The state takeover of the bank is likely to reignite fears about the financial strength of Iceland’s economy and investors, and implications for sectors such as retail, in which they have substantial interests.
Glitnir was joint financial adviser and joint underwriter to the acquisition of House of Fraser by Baugur and joint bookrunner on senior, mezzanine and bridging debt facilities.
There has been widespread concern at the level of debt taken on by Iceland’s banks as they have expanded internationally and their ability to repay debt has been hit by the weakness of the country’s currency.
The Icelandic government has paid €600 million (£478.9 million) for 75 per cent of Glitnir and new equity will be issued. Icelandic central bank governor David Oddsson said: “Without this intervention, Glitnir would have ceased to exist within the next few weeks.”
Glitnir and House of Fraser were unavailable for comment.
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