Sigrún Davíðsdóttir's Icelog

Sparisjodur Keflavikur, SpKef, is one of the many Icelandic ‘Sparkassen’ that have had huge problems following the bank collapse in October 2008. The Icelandic ‘Sparkassen’ were entwined in the financial acrobatics of the banks and their major shareholders – so far, an unwritten chapter in the Icelandic financial collapse. The last move is that this morning Landsbanki, owned by the Icelandic state, has taken over SpKef.

There is now a growing demand that Althingi commands a thorough investigation of the ‘Sparkassen.’ An Althingi bill on this matter is stuck in a committee. Rumours say that there might be some MPs unwilling to have this part of the financial system scrutinised. Be that as it may, people will want to know why Sparisjodur Myrasyslu, a tiny financial institution based in Borgarnes ca 100 km from Reykjavik, collapsed with a debt of ca ISK25bn, now ca €155m after tangoing with the mighty banking powers in Reykjavik. Or how business men related to Baugur and FL Group practically came to manipulate Byr, another ‘Sparkasse,’ as they became major shareholders in Glitnir. Dealings related to Byr have been sent to the Office of the Special Prosecutor who has already charged some ex-managers of Byr on one account.

The ‘Sparkassen’ were a parallel system to the banks but where the banks worked with bigger businesses and those who were famous for investing abroad, the ‘Sparkassen’ reveal a much more sordid story of local financial fiefdoms and local politicians. Another Icelandic financial saga waiting to be told.

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