Iceland’s Arion Bank, the successor bank to Kaupthing Bank, which failed in 2008, plans to re-enter the international debt markets by selling bonds within the next year, according to its CEO.
Bloomberg reported that Kaupthing was the biggest bank in Iceland before its failure in October of 2008. Reykjavik-based Arion was created by the state as a successor to Kaupthing, which is still working to repay creditor claims of approximately $25 billion. Iceland’s entire economy in 2008 was only $12 billion, and the government’s decision to take over the country’s banks and default on international creditors saved it from overwhelming debts.
Iceland is now far healthier than it was, with the cost to insure it against another default lower than in the eurozone. That has encouraged the country to look beyond its borders for funding. Hoskuldur Olafsson, Arion’s CEO, was quoted as saying, “The outlook for tapping into the international debt markets is positive. We’ve focused on maintaining the relationship we have with investors and on organizing the bank as a credible institution. We’ve made good progress and we believe that we might take steps in that direction sooner rather than later.”