lender KBC and it examined the books of Irish Nationwide, which was never sold and ended up in the State’s hands.

Merrion’s management bought the firm back from Landsbanki as it, in turn collapsed. The business is now controlled by management, with Brehon Capital and Somers Limited taking “sizeable” minority stakes earlier this year.