Awards for Excellence 2008: Iceland
Best bank: Kaupthing Bank
Best debt house: Credit Suisse
Best M&A house: JPMorgan
The funding crisis that has affected many other global banks since the summer of 2007 started early in Iceland, and has been especially severe for banks there. Domestically, the banks face a slowing economy and rocketing inflation. Externally, investors continue to fret about Icelandic banks’ business model and rapid growth. The largest of Iceland’s three commercial banks, Kaupthing Bank, is best placed to meet the challenges faced by the sector.
Kaupthing Bank reported net earnings of IKr70 billion ($878 million) compared with IKr85.3 billion in 2006 but increased assets to IKr5.35 trillion – up 35.8%. Return on equity held up at a respectable 23.5%. Announced concurrently with the bank’s results was the decision to withdraw from the purchase of Dutch investment bank NIBC. Although this was undoubtedly an embarrassment for Kaupthing, it was the right decision given the Icelandic bank’s financial predicament.