nordic cooperation from the icelandic ......8 key indicators are positive »unemployment at all-time...
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NORDIC COOPERATION FROM THE ICELANDIC PERSPECTIVEBenedikt Jóhannesson
Minister of finance and economic affairs
NFU conference, 20th June 2017
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ICELANDIC FINANCIAL SECTOR:2007-2017
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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
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AaaMoody’s Foreign LT bank deposits rating of Kaupthing and its predecessor
The rise and fall og Icelandic banksThe rating of Kaupthing and total banks’ assets as a multiple of Iceland's GDP
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Government ownership in commercial banks‘ equity in terms of GDP
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The government owns two of three biggest banks
and considerable share in the third
Landsbankinn hf. Íslandsbanki hf. Arion Banki hf.
Icelandic StateFinancial Investments:
98%
Icelandic StateFinancial Investments:
100%
ISFI:13%
Foreign investors
29,1%
Kaupþing100%
Kaupskil57,9%
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Book value of governement ownership in banks as % of GDP
2% 2%4% 5%
6%
22%
0%
5%
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25%
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KEY INDICATORS ARE POSITIVE
» Unemployment at all-time low
» Tourism boom drives strong growth
» Low inflation
» Government debt going down
» Credit ratings improving
» Currency controls abolished
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Government debt is falling
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% of GDP
Central Government Municipalities Debt rule
Projected
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BUT CHALLENGES REMAIN
»Overheating risks
» Strong króna claims casualties
» Although going down, interest rates are high
» Housing prices on the rise
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Jobs in finance and insurance are as many as they were in 2000
30% fewer than in 2008
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Number of jobs in finance and insurance (left axis)
Total workforce participation (right axis)
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ICELANDIC FINANCIAL SECTOR IN EUROPEAN CONTEXT
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We want close cooperation with theNordic countries and Europe as a whole
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EUROPEANCONTEXT
Iceland is a part of theEuropean Economic Area(EEA)
Wikimedia Commons
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INTEGRATION INTO EUROPEAN REGULATORYFRAMEWORK
» Last milestone: European surveillance authorities
» Next: i.a. securities markets
» Much work ahead in adopting EU directives into EEA and integrating into domestic law
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Dual status of government: regulator and owner
ICELANDIC FINANCIAL SECTOR: GOING FORWARD
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SHOULD INVESTMENTBANKING BE SPLIT FROMCOMMERCIAL BANKS?
Report in June 2017
Commission of experts torecommend next steps withdeadline November 2017
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OWNERSHIP POLICY: DIVESTMENT PLANS
Arion banki hf. (13% share)
Sell when conditions are favourable, probably following market registration by majority-stake owner
Íslandsbanki hf. (100% share)
Sell when conditions are favourable
Landsbankinn hf. (98,2% share)
Long-term ownership of 34-40%
Registration on market and divestment when conditions are favourable
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FUTURE CHALLENGES AND OPPORTUNITIES
Technical innovation making existing banks redundant?
Fintech, blockchain
Icelandic banks still too big?
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www.fjr.is | twitter.com/MoFIceland