Failed Iceland bank sells Danish unit

A Danish-Swedish consortium said yesterday it will pay nearly $900 million to buy the Danish investment banking business of failed Iceland bank Kaupthing.

Kaupthing has been run by Iceland’s Central Bank since being taken over in late 2008 when the country’s over-extended commercial banking system collapsed in the global financial crisis. The Central Bank is selling Kaupthing’s FIH unit for five billion kroner (€671 million) to a consortium comprising two Danish pension funds (ATP and PFA Pension); Swedish insurance group Folkstam, and an independent financial advisers firm, CPDyvig.

FIH, the sixth-biggest Danish banking group, has assets of 125 billion kroner and is 99.89 per cent owned by Kaupthing. It employs 370 staff and is based in Copenhagen.

The deal is subject to regulatory approval. Kaupthing built up businesses abroad during the boom years before the crash, using cheap debt to acquire a stable of varied assets, but it found it could not cover its obligations when credit dried up in 2008, with the Iceland government forced to rescue it and its peers.