Icelandic Government Concludes Íslandsbanki Privatisation with ISK 90.58 Billion Final Sale

Iceland Completes Íslandsbanki Divestment

The Icelandic government has officially concluded the privatisation of Íslandsbanki, selling its remaining 45.2% stake in the bank. The final transaction, which took place in May 2025, generated approximately ISK 90.58 billion (around $703 million), marking the end of the state's ownership in the financial institution. The offering saw significant investor interest, with total demand reaching ISK 190 billion, exceeding the available shares by over ISK 100 billion. A total of 850,000,007 shares were sold at a public share price of ISK 106.65 per share. Costs associated with this final sale included ISK 679 million in fees paid to management firms involved in the process, such as Barclays and Citigroup Global Markets Europe AG.

A Decade-Long Privatisation Journey

The journey to privatise Íslandsbanki began after the 2008 financial crisis, which saw the Icelandic State Treasury assume full ownership of the bank. The government's strategy aimed to reduce its risk in the financial system, foster competition within the banking sector, and create new investment opportunities for both individuals and professional investors. The divestment unfolded in several stages:

• In June 2021, the government initiated the process by selling a 35% share through an initial public offering (IPO), which raised approximately ISK 55 billion.
• A second tranche followed in March 2022, with the sale of an additional 22.5% share via a private stock offering.

These earlier sales reduced the state's holding, paving the way for the complete divestment in 2025.

Controversies and Oversight

The privatisation process was not without its challenges and controversies. The March 2022 sale of the 22.5% stake drew significant criticism due to concerns over a lack of transparency and a discount offered to buyers. Reports indicated that some investors, including individuals with connections to government officials, made short-term profits by selling shares shortly after purchase. This led to public outcry and investigations by regulatory bodies. In June 2023, Íslandsbanki agreed to pay a fine of ISK 1.2 billion for not fully adhering to proper business practices during the 2022 offering. The controversy also prompted discussions about the future of Icelandic State Financial Investments (ISFI), the government's holding company, and led to calls for improved oversight in future state asset sales.

Minister of Finance Oversees Final Stage

The final stage of the privatisation was overseen by Daði Már Kristófersson, Iceland's Minister of Finance and Economic Affairs. The successful conclusion of the sale marks a significant milestone in Iceland's post-crisis economic recovery, transitioning Íslandsbanki fully into private ownership and reshaping the country's financial landscape. The robust demand observed in the final offering indicates growing investor confidence in Iceland's financial sector and its economic stability.