More transparency and solutions for customers
Change and uncertainty have characterised the Icelandic economy over the past few months. During this period, Íslandsbanki's staff has focused on finding solutions for customers and framing the strategy and corporate vision on which the bank will build.
Transparency, consistent procedures and an improved regulatory framework
The new bank has devoted much effort to stepping up transparency in its activities. To this end, it has published procedures for employee transactions, lending rules and the procedures of the Board of Directors and of the bank's Risk Committee. It has also presented a procedural framework for its solutions to the needs of companies in payment difficulty. The framework's key aim is to ensure transparency and co-ordinated processes. Furthermore, the bank's key management personnel are to undergo a special assessment of their knowledge of financial market laws and regulations.
Solutions for homes and businesses
One of the bank's most pressing tasks in recent months has been to provide solutions for households and businesses facing payment difficulties. Customers have been offered repayment holidays on their foreign-currency loans, allowing them to stop repayments temporarily. The bank's staff has worked hard to adjust loan terms and suspend payments on a large number of such loans, in an effort totalling approximately 12,000-14,000 work hours.
Glitnir Financing has offered customers with foreign-currency car loans a 50% reduction of their lease payments. About 500 people have used this option. Íslandsbanki also cut its interest rates at the end of January in an aim to improve the operating conditions for Icelandic businesses and ease the interest burden on households. The bank is currently looking at what permanent solutions it can offer to customers with foreign-currency mortgages.
The Íslandsbanki Asset Management team has been hard at it to solve the issues that arose when the financial market collapsed last autumn. All mutual funds have now re-opened for business or are undergoing restructuring. Unit holders have been notified of their respective funds' position. The bank's fund management arm, Íslandssjóðir, has launched a new fund, the Government Portfolio, offering short-term investment in government-backed bonds and deposits with financial institutions. The fund has made a very good start, with total investment already at around ISK 6 billion.
Íslandssjóðir is the only Icelandic fund manager that offered customers a choice between liquidation and a six-month trading suspension of its mixed corporate and government bond funds. Unit holders responded well, with investors holding an aggregate share of 85-93% of the funds' net asset value choosing to retain their holdings rather than opting for liquidation.
Íslandssjóður, formerly Glitnir Funds, has long been a leader in transparency, a position it aims to maintain and strengthen.
Balance sheet restructuring
In the past few months, a concerted effort has been underway to restructure Íslandsbanki's balance sheet in consultation between the bank's experts, the government authorities and foreign experts. Extensive strategic planning has been in full swing within the bank, in which all employees have been invited to participate directly, including a Strategy Forum attended by 600 staff.